San Francisco is headed toward missing an important housing deadline, and the consequences could be serious.
If The City fails to produce a compliant state-mandated housing plan by the end of January, it could temporarily lose access to tens of millions of dollars in grants for affordable housing and transit, and it could even lose control over its own zoning laws.
Looming ahead is a Jan. 31 deadline for completing the Housing Element, a process requiring San Francisco to plan for 82,000 new homes by 2031. The City is currently expected to complete its Housing Element in early April, according to the latest estimates from the Planning Department. That means The City is on track to be out of compliance for at least two months next year.
The Planning Department, with advice from the city attorney, had been under the impression that there would be a “grace period” between the Jan. 31 deadline and May 31, giving The City more time to complete its Housing Element without facing any consequences.
But the California Department of Housing and Community Development (HCD), the agency that will ultimately certify or reject The City’s Housing Element, asserts that’s not the case. Jan. 31 is the statutory deadline for having a compliant Housing Element, after which non-compliant cities will face consequences like ineligibility for certain funding programs.
Housing activist Kevin Burke called attention to this discrepancy in a letter to HCD, which he shared on Twitter last week. Until that point, neither The City nor HCD appeared to be aware of the gravity of the Jan. 31 deadline.
“We’re working with HCD and the City Attorney’s Office to clarify HCD’s recent interpretation of the 120-day grace period,” Planning Department chief of staff Dan Sider wrote in a statement, adding that the state had known about The City’s timeline for completing its Housing Element for over a year, and never raised concerns.
“The issue is bigger than just San Francisco because we’re just one of many cities we believe to have interpreted the law’s grace period differently,” Sider said. “Regardless, if the final determination is that the deadline is Jan. 31, we’ll make every attempt to get it certified by then.”
According to UC Davis law professor and housing policy expert Chris Elmendorf, the deadline is not a matter of interpretation. “The statute requires the city to be in substantial compliance (by Jan. 31) or there are these consequences,” Elmendorf said. “I think there was a misunderstanding or maybe some questionable legal advice that planning received about the timelines.”
In a statement, the City Attorney’s Office wrote, “Based on recent statements, we are working with our clients to evaluate the schedule for submitting San Francisco’s Housing Element, and The City will continue to seek guidance from HCD on these issues.”
It remains unclear what the impact would be if The City were to be out of compliance with the Housing Element for a brief period. The state has an alphabet soup of grant programs, each with different requirements and application timelines.
The Affordable Housing and Sustainable Communities program, for example, will not provide grants to cities without a compliant Housing Element. That program provided a $29 million grant to an affordable housing project at the Balboa Reservoir in February.
However, other programs, like the Permanent Local Housing Trust Fund, specifically include carve outs for cities to be able to access funds within 120 days of the Housing Element deadline, before May 31, even if they’ve not yet submitted a compliant document.
If San Francisco’s housing element is not just late, but flat-out rejected by HCD, the consequences would be severe. Municipal Transportation Agency Director Jeffrey Tumlin wrote in an August email obtained by The Examiner that his department could lose out on $100 million per year in state funding if The City fails to produce a compliant Housing Element.
Another consequence of even a temporary period of non-compliance would be a policy poison pill known as the “builder’s remedy.” A provision of the Housing Accountability Act, this obscure clause allows developers to completely bypass local zoning and approval processes to build virtually any housing project they please, as long as it conforms to certain safety, environmental and affordability standards.
So far, the builder’s remedy exists largely in theory, having seldom been tested in the real world. But according to the letter of the law, if a developer submits a builder’s remedy project while The City’s Housing Element is out of compliance, they could still construct that project even after The City’s Housing Element is certified.
Despite the problematic timeline, San Francisco’s Housing Element is progressing. The latest draft, released last week, proposes a more substantial rezoning program, and specifically lays out how The City can speed up its notoriously slow permitting process. The changes come in response to extensive comments from HCD on the previous draft.
San Francisco’s housing policies have been under fire lately. Last month, at the signing ceremony for this year’s package of housing bills, Governor Gavin Newsom rebuked The City for denying and slowing down housing developments — practices HCD began investigating in August.
The latest Housing Element draft shows that city planners are beginning to take those criticisms to heart. The new document ups the number of homes The City expects to produce through rezoning from 22,000 to 34,000. That will likely entail legalizing even taller buildings — up to 85 feet, eight stories, in height — on major transit corridors in the western and northern parts of The City, like Geary Boulevard, Lombard Street and 19th Avenue.
Another key element of the Housing Element draft is a more detailed analysis of governmental constraints to housing production, and potential solutions to those constraints.
The document contains “a whole long list of very concrete things that the city is now proposing to do to reduce the cost of building, as well as some things that are not concrete, but are acknowledged as issues that will have to be addressed,” Elmendorf said.
The Planning Department proposes eliminating discretionary review for many projects in the neighborhoods slated for rezoning, ensuring that a single neighbor wouldn’t be able to prevent the construction of new housing. It also proposes loosening certain building requirements, like those requiring water recycling facilities and public art in new buildings, and trimming categories of environmental review, like wind and shadow analysis. In addition, the department pledges to study and reconsider The City’s affordable housing requirements for new market rate development, which add considerable expense to projects.
Elmendorf compared these changes to the 1978 “downzoning” of San Francisco, when most of The City’s current zoning was implemented. That policy reduced the possible development capacity of The City by 50%, or about 180,000 units. The Housing Element represents a major swing of the pendulum in the opposite direction.
While the Housing Element isn’t perfect, Elmendorf said, it’s still “a big, substantive change for The City.”
