New Report Latest Evidence of How Red Tape Blocks SF Homebuilding

Golden Gate bridge, San Francisco California stock photo

California’s housing crisis is not entirely Sacramento’s fault. Local governments have to share the blame, and maybe none so much as San Francisco’s, where the construction approval process takes longer than anywhere else in the state.

And the difference isn’t on the margins.

A report released in October by the California Department of Housing and Community Development makes one wonder why anyone would even try to build housing in San Francisco, which “has the longest timelines in the state for advancing a housing project from submittal to construction.”

“It takes an average of 523 days for a housing project to be entitled” in San Francisco, says the report, “compared to 385 days for the next slowest jurisdiction in the state,” which is South San Francisco.

It further “takes an average of 605 days for San Francisco to issue a building permit to an already entitled housing project, compared to 418 days in” Malibu, “the next slowest jurisdiction.”

At its current approval rate, there is no way the city can meet its housing needs. To reach its target, it has to add 10,259 units – including 5,825 affordable homes – every year through 2031, a total of more than 82,000 if we start the clock in 2024.

The report calls San Francisco “an outlier on housing approvals” because, in part, “of how it applies a blanket discretionary review process to all building permits.” The approval processes are “notoriously complex and cumbersome, creating unpredictability and uncertainty. This results in an environment where only the most seasoned development professionals benefit from knowing how to navigate the local processes, and barriers to entry are imposed for new developers.”

A few years back, the Terner Center for Housing Innovation, University of California-Berkeley also found that “unpredictability and uncertainty” plagued the permitting process.

“Additional hoops and requirements seem to pop up at various stages in the process,” said the authors of “Perspectives: Practitioners Weigh in on Drivers of Rising Housing Construction Costs in San Francisco,” adding that developments are subject to “re-interpretation of the codes throughout the permitting process.”

The results of what is obviously an intentional effort to slow walk development can be seen in the data. Over the last five years, housing completions have averaged a little more than 4,000 annually, with the busiest year being 2021, when 3,948 market-rate homes and 1,652 affordable homes were completed. Last year those numbers were, respectively, 1,606 and 1,304. In no year did the total reach even 60% of the target.

While time is certainly a limiting factor, so is cost. And, again, the differences aren’t on the margins. The national average cost for a building permit is about $1,000, yet in San Francisco a planning permit costs roughly $5,000 per home, according to the state. The Terner Center found that “the length of time it takes for a project to get through the city permitting and development processes” is “the most significant and pointless factor driving up construction costs” in San Francisco.

Somewhat surprisingly, the “San Francisco process” can be more frightening than the California Environmental Quality Act, the law that is “too easily to weaponized to block housing” and “a villain in the state’s housing crisis.” The Department of Housing and Community Development state says, “planners report that they are more fearful of scrutiny in front of the city’s appointed and elected bodies than of CEQA litigation.” Even when environmental planners feel confident their work would survive judicial scrutiny,” administrative appeals are not hard “to file and create problems for planning practice even if they are withdrawn or denied.”

The report finishes with a list of required actions that fall under a number of categories, such as eliminating “discretion and subjectivity in planning review,” and “increasing accountability and transparency.” There are recommended actions, as well, and the city would be wise to follow them all, since failure to implement the former will result in the Department of Housing and Community Development “initiating the process to revoke housing element compliance.”

It seems someone with political clout is fed up with San Francisco “avoiding obligations under state housing laws” and “maneuvering around them through local rules that exploit loopholes and frustrate the intent of state housing laws,” and is determined to do something about it.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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