In a weird way, I’m kind of glad that Gov. Gavin Newsom wants to the state to investigate his former home town’s housing approval process. For starters, if there in fact have been problems in approving new housing, a lot of them happened when Newsom and his chosen successor, Ed Lee, were running the city.
Specifically, it was Lee’s determination to convince dozens of tech companies to move here and bring thousands of high-paid employees—without any clue, any plan, and discussion at all, zero, of where to house them—that was the proximate cause of the latest in this city’s long housing crisis.
But more important, a real review—if the state is capable of doing one— would show that housing development in this city, and other California cities, has a lot more to do with the failures of the free market than any local policies, for better or for worse.
I don’t expect a real review. The department, of course, answers to Newsom, and the entire process will be a political move to help private developers.
But at least maybe we can force the issues a bit.
The investigation (supported by Mayor London Breed) comes just days after the state Department of Housing and Community Development sent the Planning Department its comments on the city’s draft Housing Element, which is based almost entirely on fantasy.
The state is looking at the city’s Regional Housing Needs Assessment, which defines how much housing each city is supposed to approve and facilitate in every income group.
The letter the state wrote to the city is confusing, and it includes all sorts of comments about how complicated San Francisco’s housing application process has become. The reality is that development approvals take a long time in this city because so many projects are so large, and have so little affordable housing, and the developers ignore so many important impacts that residents have no choice but to challenge them.
Very little new market-rate housing, which is all that developers are building now, serves the majority of the population that the RHNA goals define. In fact, San Francisco has approved far more market-rate housing than RHNA requires, and far less housing for anyone else.
That’s not a bit surprising. Despite what the Yimbys like to say, San Francisco doesn’t “build” housing. Private developers build housing.
And here are some numbers the state might want to look at, thanks to my colleague Calvin Welch:
As of the close of 2020 (the last numbers I could find) there were 69,435 units approved in the pipeline but only 5,509 under construction. Some 33,102 units have been approved in large projects including 9,119 at Hunters Pt. Shipyard, 4,666 at Parkmerced, 6,457 units at Treasure Island, 2,505 at Pier 70, 1,575 at India basin and 1,409 at Mission Rock.
Most of those projects are not even close to happening.
Why? The market conditions are changing, the investors want higher returns than the developers can get given the higher cost of construction, and the speculative capital is going elsewhere.
There is nothing that the Yimbys, or the mayor, or the governor, or the state can do about any of that, as long as they want to rely on the private market to solve our problems.
More from Welch:
Willie Brown Administration (1997-2005): 23,851 units approved, 15,210 units built
Gavin Newsom Adminstration (2005-2012) 22,236 units approved,15,601 built
Ed Lee Administration (2013-2018) 26,871 units approved, 19,730 built.
That means of the three mayors prior to the current incumbent, Newsom had the lowest amount of new housing approved. That, of course, had a lot more to do with market conditions (he was mayor during a major recession) than with any of his policies—which makes the now-gov’s argument an embarrassing joke.
Sup. Dean Preston, in an August 11 letter to the Governor’s Office, notes that the governor’s press release says nothing, zero, about affordable housing:
Your press release announcing your Housing Policy and Practice Review says nothing about affordable housing. Instead, you appear to conflate all forms of housing, a favored framing of the luxury housing developer lobby, but not what one would expect from an affordable housing agency. There is certainly a discussion to be had about luxury housing development in an expensive City like San Francisco, but it would seem strange if that were your priority at a time when most of the working class cannot afford a roof over their heads.
We recently held a hearing in the Government Audit and Oversight Committee regarding the City’s plan to meet RHNA goals for affordable housing. It’s clear from the hearing, and the presentations from MOHCD and Planning Department, that there is no plan. Meanwhile, we are achieving 150% of our market rate housing production goals and less than 50% of our affordable housing goals. I hope your investigation will expand on our work to better understand why the Planning Department and Mayor’s Office of Housing have no plan to meet our affordable housing goals.
The reality is that the city can’t possibly meet its RHNA goals for affordable housing without a massive influx of state money. The price tag for the affordable housing the state is requiring totals at least $19 billion—and the Mayor’s Office has no plan for how to address that funding gap.
As Preston notes:
With the Governor and State Legislature severely underfunding the affordable housing needs of Californians, the decision to investigate San Francisco, apparently not for failure to deliver affordable housing—that would be a fair inquiry, and one which I’ve led—but instead for delays in market rate housing for the wealthy, is telling. Intentionally or not, it seems that the State’s approach is to grossly underfund affordable housing, while focusing government resources on deregulating the market for unaffordable housing. This is neoliberalism at its worst.
I’ve read the entire letter that the state sent to the city responding to the draft housing element.
Among its conclusions:
The city should evaluate the impact of the RHNA by income group on the socio-economic patterns on a locational basis (e.g., neighborhood, census tract, district), including addressing any isolation of the RHNA. Based on the outcomes of this analysis, the element should re-evaluate the appropriateness of targets (e.g., increase lower-income targets in well-resourced areas) and add or modify programs to better improve fair housing conditions, including equitable quality of life throughout the community (e.g., anti-displacement and place-based community revitalization strategies).
That’s a whole lot of world-class bureaucratic bullshit, but what it seems to be saying is that the city could increase housing affordability by approving more market-driven projects in wealthier parts of the city.
Sure: Everyone talks about putting low-income housing in “well-resourced” areas, which means the West Side of town. There are plenty of people in those wealthy, single-family areas who oppose more dense affordable housing, and that’s an issue (although the supes, including those from the West Side, are pretty clear that affordable housing should go everywhere).
The bigger problem is that none of those projects will provide anywhere near the level of affordable housing that the city needs, in rich areas or poor areas. there’s no money to pay for the amount of below-market-rate housing the state wants to see constructed in San Francisco.
As Sup. Gordon Mar pointed out in a recent hearing, the “increased density” developers wanted on Taraval Street created new units that only rich people can afford, nothing for the working-class families in that community.
That might be something the state housing investigators want to address.
The numbers and the economics don’t lie: San Francisco can’t rezone or upzone its way out of this problem. Reducing “barriers” to housing approvals, as the mayor wants to do, won’t make anything more than a tiny bit of difference.
The fact is, the RHNA goals that the state wants to impose are impossible for San Francisco to meet, unless Newsom and the Legislature want to send a very large amount of money to the city. Developers won’t pay for more than 25 percent affordable housing, and much of that at levels much higher than RHNA says the city needs; they say the price is too high and the projects no longer “pencil out” (although to this day, not one housing developer has made public the actual financials of the projects, so the rest of us can see if that’s true).
And if nobody has an answer to any of this, I don’t see how the Planning Department can seriously talk about a new Housing Element.
Maybe someone from the state is honest enough to say that. I’m not holding my breath.