HCD’s Letter to San Francisco Should Be Read as a Warning to Other Communities

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By David M. Greenwald
Executive Editor

San Francisco, CA – The California Department of Housing and Community Development (HCD) delivered a 17-page rejection of San Francisco’s Housing element.  In a letter dated August 8 to the San Francisco Planning Department, HCD notes “revisions will be necessary to comply with State Housing Element Law.”

The letter begins on the positive, applauding San Francisco for “several aspects of the approach to the housing element update. The element places a strong emphasis on acknowledging and repairing the harms of decades of inequitable and discriminatory land use and planning policies that resulted in exclusionary and disinvested communities.”

It adds, “The City has proposed bold and meaningful actions to both reduce barriers to higher-opportunity neighborhoods while simultaneously reinvesting in historically underserved neighborhoods.”

UC Davis Law Professor and land use expert Chris Elmendorf noted in a tweet on Tuesday, “It looks like America’s second most expensive city is going to spend the next 8 years in de facto land-use receivership, courtesy of state law.”

The letter warns, pursuant to AB 1398, “if a local government fails to adopt a compliant housing element within 120 days of the statutory deadline (January 31, 2023), then any rezoning to accommodate the regional housing needs allocation (RHNA), including for lower-income households, shall be completed no later than one year from the statutory deadline.”

Otherwise, “the local government’s housing element will no longer comply with State Housing Element Law, and HCD may revoke its finding of substantial compliance…”

The letter hammers San Francisco on several points.

For example, “The element indicates an implementation timeline of 0-15 years. In efforts to address the City’s well documented lengthy permit process, the element should revise these timelines to complete these actions earlier in the planning period (e.g., 0-2 years).”

Thus San Francisco must not only address its slow and unpredictable permitting process, it must do so within a two-year period.

Further, “Compliance with State Housing Laws: The element must include a program to comply with all state housing laws. This program must include steps for implementing (e.g., develop processes, standard procedures, forms, etc.), definitive timelines, specific commitments, and quantified objectives, where appropriate.”

In particular, the element should specifically address processes related to SB 35, Housing Crisis Act, Housing Accountability Act, Permit Streamlining Act and CEQA timelines.

The letter notes, “HCD has received several public comments and has active enforcement cases and complaints related to the local permit process that have indicated a complex, untimely, and cumbersome process with little certainty to applicants.”

It continues, “There are also indications of potential violations of various state laws, including the Permit Streamlining Act, Housing Accountability Act, Housing Crisis Act, and State Density Bonus Law.”

The element must therefore not only “analyze potential and actual governmental constraints on housing development pursuant to State Housing Element Law” but, “specifically address potential violations with state housing laws.”

In his tweet stream, Elmendorf notes, “SF’s CEQA review process is nowhere close to compliant w/CEQA timelines, yet the CEQA timelines aren’t themselves enforceable thru CEQA litigation. Withholding approval of SF’s housing plan is a practical way to make SF honor limits on CEQA review.”

SF YIMBY’s letter from the spring argues that SF has been overly optimistic in its projects of the rate at which projects in the pipeline can be actually developed.

They point out that the city claims to have 44,234 housing units in its pipeline.

It notes, “HCD has previously suggested that cities consider ‘past completion rates’ for ‘pipeline project[s]’ when crediting units towards a City’s RHNA obligations.”

The letter argues, “Based on historical rates of completion, the City’s housing pipeline of projects currently without building permits only appears likely to accommodate approximately 9,254 units of housing during the next 8 years.”

By contrast, “the City proposes to assume that the rate at which its housing projects ‘in the pipeline’ will produce permitted housing will more than quadruple (from 17% to 80%) during the next RHNA cycle. This assumption is not reasonable, especially in light of the City’s own findings that the City has recently placed a number of new constraints on development.”

They write, “Under these circumstances, the yield from the pipeline over the last eight years should probably be treated as an optimistic proxy for the yield over the next RHNA cycle—unless the city can convincingly document economic feasibility and intended construction start dates for current pipeline projects and provide a comparable retrospective analysis showing that the ‘pipeline prospects’ were substantially worse eight years ago.”

HCD addresses this point, noting “to count these units as progress towards RHNA, the element must analyze and demonstrate the likelihood and availability of these units during the planning process.”

HCD adds that “given the element’s reliance on pipeline projects, the element must include programs with actions that commit to facilitating development and monitoring approvals of the projects, with a commitment to alternative actions (e.g., rezoning) if assumptions are not realized.”

About The Author

David Greenwald is the founder, editor, and executive director of the Davis Vanguard. He founded the Vanguard in 2006. David Greenwald moved to Davis in 1996 to attend Graduate School at UC Davis in Political Science. He lives in South Davis with his wife Cecilia Escamilla Greenwald and three children.

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8 Comments

  1. Ron Oertel

    San Francisco’s population has been dropping – by more than 6%.  We’re also in the early stages of a housing crash.

    Not to mention the commercial space crash, which is much more severe at this point.

    How does it make sense to (try) to force the city to build more housing in such an environment?

    I’m becoming even more convinced that the underlying effort is much more closely related to the influence of business interests (including the technology, building, real estate, and even the Affordable housing industries) than it is to actually providing housing for those at risk.

    The problem is that these business interests have infiltrated politics.  (Actually – they did so a long time ago, but they’re attempting to use different arguments, now. And so far, they’ve had at least some success in “shifting” the argument – to something that they’re not actually interested in.)

    These are the same people who see a “problem” with a dropping (or leveling-off) of the population.  Again, due to underlying business interests.

    There are groups which are fighting the state’s efforts. The harder that the state pushes, the more that they’re going to motivate those opposed.

    But again, the state’s efforts are doomed in the first place, without even considering the organized opposition. The governor himself has not come anywhere close to meeting his stated “goals” regarding forcing housing – even before these draconian measures were put in place. So what did he do? Why, he “downsized” his goals, of course.

    1. Craig Ross

      You keep repeating the fact that SF is losing population while ignoring that the reason it is losing population is because the cost of housing is so high.

      1. Ron Oertel

        That is a factor, as are other issues (such as wanting more space due to the ability to work from home, parking, crime, homelessness, etc.).  In other words, all of the usual hassles of living in a big city. And when you consider that some states don’t even have income tax, it can become a “no-brainer” to leave the state entirely.

        Assuming we’re going to rely upon a capitalistic system, what (exactly) is “wrong” with that system encouraging folks to leave for “greener pastures” for themselves? Places where salaries are better-matched to the cost of living? (Lots of people have already figured this out, as demonstrated by the net migration outward.)

        (I’d point out again that this is also the reason that so many have migrated to the Sacramento region from the Bay Area in the first place – including Davis. In other words, they were priced out of the Bay Area, but have a much easier time finding a place in this region.)

        1. Craig Ross

          What’s wrong is you’re using declining population as a rationalization for why there isn’t a need for more housing when in fact the cause of that declining population is the lack of affordable housing itself.  It’s a vicious circle not to mention circular reasoning by you.

        2. Don Shor

          Assuming we’re going to rely upon a capitalistic system, what (exactly) is “wrong” with that system encouraging folks to leave for “greener pastures” for themselves?

          Nothing, so long as the wealthy homeowners in those places they want to move to haven’t erected barriers to them living in those greener pastures. In a “capitalistic system” developers would be providing housing for those Bay Area refugees in Davis. You oppose that.

        3. Ron Oertel

          Craig:  What’s wrong is you’re using declining population as a rationalization for why there isn’t a need for more housing when in fact the cause of that declining population is the lack of affordable housing itself.

          Again, if there’s declining population, then it follows that there’s less need for housing.

          In the case of San Francisco, there’s more than 6% “less need” then there was a couple of years ago. Theoretically, they could tear down more than 6% of the existing housing and be in the same situation they were a couple of years ago.

          Craig:  It’s a vicious circle not to mention circular reasoning by you.

          It’s not circular reasoning – it’s simply a result. If there’s less need, then there’s less of a so-called “shortage”.

          No one has made any logical argument in regard to what’s “supposedly” wrong with this.

          Don: Nothing, so long as the wealthy homeowners in those places they want to move to haven’t erected barriers to them living in those greener pastures.

          No one (so far) is “erecting barriers” in most of those “greener pastures”.

          Don:  In a “capitalistic system” developers would be providing housing for those Bay Area refugees in Davis. You oppose that.

          They are doing that.  See The Cannery.  For that matter, see “existing” housing that comes on the market.

          Not to mention what’s been occurring in the entire Sacramento region. The wealthier, older people are probably moving to places like the massive new development in Folsom, while the less-wealthy (and still working) folks are moving to places like Elk Grove, Manteca, Natomas, Woodland, etc.  (Assuming that we’re limiting the conversation to the region, here.)

          I’ve noticed that (in general), the nicer a place is (e.g., geographically), the more that current residents protect it.

  2. David Greenwald

    From the SF Chronicle: “Gov. Newsom launches unprecedented review of San Francisco’s housing approval process”

     

    What’s going to be interesting to watch is how Davis fares with the HCD.  Talked to a lot of people in the last week who believe Davis is in a similar boat with respect to compliance with RHNA.

    1. Ron Oertel

      Davis is experiencing a challenge because they tried to count the megadorms, despite being warned in advance (repeatedly, and prior to approval) that it would not qualify to meet the requirements.

      The council approved the megadorms anyway, despite those warnings.

      HCD apparently does not consider housing specifically designed for students to be a “city need”, in regard to the specific categories required.

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