On December 14, 2023, Mayor Breed approved “Housing Constraints Legislation” passed by the City and County of San Francisco (City) Board of Supervisors, which is intended to streamline housing production, as required by the California Department of Housing and Community Development (HCD). Absent that, the City would potentially be subject to the Builder’s Remedy under the Housing Accountability Act (HAA) and streamlined ministerial approval of qualifying mixed-income housing projects under SB 35, as amended by SB 423 (effective January 1, 2024).

BACKGROUND

The Housing Constraints Legislation is a key component of Mayor Breed’s Housing for All Executive Directive, which outlines an implementation strategy for the City to fulfill its state-mandated Regional Housing Needs (RHNA) allocation. The Executive Directive consists of various administrative reforms, legislative actions, and government accountability actions intended to streamline housing production. As explained by Mayor Breed: “We’ve got to remove barriers to new housing in San Francisco, and this legislation is a key step in making that happen.” The changes made by the Housing Constraints Legislation are summarized below.

PROCEDURAL HISTORY

The City’s state-mandated Housing Element update, which was certified by HCD in February 2023, includes a plan to build 82,000 housing units in the City over the next eight years to meet the City’s RHNA allocation. The associated San Francisco Housing Policy and Practice Review (PPR) issued by HCD in October 2023, requires the City to undertake multiple actions to streamline housing production by specified deadlines.

Among other action items, the HCD PPR required the City to approve Housing Constraints Legislation within 30 days to implement various City Housing Element programs, including but not limited to eliminating the Planning Commission hearing requirement for (i) code-compliant housing projects outside of Priority Equity Geographies and (ii) State Density Bonus Law projects, including requested incentives/concessions and waivers, when no other land use entitlements are required.

In November 2023, HCD issued a “corrective action” letter to the City threatening to decertify the City Housing Element due to the City’s failure to timely comply and extending the compliance deadline to December 28, 2023. The City Board of Supervisors promptly responded by finally passing the Housing Constraints Legislation on second reading on December 12, 2023.

Additionally, the City Board of Supervisors adopted a resolution urging Mayor Breed and the City Attorney to request revisions to the HCD PPR and an extension of the remaining deadlines to ensure that the City Housing Element is not decertified.

According to this article, HCD has determined that the Housing Constraints Legislation is consistent with state law, but the City still needs to respond to the aforementioned HCD corrective action letter to explain how the City will implement other “overdue required actions.”

POTENTIAL IMPLICATIONS

There are potential implications for City non-compliance that could benefit mixed-income multi-family housing developers. First, if HCD ultimately decertifies the City Housing Element, the so-called Builder’s Remedy would apply, which is discussed in more detail in our prior legal alert. Second, as explained in more detail in this legal alert, if the City Housing Element is decertified as of January 1, 2024, the City would be subject to streamlined ministerial (i.e., no CEQA) approval of qualifying SB 35 projects where 10% of the units are designated as very low income (rental) or low income (ownership), before calculating any density bonus (“10% Projects”). Third, as explained in more detail in that prior legal alert, even if the City Housing Element remains certified, the City would be subject to SB 35 approval of 10% Projects if it fails to meet its annual RHNA target for above-moderate income units.

That will likely be challenging, even with the Housing Constraints Legislation. According to this Housing Needs Assessment, the total RHNA for the City increased by 184% for the current 2023-2031 reporting period-- including an annual target of 4,434 above-moderate income units. SB 423 amended SB 35 to specifically target the City by increasing the frequency of its RHNA reporting period to every year, beginning in 2024.

CITY PLANNING CODE AMENDMENTS

The following is a summary of the City Planning Code amendments in the Housing Constraints Legislation:

• A Priority Equity Geography Special Use District (“SUD”) has been created across the City, based on the Community Health Needs Assessment prepared by the City Department of Public Health, in areas with “a higher density of vulnerable populations.”
• Outside of the SUD, many projects are now exempt from City Planning Code Section 311 community notice and review procedures. See that section for revised requirements in specified zoning districts, including but not limited to the Eastern Neighborhoods Mixed Use Districts.
• Rear yard, front setback, lot frontage, minimum lot size, and residential usable open space requirements (including but not limited to inner courtyard dimensional requirements) have been reduced and standardized in specified zoning districts.
• Individually Requested Density Bonus Projects seeking “off-menu” incentives/concessions no longer require Planning Commission approval and may instead be approved by the Planning Director, provided that the Planning Commission ultimately delegates that authority. Contrast the HCD PPR requirement to also eliminate the Planning Commission approval requirement for requested waivers.
• Individually Requested Density Bonus Projects are no longer subject to a discretionary Conditional Use Permit (CUP) from the Planning Commission (if the CUP is related to the proposed housing) or Large Project Authorization.
• Housing units affordable to households earning up to 120% AMI (up from 80% AMI), newly including units that trigger a density bonus, are eligible for a waiver of specified development impact fees, provided that the project sponsor pays prevailing wages.
• Eligibility requirements for HOME-SF projects have been eased, such that historic resource, shadow, and wind effects are no longer considered, and up to one residential unit may now be demolished during construction of a HOME-SF project.
• Outside of the SUD, projects meeting specified criteria in most zoning districts are now exempt from the CUP requirement for the demolition, merger, or conversion of existing residential units. See City Planning Code Section 317 for revised requirements in specified zoning districts.
• Outside of the SUD, Chinatown Community Business District, and Chinatown Residential Neighborhood Commercial District, a CUP is no longer required for large lot developments.
• The CUP requirement has been eliminated for (i) buildings over a threshold height (but below the maximum height) in the RH, RM and RC-3 zoning districts, Mission Street NCT, Broadway NCD, Van Ness SUD, and Lakeshore Plaza SUD and (ii) additional units based on lot area in the RH-1, RH-2 and RH-3 zoning districts.
• The upper floor setback requirement for buildings over 50 feet in the North of Market Residential SUD and Van Ness SUD has been eliminated.
• Outside of SUD, lot mergers in the RTO zoning districts resulting in a lot larger than 5,000 square feet are now permitted.
• Geographical restrictions for Senior Housing projects, including double density projects, have been eliminated, as specified.
• Group Housing is now permitted in the RH-1 zoning districts, as specified.
• The administrative approval process for reasonable residential modification requests for people with disabilities has been significantly expanded.

OTHER RECENT ACTIONS

The City has taken other recent actions to reduce the barriers to housing production. In July 2023, the City Board of Supervisors passed new legislation to temporarily and significantly reduce City development impact fees and City Inclusionary Housing Program requirements. See City Ordinance No. 187-23.

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