California Department of Housing and Community Development Warns San Francisco About Potential Violations of State Housing Law

Miller Starr Regalia
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Miller Starr Regalia

For decades developers and landowners have considered San Francisco as a City that is unfriendly to property rights.  From the City’s Hotel Conversion Ordinance, which severely restricts the conversion of hotels from residential to tourist use, to the Community Opportunity to Purchase Act, which gives non-profit organizations the right of first offer and the right of first refusal to purchase certain multi-family properties offered for sale in the City, San Francisco has a longstanding reputation as being hostile to constitutionally-protected property rights.

It comes as no surprise, then, that the Board of Supervisors recently rejected a 495-unit housing development project proposed for development on a parking lot by hiding behind vague concerns about supposed environmental deficiencies under the auspices of the California Environmental Quality Act despite the project’s robust protections under the Housing Accountability Act, California’s most important housing production law.  The HAA provides the only lawful basis for a city to disapprove a housing development project and CEQA does not serve as a valid basis to disapprove such projects.  The Board’s rejection of the project overturned the Planning Commission’s certification of the underlying Environmental Impact Report and related project approval without making the written findings mandated by the HAA.

In the face of an unrelenting housing supply crisis, the state is finally stepping up its enforcement efforts, and the California Department of Housing and Community Development thus sent San Francisco a letter of inquiry and technical support—on November 22, 2021— warning the City that its actions may have effectively denied the project illegally.  According to HCD’s Housing Accountability Unit Chief, “HCD is concerned specifically that the Stevenson Project that [has] been effectively denied without written findings as well as larger trends in the City/ County’s review of housing . . . HCD has both the authority and duty to review any action or failure to act by a city, county or city and county that it determines is inconsistent with an adopted housing element or Government Code section 65583 or in violation of the HAA.”

HCD is concerned that the City’s actions may be a trend and expects the City to provide the required written findings to HCD and the project applicant within 30 days explaining the reasoning for and the evidence behind its decision.

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