San Francisco supervisors this week got one step closer to passing a critical package of housing reforms at the heart of the mandate to make room for some 82,000 new homes this decade. But while taking a step forward, the lawmakers left themselves with no margin for error to avoid potential state penalties that could jeopardize millions of dollars in funding and blunt the city’s authority to govern what gets built within its borders.
With final approval likely to come down to the wire by year’s end, opponents of the new rules — community advocates as well as some supervisors — continue to insist the rules could set off a wave of demolitions of SF’s rent-controlled housing.
“Much of the media coverage has been absolutely appalling in refusing to even reference or acknowledge” the demolitions issue, Sup. Dean Preston said Monday. The District 5 supervisor was speaking at this week’s Land Use committee hearing. Preston and his committee colleagues, supervisors Myrna Melgar and Aaron Peskin, let the new rules (known as “constraints reduction”) pass to the full Board of Supervisors, albeit without a stamp of approval.
The move came after more than two months of debate and amendments as pressure from state watchdogs grew and opponents called the regulations “blackmail.” Land Use committee chair Melgar called for patience, saying amendments were necessary to avoid violating the city’s broader plan to expand housing, called the Housing Element, which supervisors approved unanimously in January.
The full board, which must approve the constraint reduction package, declined to take it to a vote yesterday. They now have only the final two regular meetings of the year to pass it and avoid state penalties. By city rules, they’ll need both, as well as a Planning Commission hearing later this week. It’s a stress test of SF’s contentious politics, which state housing watchdogs have cited as a key reason for the city’s sclerotic housing process, the slowest in California.
Without a vote on the agenda item Tuesday, critics, antigrowth activists, and others used the time to slam the package, sometimes repeating falsehoods that 40,000 or even 60,000 units are sitting vacant and the housing shortage is overblown. (Editor’s note: The Frisc covered this busy week of housing debate, first at Monday’s Land Use committee and then at Tuesday’s full Board of Supervisors.)
Arguing there’s little urgency to build, Sup. Connie Chan on Tuesday cited a list of major projects around the city, such as at Balboa Reservoir and Stonestown. The former has been in the works for nearly 10 years, and the latter is still in the planning phase — unlikely to persuade the state regulators who are pushing for changes in process.
Demolition derby
The original constraints reduction bill proposed in September by the mayor did in fact allow for demolitions, in narrow cases, of one or two-unit buildings without a hearing. (The buildings had to be unoccupied, without a recent eviction on record, and also not a historic asset.)
In the current version of the bill, that language is removed. Sup. Rafael Mandelman said Monday that without those changes the original bill would have violated the Housing Element. Nobody has challenged the allegation publicly. The Frisc asked the city attorney’s office, which was consulted on the language, for comment, but it declined, citing attorney-client privilege.
Then there’s the question of the actual threat of demolition. Right now, such removals are so rare that the Planning Department, SF’s record keeper of all things housing, doesn’t even track them, according to spokesperson Annie Yalon. “It’s rare that the Planning Department would recommend — or the commission would grant — that approval,” Yalon says via email.
Even if a local legal loophole made demolitions easier, a state law on the books is crafted to mitigate their effects. Under SB 330, any development that demolishes a rent-controlled home must include at least as many rent-controlled units in the new building, and renters displaced by the construction also get first dibs on those new apartments. Those displaced are also entitled to relocation costs.
“SB 330 provides a very strong framework for preservation and replacement,” said SF Planning chief of staff Dan Sider, who calls additional local protections as a “belt and suspenders approach.” (Note that Sider means this as a good thing, remarking of local legislators, “they take it seriously and we take it seriously.”)
Unscrupulous landlords could sneak around the requirements by keeping tenants in the dark about their rights or the building’s future plans. Or they might hope those displaced find new digs and never come back. (Statistics reflect that relatively few people take advantage of their right of return post-construction.) But whoever moves into the new units will still enjoy the benefits of rent control. In other words, there would be no net loss of rent-controlled units.
The other main concern about demolition is more esoteric. The SF Tenants Union (which did not return our requests for comment) and other opponents point to a loophole that lets developers replace rent-controlled apartments with tenancy-in-common units for sale. A tenancy in common, or TIC, is a complex arrangement where apartment owners share ownership of their building — like investing in a company stock, but instead of Apple it’s your fourplex.
While TICs are indeed an “exit strategy” to get old buildings off the rental market and converted into condominiums, they’re now less desirable and more difficult thanks to city laws passed in recent years, according to Rob Laub, a broker with Brown Real Estate Group. Building new TICs after tearing down rent-controlled apartments is “from a developer’s standpoint pretty high risk,” says Laub, noting the hassle of tenants co-owning a building a developer has just financed.
Control issues
The 1995 Costa-Hawkins Rental Housing Act scuttled almost all means of expanding rent control in California. The bill left SF with a finite number of price-stabilized homes. (There are rare ways to add more; District 6 Sup. Matt Dorsey is actually a tenant in a rent-controlled home constructed post-Costa-Hawkins.)
But any threat to this stock, however rare, rings alarm bells. “When people hear ‘demolition,’ even though we have [protections], even though it won’t be a net loss, it’s a loss of that specific unit at that moment in time,” Dorsey aide Madison Tam tells The Frisc.
Campaigns to overturn Costa-Hawkins have failed time and again, most recently in 2020. There’s another effort in the works for next year. Tenant advocates have dealt with what J.R.R. Tolkien called a “long defeat,” a decades-long struggle that can only mitigate losses without making serious gains. (Much of the local fight over rent control could be based more on data and less on fear and anecdote if SF years ago had put in place a rental registry, as many other cities have done. SF’s version is only now getting off the ground.)
The package now under review isn’t abstract. It will have major consequences for the changes coming, block by block. Most important, it will open the door to a new zoning plan. It’s still in draft form, but city planners are proposing, among other things, height limits up to six or eight stories along major streets in SF’s low-rise neighborhoods — some of the city’s wealthiest. It is true that SF’s sight lines might change, which is rather different than a wave of demolitions across the city.
On Monday, board president Peskin cited the “cavalcade of laws coming down from Sacramento” that cities have to sort out themselves. He also predicted the major rezoning will lead to “bad urbanism” in SF’s future, and once again called for a deliberate pace in changing local laws.
Those calls have worked in the past. For decades, SF lawmakers and neighborhood activists have been able to throw wrenches into development plans. What were solid reasons 50 years ago have metastasized into the housing affordability crisis at the heart of so many of SF’s ills today.
City officials have kicked the housing can down the road for at least a generation. Now the state has stepped in and closed the road. The next few weeks will show whether San Francisco leaders opt for real change, and if not, how they deal with the fallout.