San Francisco is staring down a deadline to vote on the city’s most consequential housing plan in nearly 50 years. It would allow for higher buildings and more homes across the west side and many other neighborhoods.
The latest complicated step toward that goal took place Monday before the Board of Supervisors Land Use Committee. It was the first public hearing since the city economist’s prediction last week that the redesign, dubbed the Family Zoning Plan, might produce much less housing than city planners have touted.
The oft-reported goal of 82,000 new homes is what SF must make room for through the redesign. State rules say current development on Treasure Island and other large sites can count toward that goal, leaving the Family Zoning Plan responsible for about 36,000 new homes.
Last week’s analysis landed like a Rorschach test. It didn’t confirm backers’ greatest hope and opponents’ darkest fear — that is, a lot more housing in the next couple decades — but during the meeting each side pointed to elements they felt underscored their positions.
Somewhat obscured in the back and forth were key points of the report: More housing reins in prices, creates a more diverse city, and is good for the economy, which outweighs the burden of displacement of tenants and businesses.
There was no resolution. The hearing ended with another two-week deferral. Supervisors must evaluate more amendments, which are stacking up so high that Land Use Committee chair Myrna Melgar spent time at hearing’s end sorting them, Hogwarts-style, into different versions of the plan for near-future consideration.
Changes on the table range from tenant and small business protections, to deeper restrictions on demolition, to incentives that encourage larger apartments. Some have won the mayor’s embrace and are now part of the main bill. Some remain up for debate.
The next session will be Monday, Nov. 17 before the Land Use Committee. Melgar even hinted another committee meeting might be necessary on Dec. 1 before the plan moves to the full board for a decisive vote.
“We don’t have much time to get this passed,” Sup. Bilal Mahmood — one of the plan’s most outspoken boosters — said Monday. Mahmood also vowed to vote against changes that promise to reduce chances of building the housing SF has promised under state law.
At last night’s hearing, city planners said some amendments would indeed have a negative effect, but others would be neutral or even encourage more housing.
If there’s no board vote by Dec. 21, city rules say the original version of the redesign, without amendments, will take effect.
Also on Monday, supervisors pressed SF’s chief economist Ted Egan about his team’s economic report. There will almost certainly be more twists and turns before a final vote. But let’s pause to break down Egan’s testimony last night, the potential consequences of the report, and what’s next for the Family Zoning Plan.
What did the report find?
A big part of Egan’s job is to assess the effect of proposed legislation on SF’s finances and economic future. He stressed several times the benefits of more housing: The more SF builds, the more it can control rising rents and home prices, and the greater the economic benefit for the city.
The report states that “like most major policies, the proposed rezoning involves benefits and costs. Our analysis suggests the proposed rezoning’s positive impact on the city’s economy, from lower housing prices and construction, outweighs the negative impact from displaced businesses, by a factor of approximately 22:1.”
Egan’s team also projected what happens if current zoning stays in place. In the high-growth scenario, SF builds about 3,200 new homes over 20 years, which doesn’t even match the 3,238 units SF actually built from 2000 to 2024.
But the report also predicts the Family Zoning Plan would fall short of its goals. Instead of at least 36,000 new homes, the figure lies between 10,000 and 18,000 new homes over a 20-year period, depending on economic conditions.
That’s a best-case scenario of 900 new homes a year. Since 2000, the same neighborhoods up for rezoning have produced about 130 new homes a year.
Where do those numbers come from?
Egan’s team started with the 92,000 plots that fall under the Family Zoning Plan. For some, especially along major corridors such as Van Ness Avenue, Geary Boulevard, and Fulton Street, the plan will raise height limits. For others, there will be “density decontrol” — no height change but looser rules to allow more units per parcel. The hope with decontrol is that triplexes, fourplexes, or more will replace single-family homes.
Parcels are also more likely to see new construction if they’re underdeveloped, have no historic resources, are closer to downtown, and can benefit from various density bonuses (see here for more on that).
With those criteria, the report considered two futures: One in which the market remains in a slump, and one which returns to the gangbusters numbers of the pre-COVID days. The low-growth future returned a figure of just over 10,000 new homes in the rezoned areas, and the high-grown future came closer to 18,000.
Are there limitations to the study?
Yes. Egan was not shy about pointing them out. For example, the report does not account for fluctuations in interest rates or construction costs. It assumes the cost of construction will rise at the same rate as inflation over the next 20 years. If those costs cool off, more housing would almost certainly result.
“Zoning is just one factor” in the city’s economic future, as Melgar pointed out last night.
Neither does the study factor state and local laws that in recent years have aimed to cut red tape or encourage housing. Perhaps most significant is SB 79, which just passed and would raise height limits near major transit.
Another notable bill is one that exempts most SF housing projects from California’s time-consuming environmental protection analysis, which may make some medium-sized developments more attractive.
The model also intentionally excluded some “unique use” properties such as San Francisco State University, Laguna Honda Hospital, and the University of San Francisco. The report acknowledges housing could be built on these properties, it’s too difficult to calculate the likelihood.
Will more housing lower rents and home prices?
According to the estimates, yes, with greater benefit as more housing accrues. “The biggest savings would be in 2045,” Egan told The Frisc in an interview.
By the report’s math, building 10,000 homes over 20 years would lower median rents 2.5 percent from where they would be without the zoning plan. The higher-growth figure would lower rents 4.2 percent. “The percentage difference is against the rent in that year,” Egan said.
To put those abstract future numbers in current context: If SF had built those homes between 2005 and today, annual rents would be $900 or $1,500 lower, depending upon the scenario. The purchase price of a condominium would dip $24,500 or $41,600.
“I’m not that impressed,” Sup. Chyanne Chen said Monday about those lower prices.
Chen and other critics want guarantees of more affordable housing. They say the plan provides no enforcement mechanism or funding sources, which are currently limited. The Family Zoning Plan is based on the city’s 2023 blueprint, called the Housing Element, that pledged more than half of new homes would be affordable.
Backers counter that as a zoning guide, the Family Zoning Plan is only a first step to create space needed for affordable housing. Without that space, it’s far more difficult to raise funding, as Habitat for Humanity Greater San Francisco director of policy and advocacy Holden Weisman noted two weeks ago and last night.
Other backers noted that if modest housing production spurs modest savings, more robust production should rein in prices even more.
Despite the predicted modest returns, YIMBY-aligned commenters Monday praised the plan as a necessary step. But last week, the California Housing Defense Fund, a nonprofit that promotes housing development, called the plan “inadequate” and warned that the fund is ready to sue.
What happens with no zoning changes?
The most immediate threat is the Builder’s Remedy, a state law that strips away local control and gives developers something closer to a free hand.
But Egan’s team also calculated two hypothetical futures in which current zoning stays in place. In the low-growth scenario, SF builds about 1,600 new homes in the next 20 years. In the high-growth scenario, the city builds about 3,200 new homes — which doesn’t even match the 3,238 units the city actually built from 2000 to 2024.
Here’s what that looks like in one neighborhood. The Richmond District is one of the Family Zoning Plan’s key areas for upzoning, especially along Geary. With no zoning changes, the district would produce either 23 and 47 new homes in the next 20 years, according to the report.
What would no changes do to housing prices? If the economy stays cool, they rise gradually and eclipse pre-pandemic market levels around 2040. In the “hot market” model, prices explode, rising 10 percent a year just in the next five years.
What about demolitions?
Demolition of rent-controlled homes is so rare that the Planning Department tells The Frisc it doesn’t record a yearly statistic. The city also has some of the nation’s strongest eviction protections.
But Family Zoning Plan foes say it would unleash a wave of demolition and displacement. An amendment from Sup. Chen would strengthen existing tenant protections; planners say it would not constrain new production.
Planners have also accepted an amendment to bar demolition of rent-controlled buildings with three or more units. Sup. Connie Chan and others want to go farther. Chan is proposing no height or density changes to any lots where housing already exists.
The economic analysis predicts that a low-growth future under the Family Zoning Plan would lead to demolition of 463 additional homes over 20 years, while the higher end would be 1,031. (The report did not calculate how many of these homes would be rent-controlled units.)
The anti-demolition amendments under consideration were not factored into the analysis. The report notes that “amendments proposed […] may reduce these losses, along with overall housing production.”
What does the state think?
The California Department of Housing and Community Development (HCD) will decide if SF is keeping its housing promises, and if not, potentially impose the Builder’s Remedy or other penalties. In September, before the economic analysis report and the scrum of amendments, HCD signed off on the zoning plan, calling it “consistent with statutory requirements.”
When asked about Egan’s report, HCD spokesperson Alicia Murillo referred The Frisc back to that September letter.
As Egan noted Monday, the report did not take into account amendments currently in play. Two weeks ago, Murillo said about those amendments that “maintaining the spirit of the programs and statute is of the utmost importance, and any changes should be carefully evaluated and could negatively impact compliance.”
While the report added a big plot twist to the housing drama, the city is still obligated to approve a version of the plan quite soon.
Other consequences may come later, whether from housing hawks like the California Housing Defense Fund threatening to sue, or from rezoning opponents who feel emboldened by the recall of the Sunset District’s Sup. Joel Engardio. “[Opponents] have staked out a politically popular position that they can use to hammer Lurie and his allies,” says San Francisco State political scientist Jason McDaniel.
Melgar, who has shepherded the plan for years as the Land Use chair, could be targeted by her west-side constituents. “My conscience is clear because I’ve done the right thing,” she told The Chronicle last week.