Right now, 1088 Sansome is just a three-story commercial building built more than a century ago, but owner and developer (and former Building Inspection Commission president) Angus McCarthy wants to redevelop the site and erect a 19-story high-rise sporting 132 condominiums, of which 22 will be priced as affordable housing.
A few years ago this would have been impossible, as the lot at 1088 Sansome is only zoned for buildings up to 65 feet – roughly six stories. But McCarthy’s project is blowing through those height limits and raising the blood pressure of some neighbors who don’t want their hilltop views blocked. Two other proposed buildings nearby, within blocks of San Francisco’s northern waterfront, are doing the same.
For decades, tall buildings in San Francisco were confined to downtown and a few outlying cases. But times have changed, and so has housing law. The city’s skyline could be next.
Mother of density
Decades of homebuilding restrictions have helped turn California deeply unaffordable. In response, state lawmakers have crafted major changes in housing law, and now cities have little choice but to comply with new quotas. In San Francisco, that means making room for 82,000 new homes this decade, more than half of them affordable.
The new legal landscape is already changing SF’s physical landscape, and at the heart are so-called density bonus laws that let developers build beyond neighborhood limits – usually by increasing height – in exchange for extra affordable homes.
According to the city’s most recent housing report, SF has built 1,386 affordable homes thanks to density bonus laws since 2015. There are more than 3,320 new affordable homes “in the pipeline,” which make up roughly 30 percent of the buildings that are being expanded under these laws.
Amid all the new lawmaking in recent years, it’s actually been a 43-year-old California law – call it the mother of all density bonus laws – that’s been dusted off and used the most to circumvent red tape.
“In a state known for slow and costly entitlement processing, the State Density Bonus Law has proven to be the most valuable of all of the housing laws,” Chelsea Maclean, a partner at the SF law firm Holland & Knight, tells The Frisc.
A project in San Francisco’s pipeline is by no means guaranteed to see the light of day. But as the fight over 1088 Sansome heats up (Angus McCarthy is invoking the California Density Bonus Law to go from six to 19 stories) the pipeline may start to produce more completed homes and taller towers, to the elation of some and the consternation of others.
So what exactly are density bonus laws, and why are they finally have an effect now?
Building out, building up
Every city has density controls to limit the number of homes a developer can pack into the square footage of a particular lot.
Zoning rules add another layer of control, capping the height of new buildings on any given block.
These limits are meant to make sure that the tallest structures and busiest hubs sprout up in places that make sense – near major transit byways, for example.
But in density-phobic cities, these rules can be weaponized to block housing. San Francisco is intensely tower-averse for a major city, thanks to our 20th-century wars over “Manhattanization.”
In the 1980s, Mayor Dianne Feinstein made a tradeoff: She helped downtown SF’s skyline soar to new heights but promised voters to protect outlying neighborhoods from taller vistas – fallout from the 1960s construction of the Fontana towers near Ghirardelli Square.
Around the same time, California passed its original Density Bonus Law. The 1979 legislation let developers bypass building limits if they set aside at least 10 percent of a project’s apartments for “low-income” tenants, or at least 5 percent for “very low income.”
Builders not only got to build bigger, they could potentially waive parking requirements and other design rules that might make it technically difficult or expensive to pack in those affordable homes.
Few developers took advantage. “Applicants have historically been reluctant to utilize the benefits of the SDBL,” researchers for the League of California Cities wrote in 2023. Developers were sensitive to the politics involved, according to the authors, and were also reluctant to provide financial records the law required.
But a 2021 court ruling kiboshed the financial disclosure rules. More significantly, the politics have shifted, from Gov. Gavin Newsom to mayors like London Breed in San Francisco, Sam Liccardo in San Jose, and Todd Gloria in San Diego, all favoring greater density and, if need be, taller skylines.
Bonus on top of bonus
State lawmakers, led by SF’s contingent and others, have also boosted the old 70s law to thwart local opposition to density. One example is AB 1287, from San Diego Asm. David Alvarez, which allows builders more freedom to design projects based on city plans rather than on zoning.
It’s rather technical, but the law is a breakthrough for developers. Before, some California cities have pulled bait-and-switch moves, writing housing plans that seem to call for thousands or tens of thousands of new homes, but then adding layers of zoning so there’s nowhere to actually build.
Taller buildings mean more units, and more units means improved feasibility in today’s high-cost development.
Anne Stanley, spokesperson for the SF Mayor’s Office of Housing and Community Development
AB 1287 lets developers calculate state density bonuses based on the broader city plans, and the result is what housing lawyers Cox Castle describe as a “bonus on top of bonus.” Developers can end up with a 100 percent density bonus (under the old rules the maximum was 50 percent) if they simply offer more affordable housing at different income levels.
“A hypothetical code-complying base project of 100,000 square feet that received a hypothetical 100 percent bonus could build 200,000 square feet,” SF Planning’s chief of staff Dan Sider explains. “It could take the shape of 4 stories, each of 50,000 square feet or it could take the shape of 20 stories, each of 10,000 square feet.
Sider’s point is an important one. There’s not much space in SF to build a four-story building that sprawls across 200,000 square feet. So in that hypothetical situation – or one less hypothetical, say, at 1088 Sansome – those extra square feet will usually rise up, not spread out.
One block away, at 955 Sansome, there are also plans to triple the height of a tower, from eight to 24 stories. And if you’re a developer, it’s a no-brainer. Larger buildings are often more profitable, while smaller ones may not “pencil out.”
“Taller buildings mean more units, and more units means improved feasibility in today’s high-cost development,” says Anne Stanley, spokesperson for the SF Mayor’s Office of Housing and Community Development.
HOME-SF is no open door
San Francisco has a locally grown density bonus law, HOME-SF, but it’s not used as much. Of those 3,300-plus bonus homes in the pipeline, just 162 are HOME-SF homes, according to SF Planning. The department estimates the program will produce about 250 new affordable homes per year.
It affords either one or two extra stories over limit if developers make several concessions. Up to 30 percent of total homes in a building must be affordable, and at least 40 percent of homes must be at least two bedrooms. HOME-SF can’t be invoked in the lowest density areas in the city (RH-1 and RH-2, which cover most of the city) or for projects that demolish or alter existing buildings.
Still, the concept should make sense to people who want to build housing, even if they have different approaches. “When it comes to housing affordability, there’s one camp that says if you just produce enough housing it’ll bring down the overall price through supply and demand, and then there’s the camp that says what we really need is [subsidized] affordable housing,” says Robin Baral, a senior housing and land use consultant at the SF law firm HansonBridgett. “Density bonus laws cater to both, you get the affordable housing but you also just have more units.”
Court rulings have strengthened the density bonus law and made it more popular with builders, and with pro-housing YIMBYs firmly in power in Sacramento, there’s little chance of watering it down in the near future.
San Francisco’s longest-tenured politician, Aaron Peskin, an ardent opponent of density in most neighborhoods, told the Chronicle that one of the Sansome towers – which are in his district – would make San Francisco “the laughingstock of the world.”
But Peskin, who is hoping a backlash against density fuels his first-ever run for mayor, also conceded that with the tower, “something is likely to happen.”
