Everyone with a stake in San Francisco’s housing shortage has had an extra dose of holiday stress this year. ’Tis the season, which comes around every eight years, for the city to show California regulators its Housing Element, the critical plan that covers SF’s residential development through 2031.
The submission is due by the end of January, on pain of harsh discipline if Sacramento’s housing watchdogs feel the plan falls short.
In August, the state rejected an earlier draft via a 17-page letter, noting “revisions will be necessary.” Since then, city planners have been under the gun to create a new plan for a record-breaking haul of new housing.
After hundreds if not thousands of pages, dozens of hours of public meetings, and incalculable anxiety for city planners, the final draft was approved by the Planning Commission in December.
But what does it actually do?
We have waded through to highlight the plan’s most consequential recommendations — ones that may be coming to a block near you sooner rather than later — but first, some background is in order.
What is the Housing Element?
The Housing Element is an agreement between the city and state, renewed every eight years, that lays out SF’s goals and policy recommendations for housing creation. (Every California city must have one.) In the past, it was basically a formality, an exercise in box-ticking that sat around until it was time for the next one.
But this time — for the 2023–2031 cycle — state regulators finally have enforcement authority, thanks to a bill passed in 2018. They can withhold funds from cities with inadequate plans or even suspend local control over development entirely. This Housing Element is serious business.
In fact, the state’s watchdogs at the Department of Housing and Community Development not only kicked back SF’s draft earlier this year, they also opened an investigation into the city’s Mobius-like development process, which produces the longest construction timelines in the state.
The city has until Jan. 31 to submit a compliant plan — or else. Later this month, the Board of Supervisors will take an up-or-down vote on the final draft; it’s too late for revisions.
What are SF’s housing goals?
Over the next eight years, the state expects San Francisco to plan for more than 82,000 new units of housing, of which more than 47,000 should be affordable.
It’s a massive leap. For context, the city’s goal in the 2014–2022 cycle was just over 29,000 units, and it only managed 71 percent — even with the biggest housing boom since 1850.
The goal has now been tripled, and there are other conditions to meet as well. Some 43 percent of those 82,000-plus homes need to fall within the “above moderate income” price scale, while the second-largest allotment (17 percent) falls on the “extremely low income” scale. That’s quite a lot of ground to cover.
On top of that, planners have vowed this would be “San Francisco’s first housing plan that is centered on racial and social equity,” acknowledging decades of racist policies that excluded people of color.
This new plan will aim to “repair past harms,” “prioritize the most vulnerable,” and recognize a broad “right to housing,” all while making sure new development does not harm existing vulnerable communities.
Oh, and another goal of the Housing Element is to end homelessness — in those exact words — because the main way to reduce homelessness is to produce more homes, a straightforward concept that’s stubbornly hard to get across.
These are all noble goals, and an awful lot for one document to bear. Let it never be said that San Francisco planners lack ambition. So how is the city going to pull all this off?
The great rezoning
First things first: The city needs to find space for a lot more housing, and in relatively short order. Neighborhoods must become denser. The most ambitious part of the Housing Element recommends loosening limits across the city, which will likely gin up the fiercest resistance — particularly in neighborhoods that have long resisted change. (Here’s one early attempt to duck the coming requirements.)
For decades, SF has crammed new housing into just a handful of neighborhoods, mostly on the eastern side; NIMBYs and low-density zoning kept western neighborhoods insulated from almost all new construction.
SF has recently chipped away at those restrictions, but it’s a light touch compared with what may be coming.
State regulators demand that SF “show that it has adequate land zoned to accommodate the entirety of its [82,000-unit allocation],” and the Planning Department estimates zoning changes are needed to fit about a quarter of those new homes.
The Housing Element may be enough to move even the most fervent antigrowth advocates’ immovable objections. But resistance will be strong, as evidenced by all the fuss a single project in the Sunset District created.
The rezoning must emphasize low- and moderate-income housing. Between a quarter and half of the city’s new permanently affordable housing must be built over the next 16 years in “well-resourced neighborhoods” — planning-speak for wealthy areas with good schools and other amenities. (See the map below.)
The sound you just heard was every development hater in San Francisco suddenly crying out in terror after having the run of the town for a generation or more. The Housing Element may be the force strong enough to move even the most fervent antigrowth advocates’ immovable objections.
This huge injection of housing should also include both new permanent supportive housing for homeless people ready to get off the street and “deeply affordable housing” subsidized for the lowest income earners, part of the ambition to end homelessness. Resistance will be strong, as evidenced by all the fuss just one 100-percent affordable project in the Sunset District has created.
How to pay for it
The Housing Element acknowledges that building homes is expensive, and it has a clear recommendation for coming up with the billions of dollars required. In short: Keep doing what we’re doing, but with some tweaks.
In SF, private developers foot the bill for market-rate projects. They also help build affordable housing via the inclusionary system, either by including those units in their larger projects or paying into a city fund. (Federal and state dollars pay for affordable housing too.)
The Housing Element calls for an unprecedented amount of affordable housing — more than 47,000 new units — which means an unprecedented amount of cash on hand, about $20 billion.
As we’ve reported, development skeptics would prefer to ditch the inclusionary system and leave the high-end middlemen out of it. But the Housing Element says SF should keep it: “Providing an abundance of permanently affordable housing […] means continuing production of market-rate housing for all segments of San Francisco’s workforce.” (Italics are mine.)
The plan also pushes for more direct financing of affordable housing through taxes and borrowing. The city does this already, but the Housing Element specifically notes that two recent tax measures approved by voters in 2020 only “partially meet our funding gap.” (One of those taxes, a property transfer tax hike, didn’t hit the two-thirds approval threshold, and its revenues cannot be specifically earmarked for housing.)
Bonds can provide another piece of the funding puzzle for affordable housing, and the city’s capital plan has space for them. The last one came in 2019, and the $600 million plan, the city’s largest ever for housing, won in a landslide. At the time, we noted that $600 million would pay for about 2,800 units. The price has since gone up.
Given that, it would make sense to put up an even bigger bond this time — maybe even double.
As with rezoning, the Housing Element can only make recommendations. The supervisors and mayor must craft and pass the policy changes, leaving taxes and bonds subject to political fights, which has happened with the property transfer tax.
SF voters rarely feel conflicted, however, and often have no qualms approving more spending.
Fair is fair
Like every major U.S. city, San Francisco’s housing history is marred by injustice. The new plan aims to correct past racist policies with several programs:
- The Displaced Tenant Housing Preference Program, which gives special preference in affordable housing lotteries to tenants driven out through no-fault evictions — say, because their homes are being demolished for new construction.
- The Neighborhood Preference Program, which grants a lottery advantage to current and former SF residents.
- The Certificate of Preference Program, which confers housing priority to households or the descendants of households driven out by “urban renewal” programs during the 1960s and ’70s. This program dates to the ’60s, but a recent state law expands its efficacy.
The element also promotes continued use and expansion of cultural districts “to help anchor and stabilize American Indian, Black and other communities of color.” The city has 10 such districts.
You’ll notice a lot of these efforts hinge on affordable housing lotteries, which are infamously swamped with demand right now. But the hope is that increased funding and construction will open up more opportunities over the next decades.
State housing regulators are watching. Not only must SF’s rezoning create space for affordable housing in “high resource neighborhoods that have often been exclusionary,” but the city must also implement programs that give ethnic minorities a fighting chance of netting housing in those neighborhoods.
Circuit breaker or dirty bomb?
The Housing Element is also cognizant of the difference between planning for tens of thousands of new units and actually building them. How can we make sure that we get the 82,000 homes we’re shooting for?
With this in mind, the city may trigger what the Planning Commission dubs a “circuit breaker,” which would further relax density limits and juice developer interest if enough construction isn’t coming through. (The Board of Supervisors would have to approve it.) The circuit breaker is meant as nimble legislation that can respond to changing markets years down the line.
Activists led by the Race & Equity in All Planning Coalition are up in arms, however, and call the amendment, which was added in recent months, a “dirty bomb” that would set off mass demolition and eviction across the city and pave the way for more market-rate housing.
When the Planning Commission approved the Housing Element on Dec. 15, the hearing featured dozens of commenters accusing the city of giving away the store to developers and potentially invalidating the rest of the document; after all, what good is a binding agreement if the fine print says terms can change years after the fact? (The Housing Element also had plenty of commenters in support, for the record.)
It’s easy to see why people are suspicious of the planning process, given the long and ugly history of SF redevelopment that served as a de facto truncheon against people of color. City planners see it too and anticipated the outcry, writing into the Housing Element that earning the public trust requires including communities in the process.
At last month’s hearing, Planning Department director Rich Hillis tried to defuse the “dirty bomb” accusation, noting that the circuit breaker can serve the needs of SF’s lower-income residents. “If we’re overproducing market rate housing, this would compel us to do more affordable housing,” Hillis said.
Hillis, his staff, and advocates for a denser San Francisco insist that the Housing Element’s primary focus of racial and economic equity isn’t just lip service, as critics contend. Maybe most important, there is no way forward except by building more housing — a lot more — for all income levels. “This time will be different” is a hard sell in the face of recent history, but doing nothing is off the table.
Adam Brinklow is a staff writer for The Frisc, covering housing and development. He’s lived and worked in San Francisco for over 15 years.