San Francisco housing developer Patrick McNerney recently said a remarkable thing.
For more than five years, McNerney’s firm has been working on a residential project on the southwest side of Nob Hill. Last month, its fate was in the Board of Supervisors’ hands. The proposal, a 22-story tower with 303 new homes — about one third of them priced below market rate — would rise at the site of a former funeral home on Sutter Street. McNerney told the Examiner it was “the most difficult project we’ve ever done” in his firm’s 35 years.
In San Francisco, that’s saying something.
Like so many major SF housing projects, this one spent years in a holding pattern. By the time it gained momentum, accountants warned that an extra $3 million to comply with a city water ordinance would sink the development, already complicated by financing for the affordable portion.
The project needed a rescue that only the supervisors could provide. And in SF, that’s saying something too.
In past years, the board has at times done its best not to rescue housing but to kill or delay it. In past years, too, the Sutter site sat in the district of Aaron Peskin, a longtime skeptic of new housing in his own backyard.
But in November’s election, Peskin’s seat turned over to North Beach community organizer and tech and media marketer Danny Sauter. Last month, with the financing clock running out on the Sutter site, Sauter pushed to exempt the project from the city’s water recycling rules.
Sauter called it an opportunity to transform the block and emphasized to other board members they risked losing hundreds of new homes in an economic climate where almost nothing is getting built. The measure passed unanimously.
Sauter’s legislative win came less than two months into his tenure representing what’s likely the most diverse, and most fractious, of San Francisco’s districts. District 3 covers the northeastern corner of the city, spanning Chinatown, North Beach, Russian Hill, Nob Hill, Union Square, the Financial District, and Fisherman’s Wharf, among others.
“It’s definitely a tough district for a supervisor: downtown-tower and international corporations, small businesses, homeowners, renters, long-standing and active community groups,” says SF Heritage president and CEO Woody LaBounty, who adds that “maybe only District 5,” which includes the Haight and most of the Tenderloin, is as diverse and difficult.
Sauter’s home base is North Beach and he helped run the North Beach Neighbors advocacy group for a decade. But now he must balance on a carousel of demanding demographics, from some of San Francisco’s wealthiest neighborhoods to some of its neediest and most vulnerable. He’s also charged with downtown and Fisherman’s Wharf, major economic engines still struggling with pandemic comebacks.
“He’s having to manage a lot of different problems,” says Hanmin Liu, director of the Upper Chinatown Neighborhood Association. “There’s a lot he has to know and a lot of skill he’ll need to pull it off, and it’s still early. I do think Danny wants to do what’s right for the neighborhood,” Liu adds.
It’s a lot for a lawmaker who has never held public office before, and the stakes are high. Sauter’s advocacy on behalf of D3 neighborhoods could sway his political fate. But his work on downtown recovery with his board colleagues and the mayor could determine San Francisco’s economic fortune.
Downtown promises
Like Sauter, Mayor Daniel Lurie is a first-time elected official, and like Sauter, he campaigned hard on downtown revitalization.
It’s clear why. Due in large part to the flight of businesses and the absence of workers, San Francisco is facing a nearly $900 million hole in the upcoming two-year budget that begins in July. City accountants have warned departments to slash general fund spending 15 percent and audit their nonprofit grants, and Lurie went one step further and implemented a hiring freeze in January.
As one of 11 supervisors, Sauter’s sway has limits. But with Union Square and the Financial District in D3, it’s upon him to lead with solutions centered there.
He’s having to manage a lot of different problems.
Hanmin Liu, director of the Upper Chinatown Neighborhood Association
Among other ideas, his campaign last year said Sauter “will add thousands of new homes by converting empty offices.” It’s not a new idea. Soon after COVID shelter-in-place orders, calls for conversions began. But as The Frisc has reported frequently, few downtown buildings are easily adaptable, and property owners have little incentive to launch difficult conversion plans.
Still, Sauter is trying his level best. His first big foray is the city’s latest downtown-conversion law, which Lurie and Sup. Matt Dorsey cosponsored, building upon a previous version Dorsey authored with Mayor London Breed.
It does away with some fees for developers who try to transform cubicles into condominiums. To mollify the board’s progressive budget chair Connie Chan, Sauter amended the bill to cap fee-exempt conversions at 7 million square feet. (There’s a lot of room under that cap. The only big conversion job in the city right now is just 100,000 square feet.)
The conversion bill, which passed 9 to 2 in late February, is the latest attempt to encourage reuse of vacant space, adding to tax incentives and changes to office construction limits. Sauter acknowledges most developers and landlords won’t convert their buildings, but “there’s going to be a really stubborn last 5 to 10 percent of the office market that just doesn’t return,” he tells The Frisc. “I think we can fill that gap with new homes instead.”
Threading the needle
Moe Jamil, a longtime deputy city attorney who ran against Sauter in 2024, says “neighborhoods like North Beach and Russian Hill are gangbusters,” while the problems of the nearby Tenderloin are getting “squeezed like toothpaste” into the District 3’s sections of Polk Street and Lower Nob Hill.
Sauter is banking that the delicate political stance of his past North Beach advocacy will also work across disparate neighborhoods: framing the fight for less regulation and bureaucracy in ways that many San Franciscans, who might otherwise be suspicious, can get behind.
With North Beach Neighbors, he helped establish a popular farmer’s market by cutting through messy red tape. During the pandemic, he cofounded North Beach Delivers, a volunteer service that provided free deliveries of take-out from neighborhood eateries.
(Asked about Sauter’s neighborhood advocacy over the years, Diana Taylor, spokesperson for the Barbary Coast Neighborhood Association spokesperson Diana Taylor said that he’s been “supportive by helping draw attention to the local impacts” of retail closures.)
And despite North Beach’s singular distaste for chain stores (one of preservationist Peskin’s bugbears), Sauter rallied on behalf of taqueria chain El Farolito when it tried to open a neighborhood outlet in 2021 but ran into SF’s “formula retail” limits.
Thousands of signatures later, the city waived the rules for El Farolito — the kind of surgical strike that Sauter still promotes. “I completely understand the resistance to chain stores,” Sauter tells The Frisc, but adds the rules can be broken “in a managed way” to boost economic recovery. Next in his sights are the vacant storefronts along Van Ness Avenue, which borders District 3.
“There were many years of adding rule after rule,” says Sauter. “At some point, between the changing retail landscape and the pandemic, we hit a breaking point.”
Danny Sauter, regular guy
Sauter, 36, is about to become a new father. If that doesn’t gain him sympathy among his constituents, he has been careful to portray himself as an everyday resident, not a City Hall insider — often citing his renter status, as he did first thing on a 2020 candidate questionnaire from the Harvey Milk Club.
Unlike in most big American cities, a majority of SF residents are renters. In the current housing politics, NIMBY homeowners (protecting their turf, their views, and property values) have found some common cause with renters groups wary of displacement by “greedy developers” and other villains.
YIMBYs have often tried to underscore their renter cred. The first significant SF YIMBY lobby was even called the San Francisco Bay Area Renter’s Federation (BARF). “I think it’s part of YIMBY’s success, and Sauter’s,” BARF founder and YIMBY Law director Sonja Trauss tells The Frisc via email. “Stressing that YIMBYs are renters does serve to emphasize that it’s a grassroots movement of regular people.”
Sauter is considered a key member of the board’s new pro-housing tilt, but he’s got a soft touch. For example, when some North Beachers pushed to codify their entire neighborhood as an historic district — which would make new housing extremely tough to build — he didn’t exactly push against it. But he did caution that it might be harder than they think.
And in that Harvey Milk Club 2020 campaign questionnaire, Sauter listed his top policy goal as “Protecting Tenants and Adding Affordable Housing,” paying fealty to tenants rights and new housing but notably not market-rate housing.
Then again, he hasn’t had to say too much to differentiate himself from his predecessor. During the 2024 mayoral campaign, the tech-backed advocacy group GrowSF dubbed Peskin the “notorious leader of the anti-housing coalition on the board.”
I’m actively working with SF Planning to ensure District 3 does its part to add more housing.
danny sauter
A neighborhood preservationist, Peskin entered SF politics in 2000, when the current supervisor districts were born. Peskin earned a reputation as SF’s arch-NIMBY; his long-term record is more complicated, as The Frisc reported in October 2023, on the cusp of Peskin’s bid for mayor. But in the mayoral campaign, Peskin reinforced his reputation, going all-in to align himself with neighborhood NIMBY groups.
When Sauter challenged Peskin in 2020, his platform was not that different from last year’s, emphasizing housing, commercial vacancies, and cutting red tape. He lost by 17 points.
In 2024, Scott Wiener endorsed Sauter, as did the Housing Action Coalition and GrowSF, which now hails him as “part of a new, pro-housing majority.” Peskin, who did not return requests for comment, pointedly endorsed both of Sauter’s main rivals, former SFMTA board member and onetime city planner Sharon Lai and Jamil.
Lai, a Chinese-American immigrant, came in second and was popular in Chinatown and neighborhoods close to Market Street and the Tenderloin, all hit hard by the pandemic. “Parts of Chinatown are doing better,” Lai tells The Frisc, “but if you look under the hood, a lot of people are finding even the bubble of Chinatown harder to afford.”
Learning Cantonese
Half of D3 voters are Asian-American. Sauter started learning Cantonese during the 2020 campaign. In a 2024 Cantonese-language debate, Lai and Jamil spoke the language. Sauter provided opening remarks in Cantonese but relied on an interpreter for the rest of his comments.
Sauter is most popular in the wealthier neighborhoods in the northeast side, but he also notched endorsements from business and property owners in the Tenderloin and the Polk Street corridor.
“We’re getting an incredible amount of attention from Sauter’s office,” says Ben Bleiman, bar owner and Polk Street advocate. The Polk corridor often falls through the cracks at City Hall, Bleiman says, but “the energy [Sauter’s] shown is very encouraging.” (Bleiman sits on the SF Entertainment Commission but commented in a personal capacity.)
Sauter will need that good will for the city’s next big housing battle, which should start any day now. San Francisco planners are about to release a new city map that shows where bigger buildings can be constructed. It’s part of SF’s pledge to make room for 82,000 new homes this decade. Actual construction of all those homes in that time is almost impossible, but state housing regulators at least want to see major policy changes that encourage development.
The push for taller, denser blocks will focus primarily on western neighborhoods, sparing most of District 3 if earlier map drafts hold true.
But Sauter tells The Frisc he’ll still push for new housing in his backyard. “I’m actively working with Planning to ensure District 3 does its part to add more housing,” Sauter says, citing Polk Street and the wharf as areas that can absorb more density.
He’s also made it clear he supports building more across SF’s low-slung western neighborhoods.
Since its creation, District 3 has been almost exclusively the domain of one man – and one of the city’s most influential politicians of this generation. It’s now something of an experiment, like Yugoslavia after the fall of Tito. Can anyone else hold together all these overlapping interests?
Sauter has to be the approachable City Hall representative for his district’s neighborhoods, all while rallying them all behind a downtown revival. That could describe the work of every supervisor, but in District 3, many neighborhoods themselves are political and economic power centers. In a town full of difficult needles to thread, Danny Sauter will need a particularly sharp eye and steady hand.