Can the Housing Element Help Streamline The Entitlement Process?

In this installment of our Housing Element series, we focus on a new objective of the proposed 2009 San Francisco Housing Element. You’ll remember from our last update on this subject that the Planning Department is in the process of updating its Housing Element, as is mandated by state law. The purpose of developing and adopting a Housing Element is so each city and county will “consider economic, environmental, and fiscal factors and community goals set forth in [its] general plan and [will] cooperate with other local governments and the state in addressing regional housing needs.”

The 2009 Housing Element contains a new objective (Objective 10), which states that the city should “ensure a streamlined, yet thorough, and transparent decision-making process.” We see this as a positive step – as a city, we would be recognizing that our entitlement process needs to be improved, which would provide justification for future changes to the system. Changes to make the process more efficient and faster could lead to lower housing costs, which is a major goal of the housing element. While we are hopeful, there have been many unsuccessful attempts to improve the process in recent years. While a high-level statement in the Housing Element is helpful, everyone that is part of the entitlement process and wants to see change must re-double their efforts. We consider below two attempts at recent reform, as well as the elephant in the room: the unwieldy, unmanageable and increasingly obstructionist CEQA process.

Discretionary Review Reform

Later this month, the Board of Supervisors’ Land Use and Economic Development Committee will hold its fourth hearing on the proposed amendments to the discretionary review (DR) process. Reforming the DR process would go a long way towards stream-lining the permitting process for small projects. DR, which is normally initiated by a member of the public or a community organization, requires the Planning Commission to hold a hearing on any building permit before it is issued. This hearing is required if requested, even if the project complies 100% with the Planning Code and guidelines. At the hearing, the Commission holds a vote to effectively approve, modify or disapprove a project. This means that the Planning Commission has on its calendar every week disputes between neighbors about things like how far back into the rear yard someone’s addition extends, or if a third story is allowed for a new home. These may in fact be important issues to those involved, but they don’t belong at the Planning Commission. They need to be resolved by the Planning Department in some other way.

Even though the City Attorney’s office opined in 1954 that DR is “a sensitive discretion and one which must be exercised with the utmost restraint,” there were 230 publicly-initiated DR cases in 2004 alone, and 126 in 2008. In addition to all the other problems this causes, the ease and frequency of filing of DR cases significantly slows the entitlement process and increases its uncertainty, which, in turn, increases the cost of housing.

The most promising aspect of the DR reform package, with the best chance of streamlining the process, is the elimination of the automatic hearing of DR cases before the Planning Commission. Currently, every DR case is entitled to a hearing, no matter how frivolous the complaint is. This adds time and cost to the development process and, most importantly, adds the uncertainty of a public hearing and vote. The DR reform package would empower staff to review each DR case for its compliance with the Residential Design Standards. If the project substantially complies with the Code and the Standards, the DR case will not be heard by the Planning Commission. In a test run of staff’s recommendations over the past year, the Planning Commission has agreed with staff on whether a hearing should be held 95% of the time. While not perfect, this staff review will significantly streamline the entitlement process, which would still allow appeals of staff decisions to the Board of Appeals.

We’ll keep you posted on upcoming hearings at the Board of Supervisors regarding DR reform.

Certainty in Zoning

Proposed Policy 10.2 of the Housing Element would set as city policy the need to reduce other discretionary processes such as the conditional use approval requirement. Just like DR cases, conditional uses add uncertainty to the entitlement process and can unnecessarily increase the cost of constructing new housing.

The city sought to achieve a relaxation of conditional use requirements in its recent Eastern Neighborhoods rezoning. Many of the new zoning districts created by the rezoning made standard housing projects permitted as of right, a major improvement on the industrial districts they replaced, which permitted housing only as a conditional use. However, the Eastern Neighborhoods rezoning fell short of the goal of truly streamlining the entitlement process for housing. A new Planning Commission review process was created for certain “large” projects, including those creating 25,000 square feet or more of new space. Such a low threshold ensures that most new housing projects will require review by the Planning Commission, defeating the purpose of making residential uses permitted as of right, just as the City was trying to do the right thing by making housing easier to build.

Housing developers should be given a clear set of zoning rules to follow, and not be subject to unpredictable public hearings for housing projects that fulfill many of the goals of our Housing Element. Along that vein, proposed Housing Element implementation measures 69 calls for the Planning Code to “clearly specify development that is principally permitted, and limit conditional use requirements.”

CEQA Streamlining

The CEQA process was born out of the environmental movement in the early 1970s with a simple and direct mandate: before doing anything that could have a major effect on the environment, we should gather the relevant information so that the public and the decision-makers are able to consider all the facts when making decisions about physical changes in our environment (i.e. development projects). What was originally a straightforward, information-gathering and reporting process has evolved over the last 40 years into a massive regulatory construct that dramatically increases the cost of development without providing any significant benefit to the public or the environment. Should CEQA be repealed? Of course not. Could there be significant and meaningful changes in the CEQA process that would take it back to its original roots of providing meaningful and usable information in an unbiased manner so that the public and the decision-makers can then decide what to do with a project? Yes.

Over the years, CEQA has become a battleground between developers and those that don’t like development. It is no longer an information gathering process. It is routinely used by project opponents to drive costs up and slow things down. In San Francisco, the Board of Supervisors routinely hears CEQA appeals where the project consists only of alterations to a single-family home. The CEQA burden on the Planning system in San Francisco is substantial. All you have to do is look at how the Planning Department staff is divided up to see just what a massive amount of CEQA work is done in San Francisco: the Neighborhood Planning division that reviews permits and projects to determine consistency with the General Plan, the Planning Code and other policies, has 31 planners assigned to deal with virtually every project in the City. The Planning Department’s CEQA division (called MEA, for Major Environmental Analysis division) whose sole purpose is to try and keep the City in compliance with CEQA, has 27 planners.

Where can reform start? Unfortunately, CEQA is a state law and must be changed by the lawmakers in Sacramento; there is no quick fix at the City level. Until 2003, in San Francisco only EIRs were appealable to the Board of Supervisors, ensuring that only the largest and most complex cases reached this Board. The process was not nearly as political, and seemed to work relatively well compared to where we are now. Amendments to CEQA in 2003 unfortunately allowed any CEQA determination to be appealed, even exemption determinations (i.e. rulings that CEQA did not apply). That is why the Board hears so many appeals that deal with modest changes to single family homes. To close that loophole and return us to saner days would make an enormous difference in San Francisco. Locally, however, there are a variety of streamlining mechanisms that the Planning Department is moving on to attempt to speed up the process and get the CEQA document finished sooner. One of those in the works is a change for traffic studies that would move away from the level of service analysis and to a mitigation fee-based system. We strongly support this approach which could dramatically speed up transportation analysis for many projects.


It’s good news that the City’s Housing Element may someday include an objective that pushes for a streamlined, thorough and transparent decision-making process for housing projects. But that’s just the beginning. We all need to make sure the city follows through and actually turns policy into practice.

Reuben & Junius, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leases, purchase and sale agreements, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

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