The Board of Supervisors (“Board”) recently issued two unusual denials of large housing projects – the projects would have provided over 800 dwelling units, over 130 of which were affordable. In an even more unusual move, last week the California Department of Housing and Community Development (“HCD”) informed San Francisco officials that the City may have violated state housing laws by rejecting the projects. Without getting into the Board politics behind the project denials, the State’s actions are notable. The State rarely takes such a public stance concerning local planning and zoning decisions, indicating the high priority the State is placing on the provision of housing and the concern with these decisions.
The Two Rejected Housing Projects
The two housing projects at issue are located at 469 Stevenson Street and 450-474 O’Farrell Street. The 469 Stevenson Street project is a mixed-use, 27-story high rise with 495 dwelling units, including 89 affordable units. The Board of Supervisors denied the project on CEQA grounds, overturning the Planning Commission’s certification of the project’s Final Environmental Impact Report (“FEIR”). In HCD’s own words, the Board cited “various vague concerns about FEIR deficiencies, including seismic concerns, effects (e.g., shadowing) on historic resources, and gentrification.”
The project at 450-474 O’Farrell Street is a modification of an earlier project. The new project proposes more, smaller units (316 vs. 174) that are “affordable by design”, and included 43 affordable/below market rate units. The Board overturned the Planning Commission’s approval of a Conditional Use Authorization for the project without yet issuing written findings.
HCD Letter
HCD made its concerns known to City officials in a letter last week. The message was pointed. HCD expressed concern that the Board’s decisions “represent[] a larger trend in the City/County,” noting that “California’s housing production does not meet housing need. In the past ten years, housing production has averaged fewer than 80,000 new homes each year, far fewer than the 180,000 new homes needed…. As a result, the cost of housing has skyrocketed, and San Francisco stands amongst the top two most expensive housing markets in the United States.”
HCD raised significant concerns with the City’s compliance with the Housing Accountability Act (“HAA”). Under the HAA, a local government cannot disapprove or reduce the density of a housing development project that complies with applicable, objective general plan, zoning, and subdivision standards and criteria, including design review standards, in effect at the time that the application was deemed complete, unless it makes written findings supported by a preponderance of the evidence on the record that the project would have a specific, adverse impact upon the public health or safety and there is no feasible way to mitigate that impact. The Board did not make such findings for either project.
HCD also expressed “concern[] about the significant delays in the approval of housing generally and in the City/County in particular.” As to the O’Farrell project, HCD expressed concern that the City violated the “5 Hearing Rule” set forth in the Housing Crisis Act of 2019 (SB 330). The Planning Commission had six hearings on the project and the Board appeal was the seventh hearing.
Lastly, HCD warned the City about its implementation of and compliance with its existing Housing Element and its upcoming Housing Element update. The Housing Element update “must … demonstrate local efforts to remove governmental constraints that hinder the locality from meeting its share of the regional housing need and include program actions with metrics and milestones to remove or mitigate identified constraints…. Academic research continues to show that San Francisco’s processing and entitlement timeframes and procedures exceed the norms for other jurisdictions of similar size and complexity and act as a constraint on the development of housing.”
HCD concluded by reminding the City that HCD “has both the authority and duty to review any action or failure to act by a city, county, or city and county that it determines is inconsistent with an adopted housing element… or in violation of the HAA.” HCD’s investigation remains open and they are continuing their review of the City’s practices with respect to housing review and approval generally.
Authored by Reuben, Junius & Rose, LLP Attorney Thomas P. Tunny.
The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, 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 leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.
