On 21st Street. Photo by Walter Mackins.

Last week’s Board of Supervisors meeting capped off with another clash between the city and the state over housing, and who — the city or the state — has control over housing development in San Francisco. 

In a near-unanimous decision, the supes passed a resolution opposing a state bill that would ban localities from charging affordable housing fees on “bonus” units of market-rate projects (AB2063). 

State lawmakers argue that the fees discourage developers from using the State Density Bonus Law, and thus prevent the city from adding more affordable housing stock. If the proposed state law passes, it would supersede current San Francisco policy, and the supes aren’t down for that. (By the way, the defensive resolution has no teeth.)

Local officials fighting against state legislators is hardly new. In 2020, the supes opposed an eerily identical state bill on San Francisco’s housing fees, which died. But the political climate has changed; no longer are state legislators sitting out the housing debate. The proposed legislation is just one of several examples in recent months of how state legislators and litigators are successfully fighting back on what they perceive as local officials slow-walking the addition of new housing — and they’re just warming up.  

“Seven years ago, there were very few folks in Sacramento who were thinking about how we would address this [housing] crisis,” City Attorney David Chiu, who recently left the state assembly, said last November at a gala for a housing advocacy group Yes In My Back Yard. “And then, a couple of people decided to take action.” 

That action looks like a myriad of recently passed state laws aimed at curbing local authority. And, developers are using them. That happened last August at 300 De Haro St., when the project leaders wielded one of those new laws (SB35) to evade resident complaints. 

Hometown state Sen. Scott Wiener authored that legislation, which lets developers skip over Planning Commission, Board of Supervisors, and neighbor approval if enough units are affordable. That was the case at De Haro. “This is what the state intended when they passed their rules, and what I think we are looking at for future projects,” San Francisco Planning Director Rich Hillis told The Chronicle.

Other legislation authored by Wiener upped the penalties on local authorities who fail to produce adequate housing plans (SB35 and SB828). Those bills, now laws, impact the Housing Element, a state-mandated housing plan that requires cities and counties to plan sufficient housing for their populations. 

Historically, localities often submitted Housing Elements full of unfulfilled and unrealistic promises, while the state gave them a pass. That’s no longer gonna fly: If adequate plans aren’t received by the deadline, the state says, it can impose ministerial review, fines, lawsuits, and suspend local permitting authority. I can hear the local officials screaming now. 

And the state isn’t being an easy grader; it has rejected multiple counties’ plans so far, and alerted San Francisco in a letter that it’s watching how the city tends to “constrain” housing production. That must change, the state warned.  

Chris Elmendorf, a law professor at the University of California, Davis, and one of the prime Housing Element experts, said this could be the major wake-up call most cities and counties need to undo the poor, unchecked (or disingenuous) calculations of past. 

“Now, developers are more willing to tell cities, ‘Look, this is what the law is supposed to do,’” Elmendorf said in an interview earlier this year. “If you don’t do it then we’ll sue you — as well as approving our projects.” 

Local control

Last week’s vote at the Board of Supervisors made it clear the supes were upset by the state’s plans to upend San Francisco’s fees on bonus units.

That vote ended with 10 supes voting in favor of the resolution (Supervisor Ahsha Safaí abstained) saying they oppose this new Assembly bill, which targets the State Density Bonus Law. That 1979 law, updated in 2021, encourages developers to add affordable units and, in exchange, they can get a pass on local density restrictions. 

San Francisco, not vibing with that bonus law, has made state density projects subject to a local law that allows fees on the “bonus” units. 

For example, in 2019, a 93-unit development providing 18 affordable units got a “bonus” to grow to 115 units in exchange for adding more affordable units. In San Francisco, developers must still pay a fee — in this example, $1.5 million — to add the 22 units. 

State legislators were not happy with San Francisco’s extra charges, stating the fees are a disincentive to adding affordable housing.  Assemblymember Marc Berman, with the help of housing advocacy group Housing Action Coalition, introduced AB 2063 to ban those fees. 

The supes disagree, but their resolution is just a declaration; the supes can’t vote on the state bill, nor can they stop future assemblymembers from introducing similar bills if this one fails. (This is Round 2 to ban fees on bonus units, remember?) 

And the state is taking its authority seriously. 

Already, in 2019, former State Attorney General Xavier Becerra wrote a legal opinion stating that density bonuses incentivize affordable housing development.

He wrote that the state law “preempt[s]” any local ordinance that attempts to add fees on bonus units. “If the developer meets the requirements, the city or county must award a density bonus…Therefore, we conclude that an ordinance imposing a fee only on units created through a density bonus… is invalid.”

The long arm of the law…suit

This idea that state density bonuses must be honored was actually brought up at another Board of Supervisors discussion last week over development plans at 3832 18th St. Despite the law allowing the project to grow to six stories, the Board and the Planning Commission whittled the project down to five. The developers’ attorneys, the Board of Supervisors and a staff from YIMBY Law (the legal arm of pro-density group YIMBY) all acknowledged it could invite a lawsuit, a tool that has become increasingly common in housing issues of late. 

YIMBY Law, which has successfully won other housing cases, has two active lawsuits over controversial housing decisions last fall at 450 O’Farrell St. and 469 Stevenson St., the 495-unit project that sent the city over the edge. And they’re not alone. This February, an appeals court ruled in developers’ favor over the use of State Density Bonus Law, a decision that may become statewide precedent

catch up:

Meanwhile, the decisions at O’Farrell and Stevenson are also being investigated by the state’s Housing and Community Development department. A Feb. 1 letter from the state housing department to Kate Conner, the manager of priority projects and process in the city’s planning division, obtained by Mission Local, states that the state department  is “not satisfied” with the city’s explanation over the Stevenson decision, and the investigation is “ongoing.” 

The letter added that the department is aware of a “potentially concerning pattern” of slow-approval time frames and the “Board of Supervisors’ decision-making process.”  San Francisco must fix that in its newest Housing Element, the letter stressed.  

But if not, there’s a strike force in town! 

Attorney General Rob Bonta unveiled the Housing Strike Force, tasked to enforce state housing and development laws and increase housing to Californians. Bonta’s already used his clout against the city of Woodside, after it zapped a proposed housing project by claiming the city “in its entirety — is habitat” for mountain lions. Bonta condemned the city in a stern letter and ordered town councilors to immediately address his concerns. They did. Maybe the lions can take refuge at this mansion instead. 

“Act in good faith, follow the law, and do your part to increase the housing supply,” Bonta has warned, and repeated in response to Mission Local’s inquiries. “If you don’t, our office won’t stand idly by.” 

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REPORTER. Annika Hom is our inequality reporter through our partnership with Report for America. Annika was born and raised in the Bay Area. She previously interned at SF Weekly and the Boston Globe where she focused on local news and immigration. She is a proud Chinese and Filipina American. She has a twin brother that (contrary to soap opera tropes) is not evil.

Follow her on Twitter at @AnnikaHom.

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  1. San Francisco has had our inclusionary housing law for two decades, and it has become apparent that the in-lieu fee structure is not working, because so little affordable housing has actually been created with these funds. Adding $200/sq. ft. to market-rate housing not only increases unaffordability for those lucky enough to pay market rates, the little BMR housing it has generated [for those lucky enough to win the housing lottery] is capped near inflation, locking out BMR home owners from the most-tangible benefits of home ownership itself — price appreciation. It is time for San Francisco to step out of the way of the State Density Bonus and encourage development and zoning for large mixed-income apartment buildings instead of tacking on BMR units onto luxury housing. Just my perspective of our local housing policy failures, all done with the best of intention but providing the least-desirable results.

  2. Regarding the State Density Bonus Law (passed in 1979), SF had been in violation of the Law for decades until it’s bluff was called with approval of the 200-unit “333 12th St” project.

    However, by illegally demanding additional “inclusionary fees” on such projects, the City continues to flagrantly thumb it’s nose at the Law — challenging project sponsors to file an expensive lawsuit in order to compel it to behaving legally. (The City, of course, has bottomless amounts of taxpayers dollars at its disposal to attempt to fend off and drag out such justice.)

    AB-2065, cuts to the chase — and doesn’t allow the City (and other anti-housing NIMBY-led jurisdictions like Palo Alto, Cupertino, Santa Clara, Beverly Hills, Encinitas, et al) to play this game of chicken any more and continue to undermine housing creation.

  3. The BOS is responding to resident property owners who want to see their property value increase as much as possible and renters who want no higher density in their immediate environment. Both those constituencies have only selfish motives. There has to be a way to keep SF from becoming like Hillsborough due to the growing spike in national(global) income/wealth inequality. Great wealth inequality combined with SF being desirable to the highest 20% income/wealth will result in a monoculture of wealth. Leaving SF largely to the private housing market, will result in a token number of the lesser wealthy people who were in the top 1% of the low-cost housing market.

  4. “And then a couple of people decided to take action.”

    How about Clinton I teamed up with Republicans to deregulate Wall Street, money flowed like a torrent over the political terrain into the finance wheelhouses. As a result, we’ve seen all manner of distortions and political shows of force in health care, insurance and real estate/mortgages.

    To claim that a resourced, coordinated campaign to buy electeds with contributions, to tilt the balance from localities, existing residents, to developers and hypothetical residents is “a couple of people,” (shouldn’t he have used the more familiar Harford (or is that Stanvard?) speak “folks?”) is a case study of how politicians lie.

    It makes perfect sense that we’re seeing simultaneous mobilizations for the drug war, for the carcareal state, making claims to close safer road space while ignoring riskier roads, for further segregation in public schools. YIMBY was the model and other resourced neoliberal mobilizations have copied that template with no shortage of success.

    The progressives and liberals are too busy hunkering down and collaborating with the neoliberals to do much about it.