This week: SF rezoning is too much for one congressional candidate, not enough for pro-housing advocates

When is the passage of a historic, citywide rezoning law that creates room for more than 36,000 new homes in a single city not enough? When that city is San Francisco, cradle of the YIMBY movement, where the state has mandated the city permit more than 82,000 new homes by 2031.

The San Francisco Board of Supervisors’ Tuesday passage of the rezoning rules was a major political victory for freshman Mayor Daniel Lurie. The so-called Family Zoning Plan, approved in a 7-4 vote, upzoned about 60% of the city, including neighborhoods that haven’t added new housing in decades, such as the Richmond, Sunset and Marina districts.

In a recent conversation with The Real Deal, a major housing California developer characterized the plan as a “fantastic long-term win,” but expressed skepticism about the short-term impact on housing development. Among the challenges in the near term: Interest rates on development financing and the material and labor costs of construction as the real pain points in building housing in San Francisco. The developer, who spoke on the condition of anonymity, doesn’t expect costs to come down but foresees interest rates falling over the next year.

“I don’t think much housing gets added in 2026 or 2027,” the developer said, adding that “the city is doing everything it possibly can,” on the legislative side to spur housing development.

Major pro-housing groups in the state disagree. According to a report from the San Francisco Business Times, three such organizations have threatened to sue the city for not going far enough with the Family Zoning Plan. YIMBY Law, the California Housing Defense Fund and Californians for Home Ownership, are each mulling legal action over what they see as a violation of state law.

The groups point to an October report by the San Francisco Controller’s Office, which projected that the Family Zoning Plan would only produce 15,000 new homes over the next two decades — well short of the plan’s promised capacity, and a fraction of the state’s mandate for the city to permit 82,000 new homes by 2031. San Francisco planning officials told the Business Times that the state had endorsed early versions of the Family Zoning Plan.

However, if the groups do file a lawsuit and are successful in court, the city, without an approved zoning plan, could end up out of compliance with state housing rules. The state may then implement builder’s remedy, which allows developers increased latitude to propose projects without any consideration of local zoning law, provided projects designate a minimum of 10 percent of units for affordable rates, with the requirement ranging upward on a case-by-case basis.

Then there are some who believe the city-wide rezoning goes too far, including District 1 Supervisor Connie Chan, one of four supervisors to vote against the changes. Chan’s dissent sets the stage for the kind of debates San Franciscans will hear during the 2026 campaigns for Rep. Nancy Pelosi’s congressional seat. Chan, a progressive second-term supervisor who declared for the race late last month, is likely to operate as a sort of foil to state Sen. Scott Wiener’s pro-housing development reputation. Wiener has already criticized Chan as “unsuccessful at getting anything done” since she joined the board of supervisors in 2021.

While city hall was debating land use changes to spur new housing, two high-profile projects returned to the headlines with new life.

The troubled residential development at 360 Fifth Street is now poised to be taller and with more units after Novato-based Thompson Builders recently submitted new building permits that would take the project from 20 to 21 stories, with an additional 14 units, bringing the total to 272. The property faced a public nuisance lawsuit last year when San Francisco City Attorney David Chiu accused the former developer, Leap Development, of abandoning the partially excavated site. Thompson Builders, who was contracted by Leap to build the project, bought the site for $1.3 million earlier this year.

Developer Crescent Heights is reportedly restarting talks for its $1 billion, 67-story residential tower in downtown San Francisco. The San Francisco Business Times reported that the Miami-based developer has begun early-stage talks around making the 1,000-unit project a reality. According to the Business Times, Crescent Heights aims to break ground in 2027 on what would be San Francisco’s first high-rise residential tower in years.