“Builder’s remedy” could ignite housing boom in San Francisco

Legal loophole that approved 4K units in Santa Monica could reach Bay Area

San Fransisco and Builder's Remedy (Illustration by The Real Deal with Getty)
(Illustration by The Real Deal with Getty)

It’s a loophole in state housing law known as the “builder’s remedy” – and could be a workaround for developers frustrated over San Francisco’s glacial approval of new housing.

Unless the state signs off early next year on the city’s plan for 82,000 new homes, builders could pursue the untested remedy to break ground, the San Francisco Business Times reported.

That would mean few constraints on housing development: no height caps; no density limits, no rules about where housing could be built.

As The Real Deal reported, Santa Monica is the epicenter for a developer attempting to assert its legal right to skirt local zoning regulations under the builder’s remedy. San Francisco may be No. 2.

Daniel Golub with Holland & Knight’s West Coast Land Use and Environmental Group (Holland & Knight)

Daniel Golub with Holland & Knight’s West Coast Land Use and Environmental Group (Holland & Knight)

“I’d say awareness of the builder’s remedy is certainly significantly increasing,” Daniel Golub, a San Francisco-based partner in Holland & Knight’s West Coast Land Use and Environmental Group, told the Business Times. “All these different factors are creating a perfect storm, and it’s increasing interest.”

The builder’s remedy is an untested provision of a 1990 state law known as the Housing Accountability Act.

Under the law, cities that are deemed noncompliant with their state-mandated housing plans lose the ability to approve or deny projects with affordable housing components – and those projects instead are automatically approved. It’s a function known as “builder’s remedy.”

Projects qualify if at least 20 percent of their units are affordable, or if the entire project is dedicated to moderate income tenants.

San Francisco has a notoriously slow housing approval process. State housing officials have launched an unprecedented probe to find out why San Francisco takes 15 months to approve a new housing project, the longest time frame of any city in California.

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San Francisco discovered last week it had misinterpreted a state deadline to adopt a final Housing Element, or blueprint for meeting mandatory state-assigned housing production quotas.

City staff say San Francisco will meet the Jan. 31 deadline. But if the city falls behind, it would lose its ability to reject proposed residential developments that don’t comply with its zoning code until it’s updated.

Projects proposed in the interim would still qualify for the so-called builder’s remedy, even after the city has an approved housing element.

The City of Santa Monica, which failed last year to produce a housing plan acceptable to the state, saw the approval of more than a dozen projects with almost 4,000 units proposed under the builder’s remedy, including 10 submitted by Los Angeles-based WSC Communities.

The city managed to adopt an approved Housing Element on Oct. 14, however, closing the golden builder’s remedy loophole for other developments.

The short-lived approval boom could easily be duplicated in San Francisco – as well as Berkeley, Oakland and San Jose, which also risk missing the Jan. 31 housing element deadline.

Santa Monica could be a bellwether for the Bay Area, Chris Elmendorf, a professor at the UC Davis School of Law, who specializes in land use, told the Business Times.

“One scenario that seems quite plausible is that there will be a ton of these projects filed” if Bay Area cities fail to meet the deadline, he said.

— Dana Bartholomew

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