YIMBYs Prepare for “Zoning Holiday” in San Francisco

If San Francisco’s Housing Element is not approved by the state on Jan. 31, the city should expect to see hundreds of builder’s remedy applications come in starting on Feb. 1, according to Sonja Trauss, executive director of YIMBY Law.

The Yes in My Back Yard group is “absolutely planning” on the “zoning holiday” brought on by the builder’s remedy, Trauss said. The quick pathway to housing entitlements will go into effect if the city’s Housing Element, a comprehensive eight-year plan to build 82,000 new units by 2031, is not approved by the January deadline. YIMBY Law is pushing projects that it believes can also avoid CEQA challenges: buildings with six and fewer units, projects that are 200 units or less within a half mile of transit and in priority development areas.

The group anticipates interest from single-family homeowners and other small property entrepreneurs.

“We’re going to be creating materials, training and education for homeowners and small developers to put in applications for five-unit buildings,” Trauss said. Four units would be market rate with the fifth below-market to meet the 20 percent affordability requirement needed for builder’s remedy to kick in.

The group is putting together standardized five-unit elevation plans and has partnered with Memphis-based Bank3 to provide financing options for those seeking to build these units. Trauss said they would probably be very similar to “Richmond specials,” low-rise apartments that popped up all over that western neighborhood in the 1960s and 1970s.

“People are saying, ‘Oh no, it’s going to be the Millenium Tower all over the city,’” she said. “But that’s not economically realistic.”

Developer’s “outside option”

While the focus is on smaller buildings, Trauss said the organization was surprised to hear from larger developers, including at least two affordable housing developers.

“I thought that most of our interest would be people who were not developers yet: contractors, homeowners or Realtors,” she said. “But in San Francisco, we do have inquiries from developers who are successful in the current regime. I didn’t expect that, given that they’ve worked so hard to build up this political capital.”

Trauss declined to name the developers, but said they will likely continue to pursue entitlements by going through the typical channels, while also filing for expedited builder’s remedy entitlements at the same time as an “outside option.”

Another repercussion of the city missing the compliance deadline involves losing millions in affordable housing dollars. Trauss said when pro-housing advocates realize this downside it “tempers the glee” brought on by the thought of fast-tracked housing construction.

While she calls a Jan. 31 approval “wishful thinking,” she said the city will likely have its element approved by May, by which point she’ll be glad to see it back in compliance.

“To be a grown up about it, being out of compliance is going to interrupt important state funding sources,” she said. “That’s why we’re calling it a zoning holiday. We want to have a few months of this — we really don’t want to have years and years.”

Tight timeline

Despite the potential loss of affordable housing funds and a shortened rezoning timeline, the San Francisco Planning Department said the builder’s remedy was its biggest concern about potentially falling out of compliance, according to the department’s Policies and Strategies Manager Maia Small.

“Even with high construction costs, if the builder’s remedy becomes a usable permitting pathway statewide, San Francisco is likely to receive applications,” she said via email.

If initial feedback from the state department of Housing and Community Development shows that the city’s current draft Housing Element has met or is very close to meeting the standards of state law, Small said, the department believes that it is on track to meet the January deadline.

“We are seeking a draft in-compliance letter from HCD in early December,” Small said, adding that if the department does not get one it could impact the tight timeline, “but we are hopeful to meet that timing.”

Also, the element must be approved by the city Planning Commission. The department will present an informational session on the element on Nov. 4, and the San Francisco Board of Supervisors will get their first presentation on the element as a full board on Nov. 15.

SF YIMBY’s Robert Fruchtman said he has concerns that even if the state does approve the plan, it could get shot down by the Board of Supervisors in a 6-5 decision.

“It’s an uphill road for sure,” he said. “There’s a lot that the city doesn’t like already about what they have to do. There’s a lot that elected officials haven’t heard presented to them yet.”

He said it’s a “coin toss” whether the city will have an approved element in time, especially given that the Planning Department thought they had until the end of May to come up with a state-and city-approved plan just a few weeks ago. Even though he likes the idea of approving new housing quickly with builder’s remedy, Fruchtman said he hopes the city and state can pass the element in time.

“There’s a small part of me that wants to see what happens,” he said. “But honestly, I think what the city really needs right now for housing is some kind of predictability and security. The builder’s remedy would alleviate some kinds of uncertainty, but lead to other kinds.”

Court battles

One certainty is the legal battle that is bound to arise from builder’s remedy entitlements. The Planning Department said that its focus is on getting a housing element approved, not on possible court battles, but it is also “keeping an eye on what happens to proposed builder’s remedy projects in other areas of the state,” according to Small.

Trauss of YIMBY Law, which is affiliated with SF YIMBY but is a separate nonprofit, said that legal challenges are to be expected. That’s one reason the organization is trying to get so many builder’s remedy projects into the entitlement pipeline. A few projects won’t really change the landscape, she said, but a few hundred is “a constituency.”

“Once this stuff is proposed, processed and starts to get built, people will question how committed they are to the current zoning,” she said. “It could become a lot more stomachable.”