How Politics in San Francisco Deepens the City’s Housing Crisis

A Residential “Right to Build” Amendment to the State Constitution Is Needed

The housing crisis in California is well documented (see, for example, my report How to Restore the California Dream). Perhaps nowhere is the crisis worse than in San Francisco. Two recent incidents reveal how political gamesmanship in San Francisco deepens the crisis by making it impossible to build housing quickly and affordably.

Brookfield Properties wants to build 2,930 residential units at San Francisco’s Stonestown Galleria mall. After years of community input, Brookfield submitted its proposal to the city’s planning department in December 2021.

The project would demolish an abandoned United Artists movie theater, built in 1970, to construct an eight-story building with 170 housing units. The city’s consultants concluded that the theater, empty since 2020 and in disrepair, is eligible to be placed in the California Register of Historic Resources because of its “New Formalist” architecture. This has put the entire housing development in jeopardy.

It could be argued that if the theater truly had “historic” value, someone would have offered to buy it; but nobody has stepped forward. Chris Foley, a member of San Francisco’s Historic Preservation Commission said at a hearing, “When I look at this building, it’s just another old theater that’s pretty much dead. We really have to go and let this developer get this thing approved.” San Francisco Supervisor Gordon Mar agreed, “This is a misuse of historic preservation,” he wrote on Twitter.

The building is no longer needed as a theater because the nearby mall has a state-of-the-art 12-screen theater. Nevertheless, the developer is now evaluating alternative plans, all of which involve building fewer housing units. The hurdles and delays are noteworthy:

  1. Brookfield’s new proposal detailing its plans for saving the theater will be analyzed in a draft environmental impact report
  2. The draft environmental impact report then undergoes public review and hearings at the planning department and historic preservation commission
  3. Before the report is certified by those two agencies—if it is—the agencies may demand adjustments
  4. A final environmental impact report could take nine months to more than two years to complete, depending on challenges and litigation, according to Dan Sider, chief of staff at the city’s Planning Department. And there’s more . . . 
  5. The project requires zoning changes that the city and developer must agree on, but not before the planning department also has its say on the changes
  6. Then the final environmental impact report and development agreement with the zoning changes goes to the city’s full Board of Supervisors for approval, but not until more public hearings and approval by several Board committees (for more details, see Danielle Echeverria’s excellent story in the San Francisco Chronicle titled “How an Empty 1970s S.F. Movie Theater Deemed ‘Historic’ Could Scale Back Housing Plans at Stonestown”)

Because of rising construction and financing costs, it is increasingly common in San Francisco for projects not to pencil out financially after long delays. Thus, due to the city’s ridiculous Rube Goldberg-style approval process, it would not be surprising if Brookfield walks away from the project, as many developers of other projects have done.

Another example of politics killing or delaying needed housing development in San Francisco involves a proposal to rezone 15 parcels to allow construction of 1,300 additional units of denser residential housing. In July 2020, three members of San Francisco’s land use committee on the Board of Supervisors stopped the rezoning approval process until a “race and equity study” was completed and evaluated (the real reason for the rezoning stoppage appears to be that some members of the Board of Supervisors want the resulting units to be government owned rather than privately owned).

San Francisco Chronicle columnist Heather Knight explains in her excellent piece on the incident that “two years and one month later, the [race and equity] study hasn’t begun.” John Elberling, president of Tenants and Owners Development Corporation (TODCO), a powerful San Francisco nonprofit housing group, pledged to conduct the study, but now he says he is not going to do it.

Requiring bogus unnecessary studies is a time-tested tactic by politicians to kill projects for political reasons, but usually a study is completed. In this case, as noted by Knight, “The 25-month pause for a report that never happened means no progress has been made on luring developers to plan housing on those sites in a city with a severe housing shortage and a mandate from the state to build 82,000 new units by 2031.” This political gamesmanship is immoral.

Political roadblocks have created the housing crisis in San Francisco and across California; therefore, the solution is to remove politics from housing development. As I explained in an earlier posting on The Beacon, a residential “Right to Build” amendment to California’s state constitution would shift power away from special interests and politicians and back to private property owners, allowing them to build the housing that Californians desperately need. This is the only truly effective solution to California’s massive housing crisis and it is the just course of action.

Lawrence J. McQuillan is a Senior Fellow and Director of the Center on Entrepreneurial Innovation at the Independent Institute. He is the author of the Independent book California Dreaming.
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