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San Francisco launches housing production policy salvo to address shortage

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(The Center Square) – To address its housing shortage, San Francisco plans on enabling the construction of 82,000 homes in the area by 2030, which would require more than tripling the city’s prior housing production rate.

In pursuit of this goal, the San Francisco Board of Supervisors approved a new plan to cut construction fees and “inclusionary zoning” requirements that mandate a certain percent of units be affordable to individuals of certain incomes.

According to the San Francisco Chronicle, housing production in San Francisco was a mere 2,257 units last year. To meet its housing production goal, San Francisco would have to build an average of 10,250 homes per year.

However, due to having some of the highest development costs and longest development timelines in the country, San Francisco has created a regulatory and fiscal environment where it is difficult for standard building projects to financially pencil out, leading developers to shift their funds and attention elsewhere.

Recognizing this, San Francisco Mayor London Breed and Board of Supervisors President Aaron Peskin introduced the measure, called the Housing Stimulus and Fee Reform Plan, to make serious changes to the city’s development mandates and fees. Should the city fail to meet its housing production goals, Senate Bill 35 would allow for significant development with streamlined approvals independent of what limitations San Francisco wishes to impose.

“San Francisco is in the midst of a housing crisis and is not on track to reach its housing obligations,” said M. Nolan Gray, city planner and research director for California YIMBY. “Removing fees and rolling back unworkable mandates is a good step in the right direction.”

Chief among these rollbacks is the temporary reduction of the city’s inclusionary zoning requirement of 22% for rental units and 24% for condominiums down to 12% for projects that have been approved but have not yet been built. While previously 22 to 24% of all units in new multifamily developments would need to be deemed “affordable,” now only 12% will be required to help those approved projects pencil out and begin construction. For new construction introduced over the next three years, the rate would drop down to 12%. Additionally, San Francisco will also drop a series of development fees by roughly one-third for the next three years and delay many of those fees until construction is complete – and not have them due, as before – when construction begins.

According to Gray, creating a short window for production will have the effect of spurring production now without causing speculators to grab and hold onto land they choose not to utilize in the short term.

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