Permits and 1k days of meetings: How bureaucracy fuels SF’s housing crisis

“The entire housing process is a complete nightmare,” Moss said. “San Francisco has a unique ability to find the most inventive ways to step on its own toes and prevent itself from providing its most needed services.”

Each housing project Moss has developed in San Francisco has faced the same agonizing hurdles: months of preliminary coordination meetings followed by years of negotiations, paperwork and meetings to receive project approval — only to then be faced with an onslaught of permits before finally breaking ground.

Mayor London Breed blames the Board of Supervisors for obstructing housing. The supervisors in turn blame City Hall for not supporting enough affordable housing. The reality, however, is that all bodies have a role to play in fixing the status quo.

That’s because the core of San Francisco’s housing problem isn’t politics, it’s bureaucracy.

Decades of compounding bad policies that have resulted in impenetrable red tape that can — and often does — kill housing projects in San Francisco. Including affordable housing.

“What people don’t realize is that nonprofit housing projects have to be completed within 18 months of building permit approval, or we risk losing affordable housing bonds,” Moss said.

And yet the median time for securing approval to build in San Francisco is 627 days — which puts 50% of projects at risk of losing funding due to delays.

The outcomes speak for themselves.

In 2021, San Francisco issued permits for just 2,000 homes, and in 2022 there was similarly anemic building activity. By contrast, Seattle — a city of comparable size — issued more than 10,000 permits.

San Francisco recently submitted and passed an impressive version of the state-mandated plan known as a housing element: The city says it will build more than 80,000 homes in eight years, or 10,000 homes per year. But state planners are not convinced San Francisco will live up to this promise. And a deep study of the city’s housing bureaucracy provides an answer as to why.

To understand the sweep of the problem, it is necessary to dive into the leviathan that is San Francisco’s city government. It took me several months of interviews with developers, commissioners, housing advocates and academics to fully understand the bottleneck of bureaucracy surrounding housing: a compounding set of confounding procedures that necessitates securing at least 87 permits, enduring 1,000 days for meetings and paying more than  $500,000 in fees on average for any residential project. In combination, these procedures make nearly all housing projects financially infeasible to build in San Francisco.

1,000 days for meetings

Any attempt to build housing in San Francisco starts with meetings. Lots of meetings. Of course the San Francisco Planning Department will want to have its say. So will the Mayor’s Office of Disability and the Fire Department — among others.

There are two phases of housing development. The first is the project approval — or entitlement — phase. This requires meeting with the San Francisco Planning Department to prepare application forms simply requesting permission to build. In San Francisco, housing projects face a median wait time of more than 450 days for this entitlement.

The second phase is called the building permit — or post-entitlement — phase. This is when developers apply for permits to build. Combined with the project approval stage, the time to complete permitting often stretches to over three years, according to data published in San Francisco’s housing element. That’s more than 1,000 days before a housing project can even begin construction.

To understand the bottlenecks, let’s break down the process.

There are six phases to housing development in San Francisco:

Steps 1 and 2 involve preliminary project assessments (which take 60 days) and project application filings (about 30 days) to the Planning Department that detail the overall housing project.

Steps 3 and 4 entail the preliminary application review (which takes about 90 days) where the Planning Department conducts checks of residential, streets and urban design planning, followed by any project refinements (typically another 30 days).

Step 5 is the final project analysis where comprehensive plan and design checks, and environmental reviews are conducted (which can take at least 180 days).

Finally, Step 6 is where after receiving an official project approval, the developer can apply for building permits to begin construction (but it can take over 600 days).

Why does navigating these steps take so long?

In part because San Francisco is the only major city in California with a city charter that mandates that all permits are “discretionary” and, by consequence, appealable. This simple rule has far-reaching consequences.

“In most cities, building permits follow what is called ‘ministerial’ approval — where if a project is code compliant, the permits will be approved, often in months,” said Rachael Tanner, president of the San Francisco Planning Commission. “The issue in San Francisco is that because all permits are discretionary, a governing body like the Board of Supervisors can weigh in — or a single resident can ask for the Planning Commission or for the Board of Appeals to take a closer look. This can literally add years to even the simplest projects.”

San Francisco’s discretionary process allows for two obstructionist tactics.

The first is that it enables a neighborhood organization or a single person to file a notice to the Planning Department requesting a delay of the project during the project approval stage or to file a notice to the Board of Appeals at the building permit stage.

The recent housing project at 870 Union St. is a case study that is part of San Francisco’s housing element. A preliminary project assessment was filed in October 2015. Less than a year later, the project filed and received approval for most of its paperwork. But in September 2016, an appeal was filed by a neighborhood resident, triggering hearings and further meetings with the Planning Commission. The project wasn’t approved until May 2017 — more than 200 days later.

San Francisco abounds with such examples of projects delayed by neighborhood input. The cumulative impact was a 123-day median delay in the housing approval process in 2021, according to San Francisco’s Housing Element.

San Francisco is also the only city in California that allows such building permit appeals even after a project has received all its approvals. Assembly Member Matt Haney of San Francisco recently introduced AB1114, which would ban this practice. But even if that ban is implemented, a second obstructionist tactic still emerges from San Francisco’s discretionary system — a delay induced by the California Environmental Quality Act.

A well-intentioned 1970 law, known as CEQA, initiates a process requiring technical studies, environmental notices and additional hearings to evaluate and disclose to the public the environmental impact of any discretionary action by local government. Thanks to San Francisco’s charter, that includes housing projects. Housing experts note that the sheer volume of studies and meetings required to even consider a CEQA filing results in a median 122-day delay to projects. And if deemed necessary, an actual environmental impact report can take a median of 700 days to complete, according to San Francisco’s housing element.

In essence, because all permits in San Francisco are discretionary, every housing project becomes a political battle.

This is what happened at 469 Stevenson St., where developers sought to build 495 units of housing on a Nordstrom valet parking lot, only to be delayed more than a year when the Board of Supervisors rejected the project’s environmental analysis for what many critics argued were spurious reasons.

San Francisco’s extensively broad application of CEQA necessitates conducting more than 5,000 reviews per year. This intensive level of environmental review is not cheap. According to the 2022 update to San Francisco’s housing element, around 40 full-time planners are employed just to work on these reviews.

It doesn’t have to be this way.

San Francisco can simply follow the example of cities like San Jose, Mountain View and Santa Clara, which employ a split permitting process. 

In this split process, the planning approval is discretionary while building permit approval is ministerial. This streamlines the approval process and avoids unnecessary discretionary stopgaps.

“Bifurcating the planning and building permit process will create a clear and discernible path for applicants to see what is required of their project,” says Raquel Bito, president of San Francisco’s Building Inspection Commission.

Indeed, the Department of Building Inspection formally first reviewed such a proposal in August —  and is now investigating mechanisms to streamline.

We actually can see the potential impact of ministerial approval in place today. In 2017, a bill authored by state Sen. Scott Wiener of San Francisco, SB35, was signed into law and it enabled ministerial approval at both the project approval and building permit stages for projects that feature 50% or more affordable housing.

The 555 Bryant St. housing development in San Francisco benefited from SB35 — a preliminary project application was filed in January 2021 and the project was fully approved within 175 business days — roughly half the time of the 870 Union St. project.

“Ministerial approval isn’t just important, it’s an absolutely essential tool if San Francisco is to meet its goal of building 82,000 homes in the next eight years,” said Wiener, who is introducing SB423, which would renew SB35 and make it even more effective.

The solution here is clear — build by ministerial approval. It works, even sometimes in San Francisco.

87 permits and $500,000 in fees

Just because a housing project is approved doesn’t workers can start building. It merely means the project has permission to apply for permits to start building.

In San Francisco, that process takes a median of 627 days. Worse yet, 270 projects during the past 10 years have taken more than four years to get all their permits. This is the slowest approval time for permits in any major city in California. It’s 400 days longer than Oakland and 300 days longer than Berkeley.

Where’s the breakdown?

The issue is bureaucracy. Namely, the 87 permits San Francisco’s housing element identified that a project needs to apply for in order to begin development: 15 permits from the Planning Commission, 26 permits from the Public Utilities Commission and Fire Department, 19 permits from the Department of Building Inspection, 17 permits from the Public Works and 10 other permits related to public spaces.

With 87 permits across multiple departments, it’s easy to see how San Francisco’s bureaucracy is slowing housing development to a crawl.

Why does San Francisco require so many permits? Part of the problem is redundancy. Of the 87 permits listed, at least 12 pertain to issues of water regulations, issued separately by the Public Utilities Commission, Department of Building Inspection and Public Works.

And it isn’t just the sheer number of permits. San Francisco forces developers to receive each set of permits sequentially — you can apply for a set of permits only after you have completed the previous set. With 87 permits, the time compounds.

Compare that to San Jose, which has only 57 permits and allows for parallel review of both the planning and permitting phases. According to Bito, this allows builders to receive feedback more readily from all requisite departments (like Public Works and the Fire Department), potentially shaving months of waiting.

Permitting in San Francisco isn’t just time-consuming, though, it’s expensive.

Permitting fees — specifically, what the Department of Building Inspection charges for a housing project — are proportional to the cost of construction. The challenge here is the unpredictability of those costs.

Labor and material prices are constantly changing. The longer a project is delayed in the approval or building permit phases, the higher likelihood that market conditions change and materials costs have risen, and the higher the city’s fees.

Furthermore, during the time developers are applying for permits, they incur significant costs to hold the land they plan to use.

San Francisco’s development process is also loaded with what are called “impact fees” — or fixed fees to get project approval. These impact fees cover the cost of providing public services like schools, water, transportation and public art investments in a neighborhood. But when added to the litany of other direct and indirect costs San Francisco imposes on development, they can make projects infeasible.

All told, housing development projects over $25 million can in turn incur at least $500,000 in combined impact and permitting fees, according to San Francisco’s Housing Element. This can add up to $74,000 in costs to an individual apartment or condo in San Francisco, compared to $39,000 per unit in Oakland, $54,000 per unit in Emeryville and $62,000 per unit in San Jose.

The result of these astronomical costs in San Francisco makes housing projects risky or infeasible to build. Only the most monied developers, therefore, have access to the market — and they focus on expensive high-rises to improve the odds of recouping their investments.

A path forward

If a housing project has to sequentially wade through 87 permits, pay $500,000 in impact and permitting fees and endure 1,000 days of meetings simply to break ground, it will be a tall order for San Francisco to build 10,000 houses per year as stated in our state-mandated housing element. We can’t even build 2,000 a year today.

It doesn’t have to be this way. We can be a city with abundant, affordable housing, where unhoused populations can find stable homes, where San Francisco’s workers can live near their jobs, and where people and families of all stripes can make this city their home.

To move forward, however, we need to radically reform our housing approval processes. We need to transition housing approvals away from discretionary reviews — like every other major city in California.

State legislation like Assembly Member Haney’s AB1114 and state Sen. Wiener’s SB423 are necessary steps to get us there. But they are insufficient on their own.

San Francisco also needs to streamline permitting to allow for parallel processing and a reduction in impact fees. This is largely in the domain of Mayor Breed’s office, and executive action here is necessary. Her Housing For All executive order, which requests that all departments streamline permitting by 50% within a year, is a great step in the right direction.

But setting broad goals is just a start. San Francisco needs decisive action.

Bilal Mahmood is a civil servant and entrepreneur, and a board member at SF YIMBY.