Should San Francisco Developers Ready Themselves for the Builder’s Remedy?

San Francisco is facing an upcoming deadline to submit its new Housing Element to the state by January 31, 2023. If it fails to meet this deadline, savvy developers may be at the ready to submit projects under the “builder’s remedy” on February 1. The builder’s remedy is a housing development streamlining tool allowing developers to file an application for a housing development project that is not in conformance with a jurisdiction’s zoning or General Plan if the local government does not have a state-certified housing element and the project contains a certain amount of affordable housing. (Cal. Gov. Code § 65589.5(d).) Without a certified housing element, a jurisdiction cannot deny the project at all – even if it does not comply with the local government’s applicable development standards. This means developers can propose housing at any density and any height, anywhere in the city. For a project to qualify, 20% of the proposed units must be affordable to lower-income households, or 100% affordable to moderate-income households. (Cal. Gov. Code § 65589.5(h)(3).)

Santa Monica recently made headlines when its Housing Element fell out of compliance with state law. While it was out of compliance, developers proposed 16 projects, totaling over 4,500 new units of housing, with more than 800 of these designated as affordable for low-income households. The state approved a revised housing element in October 2022. However, even after the City submitted a revised Housing Element that brought it back into compliance, the projects proposed under the builder’s remedy are going forward.

Could developers employ the same tactics in San Francisco should it fail to submit a compliant Housing Element in January? Probably. The builder’s remedy will become available on February 1 should the city fail to submit a compliant plan. Therefore, developers should have their builder’s remedy projects ready to file along with a Senate Bill (SB) 330 preliminary application to vest their development rights. These two tools may put developers in a strong position against any attempts by the city to delay approvals under the California Environmental Quality Act or through other similar obstructions. However, given this complex legal landscape and its potential pitfalls, developers should consult with a qualified land use attorney before proceeding.

Another option for developers is the state’s Density Bonus Law (Gov’t Code 65915), which gives housing developments with below-market-rate units the right to additional density, waivers of local standards that preclude development, and to incentives that reduce affordable housing costs. The law’s protections apply if the “base” project (i.e., the project as considered before the additional density) provides at least 10 percent below market rate (“BMR”) homes for low-income households, 5 percent BMR homes for very-low-income households, or if the homes in the development are for sale, 10 percent BMR homes for moderate-income households. The Density Bonus law may be a good option for more cautious developers looking for a less confrontational approach while still seeking to add density to their projects.

Contact An Attorney Today

The attorneys at Zacks & Freedman can assist you with your questions about the “builder’s remedy” and all your real estate matters. Contact us at your convenience to request a consultation.

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