San Francisco lawmakers and housing advocates alike cannot seem to find a way to get more housing built without endless entitlement battles and lawsuits.  Every realizes that an estimated 4,000 people live on the streets, and the City is not even close to keeping pace with a state mandate to construct more than 82,000 homes by 2030.  Yet, even when the most common sense project comes up for approval, the City finds a way to delay it. 

            Take for example, the City’s de-certification of an environmental impact report (EIR) for a proposed 495-unit residential project on a vacant and unused parking lot in the heart of downtown, possibly killing the project after more than five years of administrative review.  The project site is an old valet parking lot for Nordstrom at 469 Stevenson Street.  With open land at a huge premium and the need for housing at epic heights, a vacant lot seemed ideal for this project.  Not so. 

            The project developer, 469 Stevenson Investment, LLC, submitted is development application to the City in November 2017.  The City Planning Commission (Commission) approved the project entitlements and certified the project’s environmental impact report (EIR) in July 2021, almost four years after the developer first submitted its application.  That was not the end of the story, however.  A public interest group appealed the commission’s EIR certification to the Board of Supervisors (Board), the highest governing body in San Francisco, which is both a city and a county. 

            On October 26, 2021, the Board voted to conditionally reverse the Commission’s EIR certification.  This caught the attention of the state’s Department of Housing and Community Development (HCD).  HCD issued the City a “Letter of Inquiry and Technical Support for the 469 Stevenson Street Project and another residential project it rejected at 450-474 O’Farrell Street.  “HCD is concerned that the City/County’s actions are indicative of review processes that may be constraining the provision of housing in San Francisco,” the letter said.  “It is well known that California is experiencing a housing crisis, and the provision of housing remains of the utmost priority.”  HCD noted that for the Board’s de-certification of the EIR for 469 Stevenson Street “no written findings have been published or provided to the project applicant nor has any substantial evidence in support of these findings been identified.”  Only “vague concerns” were apparent to HCD from the record such as the effects of “shadowing” on historic resources and gentrification.  This was not enough, in HCD’s view, to satisfy, among other laws, the Housing Accountability Act (HAA), which prohibits a local government from disapproving a housing development project if it complies with applicable, objective general plan, zoning, and subdivision standards and criteria. 

            Although it was unmistakable that HCD intended for San Francisco to add to its housing stock, the only part of the department’s message the Board heard was that it needed to provide findings for its decision.  So, on December 12, 2021, the Board adopted written findings to reverse the Commission’s EIR certification for the 469 Stevenson Street project. 

            This proved to be too much for the housing advocacy group known as Yes in My Back Yard (YIMBY).  On January 20, 2022, YIMBY filed suit against the City claiming that it violated a number of state laws that are intended to keep development applications for housing projects moving forward and ultimately receiving approval within a set time period.  Namely, YIMBY alleged that the City violated the HAA, SB 330, and certain deadlines under the California Environmental Quality Act (CEQA).  The HAA mandates that a municipality must approve a housing project application if the project is code compliant and satisfies certain objective standards.  SB 330 limits the number of public hearings a local government may hold on a particular project.  And, CEQA provides that a local agency must set a one-year time limit for completing and certifying an EIR. 

            The City demurred to the complaint and on October 21, 2022, the court sustained the demurrer without leave to amend as to the statutory claims but allowed YIMBY to amend its claim for declaratory relief.  On the HAA claim, the court found that the act only applies to approvals, denials, or conditional approvals of housing project, not CEQA certification.  On the SB 330 claim, the court found that the five-hearing limit does not apply to CEQA.  And, on the CEQA claim, the court found that the one-year time limit is directory, mandatory.  Although the petitioners’ fourth cause of action was derivative of the three statutory claims, the court allowed petitioners leave to amend to show that the City has a policy of violating state law.

            On November 21, 2022, YIMBY filed the amended complaint, which alleged a pattern and practice of violating the HAA, SB 330, and CEQA by denying and delaying applications for housing projects.  The court did not bite, and granted the City’s demurrer without leave to amend. 

            There are lessons here for everyone that’s concerned about the housing crisis in California.  YIMBY’s attorney at the demurrer hearing in February aptly said that there is a “disheartening and morally corrupt” homeless situation “on our streets.”  It is unlikely anyone familiar with San Francisco would object to this characterization.  Tents, sleeping bags, and unbathed persons in tattered clothing and disintegrating shoes occupy sidewalks, store fronts, and transit stops throughout the City. 

            The state legislature intended for the HAA and SB 330 to loosen up the housing production pipeline.  But with so many competing interests in local government, legitimate disputes and disagreements over a residential project can delay the entitlement process.  While the delay is frustrating for project proponents, and maddeningly tone deaf to those in desperate need of housing, a delay does not necessary rise to the level of a violation of law, as was demonstrated in the YIMBY suit.  As Judge Samuel Feng said during the demurrer hearing in February, you may disagree with the way the City is doing its job, but that’s not grounds for a law suit. 

            So YIMBY raised important issues and sought relief under laws intended to speed up the entitlement process.  At the same time, the City protected its right and duty to make critical public policy decisions without the specter of legal liability.  But, in the end the City lost a chance, at least for now, to add 495 residential units to its housing stock and a vacant parking lot in the heart of some of the most expensive real estate in the country is just gathering dust.