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SB 684: A Promising Solution to California’s Housing Crisis




California has long struggled with a severe housing crisis, and cities like San Francisco have become emblematic of the broader problem. With skyrocketing rents and a vacancy rate that hovers around 6.4%, the market remains tight despite some recent improvements. Over the past year, absorption has increased with about 2,700 units absorbed, but construction lags behind demand with only 2,200 units delivered. This imbalance between supply and demand has led to rising rent costs, making it increasingly difficult for residents to afford housing. The average rent for an apartment in San Francisco sits at $3,110 per month, far above the national average, further exacerbating the affordability crisis.


Enter Senate Bill 684 (SB 684), a legislative measure passed in 2023 and set to take effect on July 1, 2024. The bill is designed to address these challenges by streamlining the approval process for smaller, for-sale housing developments. It allows for quicker development by mandating ministerial approval for projects that meet specific criteria, which could significantly cut down on the bureaucratic delays that often stall housing projects. This move is expected to particularly benefit San Francisco, where housing construction has been historically hindered by stringent zoning and high development costs.


One of the key provisions of SB 684 is its focus on small-scale developments—projects that result in 10 or fewer housing parcels. These projects will bypass some of the more cumbersome local zoning requirements and receive automatic approval if the city fails to act within 60 days. This streamlined process not only encourages faster development but also makes it easier to build affordable housing units. In a market like San Francisco, where larger developments have faced resistance due to high costs and community pushback, the ability to more easily build smaller, infill projects could be a game-changer.


Moreover, SB 684 also exempts qualifying projects from forming a homeowners’ association unless required by law, further reducing the operational complexities often associated with housing projects. The bill aims to expedite developments in urban areas, like San Francisco’s Mission Bay or South of Market neighborhoods, where new housing is desperately needed, but development has been slow.


For developers, SB 684 provides more predictability and reduces the time and costs associated with navigating complex approval processes. This is crucial in San Francisco, where construction activity has remained subdued, with only 2,600 units currently under construction, significantly below the historical five-year average of 4,200 units. By encouraging small-scale developments, SB 684 could help fill this gap, potentially leading to a more balanced market.


In conclusion, SB 684 presents a promising solution to California’s housing crisis, particularly for cities like San Francisco that have struggled to meet growing demand. By simplifying the approval process and encouraging the development of smaller housing projects, the bill could help alleviate the state’s housing shortage, making housing more accessible and affordable for all.


October 7, 2024 by Michal Mohelsky, JD, Principal of MMCG Invest, LLC,

Sources:

  • Bloomberg

  • Senate Bill 684, California Legislative Information.

  • CoStar Group, "San Francisco Multi-Family Market Report," October 7, 2024.

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