No help from the state?

Peter Cohen and Fernando Marti of San Francisco’s Council of Community Housing Organizations write in a San Francisco Examiner op-ed that the governor’s proposed state “by-right” approval of housing projects consistent with local zoning won’t help San Francisco’s housing shortage.

Why? Because approvals aren’t the issue — it’s actually getting the units built where things start to break down:

Between 1996 and 2015, the city of San Francisco approved 51,000 units for construction. In the same time period, developers actually constructed 37,000 units. That’s 14,000 more units approved for construction than have actually been built, and, on average, that backlog has increased by almost 700 units every year. The City’s latest pipeline report, through the first quarter of 2016, puts that figure even higher, at almost 19,000 entitled units! That’s not even counting the approved housing from the massive Park Merced, Hunters Point/Candlestick, and Treasure Island developments.

The op-ed authors vigorously defend the public process that would be eliminated by the governor’s proposal, arguing that this process allows for extracting more community benefits from projects that actually move forward.

Instead, they say the real problem is financing. Lenders won’t invest in approved projects without more guarantees of return, and that’s where state and local leaders should be focusing their attention, not on by-right approvals.

But my question is: why aren’t financiers stepping up to fund these approved projects in the pipeline? Could it be that the same “community benefits” and other restrictions on new projects are limiting deployment only to the most high-end projects, which can guarantee enough return to make up for the exactions?

I only speculate, but it’s a potential contradiction in their argument that the op-ed authors do not address.  Otherwise, I certainly agree that more answers are needed to explain this financing conundrum.