San Francisco’s Struggling Housing Goals: Can New Policies Spark a Construction Boom?

Why are so few homes being built in San Francisco? Can the city meet its housing goals anytime soon? And how much is California’s strict environmental law standing in the way?

In 2024, San Francisco only produced 1,735 new housing units, the lowest output in over a decade, in the face of climbing housing demand. Uncertainty in the economy, post-COVID-19 slowdown, and tariffs are all hampering new construction. All this, while the new goal for the state is 82,000 housing units by 2031, which now seems very out-of-reach. A large part of the challenge is CEQA, a 55-year-old environmental protection law that critics claim impedes much needed housing progress.

Let’s take a deeper dive into the hurdles in California’s housing crisis – and whether change can come soon.

II. The Role of CEQA in California’s Housing Gridlock

The California Environmental Quality Act (CEQA), which was enacted in 1970, was originally designed to protect the environment. Its intention was to ensure that any project that could have an environmental impact — whether it’s apartments, bike paths, solar farms, or wind farms — undergoes rigorous review.

However, over time, the law has changed from an environmental protection policy into an obstacle to housing projects. The intent of protecting the environment has been transformed into a barrier to new construction, making it even more difficult to meet the demand for housing.

For developers and city planners, the CEQA process has become one of the biggest hurdles to addressing California’s housing crisis.

III. CEQA Under Fire: Lawmakers Take Aim

State Senator Scott Wiener and Assemblymember Buffy Wicks are spearheading the effort to amend the state’s California Environmental Quality Act (CEQA), an environmental statute. They note that the statute which started as quite reasonable, has become an enormous impediment to progress, especially housing growth.

One of the most significant issues with CEQA is that it has encouraged unreasonable, frivolous lawsuits and appeals that can take years to resolve no matter how compliant the project is with local city regulations. The endless litigation associated with CEQA can stop development altogether which is frustrating both the developers and the citizens who desperately need more housing.

In Wicks’ words, CEQA “removes entire neighborhoods for new housing,” and we need housing, lots of housing in California.

Attorney Ryan Leaderman, who represents developers, argues that “tremendous uncertainty” from CEQA appeals is one of the biggest deterrents to creating new building projects. These legal hurdles can take years to resolve, and in the meantime, projects are virtually impossible to start or finish.

IV. What the New Bills Propose

Buffy Wicks’s Bill (Assembly):

• Buffy Wicks’s bill is designed to address the urban “infill” housing issue. To clarify, infill housing is simply housing built in already-developed parts of towns or cities – for instance, vacant lots or underutilized land. The bill will help speed up and ease the process of developing infill housing by explicitly providing streamlined and clear exemptions from CEQA, which is currently a bureaucratic nightmare for all aspects of the development process.
• Wicks’s bill also focuses on the vague language in existing exemptions that has made it difficult for developers to actually take advantage of and through increasing clarity in the exemptions, the bill could open up more housing in already built-up areas that still have room for added density.

Scott Wiener’s Bill (Senate):

• Scott Wiener’s bill casts a wider net, impacting more than just housing. It also includes transportation, commercial, and civic infrastructure, addressing the broader issues of city planning. One of the biggest changes this bill proposes is exempting zoning changes from CEQA, which would be a game-changer for cities like San Francisco, where zoning laws often restrict higher-density development.
• Wiener’s bill also proposes that cities wouldn’t have to go through repeated CEQA reviews for projects that comply with their approved Housing Elements. In other words, once the broader housing plan gets the green light, individual projects that follow those guidelines could avoid delays from repeated environmental reviews.

V. The Political Battle Over CEQA Reform

Not everyone agrees with the push for CEQA reform. A plethora of environmental and community organizations have opposed the new bills, and some critics argue that the bills are likely to undermine critical environmental protections. The San Francisco Land Use Coalition, for example, has condemned Wiener’s bill as a “monumental gutting” of CEQA.

One of the main issues is that the bill could undermine protections for farmland, sensitive wildlife habitat, and wildfire-prone area. The opponents worry that essential environmental protections could be sidestepped if CEQA reviews are not upfront for all.

However, Wiener has pushed back against these accusations. He insists that major projects — especially those involving sensitive areas like wildlife zones or floodplains — will still undergo thorough reviews. He reassures critics that the bill doesn’t mean a free pass for every project; it just aims to make the process more efficient.

VI. Impact on San Francisco: Why This City Stands to Gain the Most

San Francisco is poised to benefit the most from the proposed CEQA reforms, especially with new zoning maps that could open up over half of the city to higher, denser construction. This would be a game-changer for the housing shortage, as it could significantly speed up development in areas previously limited by strict zoning laws.

However, the city’s housing projects have faced major delays due to CEQA. For example:

• A 500-unit Stevenson Street tower was blocked because of seismic concerns and gentrification fears.
• A Nob Hill project was rejected due to shadow analysis concerns on a nearby playground.
• A Whole Foods project got stalled after a labor union filed a CEQA appeal, leading to long delays.

VII. Public Opinion and Expert Insight

Public opinion shows strong support for reforming CEQA. According to a 2023 PPIC poll, about 60% of Californians believe limiting CEQA could be a key solution to the state’s housing crisis.

However, there are critics who argue that market conditions like construction costs, labor shortages, and interest rates pose a bigger barrier to housing production than CEQA itself. They believe that these economic factors, not the environmental review process, are what really drive delays and higher costs.

On the flip side, CEQA is also used strategically by some to extract concessions from developers, especially when it comes to affordable housing units. Activists and community groups sometimes use the law to push for more affordable homes in new developments, making it a mixed bag of challenges and opportunities.

VIII. Case Study: UC Berkeley Dorm Lawsuit

A high-profile case showcasing the challenges of CEQA occurred with the People’s Park project in Berkeley. This project aimed to build 1,200 student beds and 100 units for the formerly homeless on a piece of land in the heart of the city.

But it hit a major roadblock when neighbors used CEQA to file a lawsuit, arguing that the presence of students would create “noise pollution.” The case dragged on, and it wasn’t until legislative intervention that the State Supreme Court stepped in, ultimately overturning the lawsuit.

This case sparked a renewed sense of urgency around CEQA reform, especially in light of how housing projects, even ones addressing homelessness and student needs, can be delayed due to legal challenges.

IX. What Happens If the Bills Pass?

If these bills pass, they could bring about significant changes for housing development in California, especially in cities like San Francisco. Here’s what we might see:

1. Complementary But Separate Bills

While both Buffy Wicks’s and Scott Wiener’s bills aim to streamline the housing development process, they won’t be merged into one bill for now. They’ll work alongside each other, targeting different areas of the issue.

2. Fewer Delays for Developers

Developers will likely face fewer delays on projects that comply with the new rules. With clearer exemptions from CEQA for urban housing and infrastructure, projects could move forward much faster, especially in areas that need more housing.

3. Potential for a Housing Boom

If these bills are implemented effectively, we could see a new era of urban housing in California, especially in areas like San Francisco, where housing shortages have been a major issue for years. The combination of fewer legal hurdles and faster project approvals could lead to the creation of thousands of new homes.

X. The Bigger Picture: Vision vs. Reality

While Governor Gavin Newsom once pledged to build 3.5 million new homes in California, the reality has been far from that goal. Here’s the bigger picture:

Newsom’s Pledge: 3.5 Million Homes

Newsom’s ambitious target of 3.5 million new homes by 2025 now feels out of reach, with only a fraction of that number built. CEQA reform is seen as a potential game-changer, but it’s clear that much more is needed to reach those lofty housing goals.

CEQA Reform’s Role

CEQA reform could certainly help speed up housing development by removing some of the legal barriers and delays, but it’s unlikely to solve the housing crisis on its own. It’s one piece of a much larger puzzle.

Aligning Policy, Economics, and Political Will

To truly tackle the housing shortage, all the pieces need to align: thoughtful policy changes, a favorable economic environment, and strong political will. While CEQA reform could be the catalyst, real progress depends on how these elements come together to create a sustainable housing solution for the state.

XI. Conclusion

CEQA reform is being seen as a crucial step to address California’s housing crisis, potentially unlocking years of stalled projects. But the real test will be in how these laws are implemented and whether there’s enough urgency and compromise to make real progress. It’s not just about passing laws; it’s about making them work for everyone.

Stay informed, get involved, and make your voice heard. California’s housing future depends on it!