Many of the recently proposed Group Housing developments in San Francisco, with shared kitchens and living areas, have been positioned as creative solutions to maximize density and minimize rents in response to the City’s current housing crisis.

But with the addition of “kitchenettes,” which aren’t technically kitchens, a number of the proposed projects are effectively buildings filled with studios which were creatively designed with shared kitchens and living areas on the floor plans in order to circumvent San Francisco’s Inclusionary Housing (BMR) Program and unit mix requirements which don’t currently apply when the “Group Housing” tag is attached.

Originally intended as incentives to spur the development of lower-cost housing units, a proposed ordinance to close the so-called Group Housing loopholes could be approved by San Francisco’s Planning Commission in three weeks time.

The proposed ordinance would require Group Housing projects with ten or more units to either fund or include below market rate units as part of the development. And the affordable units would be required to be two or three bedrooms and remain permanently affordable for the life of the project.

Don’t be surprised if a number of previously proposed group housing projects have a market driven change of heart if the new ordinance is approved.

40 thoughts on “Group Housing ‘Loopholes’ Could Soon Be Closed”
  1. This is a terrible idea. These group housing projects are going to be “affordable by design” – we should allow them to flourish as part of the solution to the City’s housing crisis. Instead, the city’s knee-jerk reaction is to squash it. A good example of why we’re in this housing crisis in the first place.

    1. How can we say they are “affordable by design” if they are to be marketed generally and may end up not meeting the definition of “affordable” in fact which determination cannot be made for a matter of a couple of years minimum after submission for approval?

      Perhaps the solution should be a definition of “Group Housing” and the different treatment a matter of degree of BMR requirement.

    2. The only thing “affordable” is the cheap crap these things are made out of. The price per sf will be some of the most expensive real estate in the country.

      1. There are 2 different things:

        1 – Cheap (it is not, when the square footage is taken in consideration)
        2 – Affordable (it is, since the price is not as high as a typical dwelling)

        If we want to make the City affordable, we should allow condo splits, which is a way to help densification. It’s widespread in many expensive cities.

    3. SF has redefined the meaning of the word “affordable”, “affordable”===”subsidized”. Do you understand now?

      If most of the people have money to afford, it is not “affordable” since government subsidy is not involved. If the rent is $800 after subsidy, it can be called “affordable”. Otherwise, it is not “affordable” even if the rent is $1500.

  2. The capitalist monster just popped its head again. The San Francisco white knight will not stand it. This Capitalist Dragon must be squashed, diced, burned, buried and then its remains shipped into space. Of course if it keeps coming back, another step will be added.

  3. You have got to be kidding. Group housing IS affordable housing. The BMR units would be the equivalent of Pacific Heights homes in the midst of a dormitory complex.

  4. Excuse what might be a naive question, but how does the Planning Commission “approve a proposed ordinance” which would seem to be the exclusive purview of the BOS?

    1. On all legislation that comes before them, they are only adopting a recommendation which the BOS is encouraged to consider.

  5. I wonder who raised their hand and said, “But mommy, Sally didn’t have to wash the dishes!” on this one?

    San Francisco is like an awful mom with too many kids who she can’t control and instead just gives into each one’s demand. And we are her spoiled, entitled, whiny bratty kids. It really isn’t a matter of too much parental supervision. Quite frankly, it’s a matter of a parent acting irresponsibly and not being a parent.

  6. Not sure if this is needed, yet. How many of them have actually come on line yet? We won’t know if they fulfill their promise of affordability until more are on the market. But I do understand why the city is cautious about developers exploiting loopholes for these new kinds of housing. Look at what happened with the “live/work loft” rules, meant to preserve semi-industrial work spaces for artists. Instead the developers built tons of expensive condos that were very space inefficient yet didn’t have to pay all the impact fees of regular housing.

    It wouldn’t surprise me one bit if developers used the “group housing” rules to skirt the BMR regulations. Sure, add a common kitchen and a shared space on the floor, but if every unit has a functional kitchenette (and where is the line btwn kitchenette and kitchen?) you really have a studio. And those are MUCH more valuable (to rent or sell) than a shared room.

    My thought is that they limit the number of these projects they allow until they have a sense of how they work in the market. If the loopholes are being exploited, then close them. If they are fulfiling their promise of lower cost housing for more transient workers, then let them build away.

    1. This is the kind of micromanagement that makes things more expensive, restrains supply and creates the main problem: there’s just not enough housing, this makes ot more expensive and developers will look for any loophole to make a buck.

      in short: busybodies are creating their own hell. And every new limitation comes back with a vengeance twice stronger. But try to reason sheltered San Franciscans who have little concern for people who just want an in.

  7. Typical for SF — let’s preemptively over-regulate and kill any innovative housing idea before we really have an understanding of what it might mean.

    To quote Gore Vidal — whether “left-wing” or “right-wing” — “the dream of every society is total control”.

  8. Seattle has (or had, until the NIMBYs started screaming) a very big “loophole” in its zoning code that made micro-housing a feasible development option within the City’s non-single family low-/mid-rise zones. The consequence of which was Seattle has produced more micro-housing units than almost all over major cities in the country COMBINED. (Over 3,000 units and counting). And as a consequence, there are actually some options on the private marketplace for units that are much more affordable to the median income worker. People don’t rent by the square foot – so who gives a poop how much the developer makes per SF? People rent by the bedroom size or by the cost it takes for a roof over their head.

    This push to apply the BMR requirement on micro housing is just crazy. We should be incentivizing these kinds of housing solutions – not punishing them.

    1. Thanks for the very interesting read. I thought I was reasonably familiar with Seattle. Just goes to show, you really don’t understand a place without actually living there.

      Interesting parallels and divergences between Seattle and SF. It seems the “inhabitant class” of Seattle micro-units are almost looked upon as the homeless here. Perhaps, we should build such housing for the homeless to solve what has become as almost uniquely SF problem.

      At any rate, it does seem that micro-units very organically did become de facto affordable housing for many throughout diverse neighborhoods in Seattle to an extent I was not previously aware of..

    2. Interesting – reminds me a bit of the Uber/AirBnB discussion. The developers in Seattle clearly didn’t want to have a nuanced conversation with the neighborhoods about this kind of housing.They saw the loophole and drove right into it. They probably had the best of intentions and actually created affordable housing. But it seems unlikely that these savvy developers would not have anticipated neighbors in a low-rise residential neighborhood would be upset if a 4 story rooming house with 20 people sprang up next door. But rather than have that conversation -where these units should be built, how, etc – they just built them. So in some ways the developers have themselves to blame for the backlash. There is a reason we have zoning rules. Note how most of the SROs in SF were built in the downtown urban core, close to transit and jobs.

      Seattle’s experience shows they can be a great short term solution for low wage workers, but again we have to see what the market does with them here. Do they rent cheaply enough ($1000/mo?) to help lower wage workers? Or do they become luxury studios at $1800 – 2000/ month because they are big enough and nice enough? Only time will tell. But like in Seattle, we will never find out if we totally over regulate them.

      1. It’s none of the neighbors business what private property owners do with their property. Zoning is a takings by other means whereby whiny NIMBYs demand things they haven’t paid for.

      2. The only thing you get from “discussing” with neighbors is a more watered down proposal. Better to ram it through, exploit loopholes, and propose a huge project that you only scale back at the 11th hour as a head fake compromise. NIMBYs are to be crushed not accommodated.

        1. I happen to like the fact my neighbor can’t build a bar or service station (or a rooming house, for that matter) next door to me. But my larger point was that the developers are somewhat to blame for the backlash. They are having a major sad because of new regulations, but these could have been predicted. you build new housing types on the down low, people are going to squawk. They took the short term opportunity and lost the longer term opportunity.

          Of course, in most NIMBY-dominated places like Seattle and SF just opening the conversation would have led to an immediate NO, so maybe they were right in building 3000 units and then getting stopped, vs. trying to legitimize them and only building 300.

          1. That’s my point. In all the affluent coastal so-called ‘progressive’ enclaves – NYC, Boston, SF, Seattle, etc. – the only thing you get from a conversation with the ‘community’ is a big fat NO. You could propose a negative space building and you’d still get a no. Better to ram in down their throats until they choke, and then offer to scale it back at the very end, with that being the game plan all along. Ditto for exploiting loopholes. Entitle [it] till the cows come home (or until local city council/B.OS. closes it)

      3. Only SF needs to reinvent the wheel each and every day for the sole purpose of claiming that they did it. Follow Seattle. Learn from mistakes. Listen to wiser heads.

        There is room for tech to grow — we simply have not automated enough. Way more to go.

  9. Gah! Over-regulated SF against capitalism once again. Just stop voting for the monsters from the left on all levels. Yes the GOP is also deplorable but nothing else will stop the over-regulating monster. Nothing else.

  10. SF is a one party city. Is it the time to split Democratic Party into 2 parties? One party can be called Sensible Party, the other can be called Nonsense Party.

    1. I don’t really understand the Democratic split on the national level ie. the whole defeat of the Trade Deal in the House today. So what does the non-Obama side of the Democrats want? Do they mirror the Progressives in SF? 50 Shades of Politics, and I dislike politics.

  11. Yeah, let’s limit these too! Less competition for my rentals, so I’m cool with it. This, and the mission moratorium will do wonders for my bottom line. Thanks Sups, you guys rule! (And I haven’t even given a penny to any campaign, but if the mission moratorium passes I’ll feel obligated to throw a few shekels campos’ way, since he’s lining up my pockets without me even asking 🙂

    1. That is true. We tried to help the less educated see the long term effects of their policies but when they refuse to listen, we can step back and exploit the loopholes. I like it when I have starving contractors competing for my business, not the other way around. Ditto for prospective tenants. Less work and more money for me. I like to go on vacation and relax. Like my late mother said, “sometimes you get more just going with the flow.”

    2. I think what the supes are doing fits pretty well the definition of insanity: “doing the same errors again and again and expecting a different result at every time.

      Restraint of supply is what happens when you add more rules against the market. Then prices go up and the market finds a new way to make money and this leads Supes to feel we need more rules. Rinse, repeat (… profit).

      1. Some people (some supes) are only interested in “Other People Give Me Housing”. In order for other people to hand over free housing to them, their only work is to block everyone else. If you do not give me free housing, I will block all the development.

        I wonder whether there is any possible way to get around the people whose only goal is to block everyone and demand free things from others.

  12. When my neighbors (my primary residence and rental properties) build, renovate, etc. with or without permits, it is a wonderful thing. I applaud them and try to learn something from their business tactic. Their upgrades add to my property value without me spending a dime or doing anything different. It sure beats having a neighbor who simply ages in place while their homes slowly deteriorate contributing to the loss of my curb appeal/property values, leaving me to wonder when they are going to move to a nursing home or kick the bucket.

  13. Terrible idea. Group Housing developments are one way that young people can still afford to live in the City. Well off people are not moving into places with shared kitchens. Unnecessary and destructive regulation.

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