Permit more housing development in San Francisco

Assumptions

• Each new housing unit permitted in San Francisco will replace one housing unit that otherwise would have been built elsewhere in the region, yielding a VMT reduction equal to the emissions difference between San Francisco households and the regional average household
• Residents of the typical new housing unit built in San Francisco will drive, on average, 15 miles per day less than the regional average
• The net public costs for infrastructure and services for new San Francisco residents will not exceed the costs that would have been incurred providing infrastructure and services to the same households in other parts of the region.

Analysis

The shape of the city plays a critical role in how much and how often people travel by car. When neighborhoods are compact and many of a person’s daily needs can be found within a few minutes’ walk, vehicle trips per household decline rapidly. There is a very strong correlation between households per residential acre and both the number of vehicle miles per year that a household drives and the number of vehicles that a household own.

Compact, transit oriented land use development allows for reduced driving in two ways. First, residents of these areas tend to use transit more often than average, particularly for commute trips. Second, they make more walking and biking trips. When they do drive, their trips tend to be shorter.

The relationship between compact land use development and reduced VMT has been documented extensively in the San Francisco Bay area. A study by MTC, for example, estimated that San Francisco Bay Area households living within half a mile of rail or ferry stations typically drive 15 miles per day less than the average household in the region.¹

Extensive research has also documented that there is significant unmet demand for this type of housing.² Throughout the Bay Area the supply of housing in denser urban areas tends to be limited not by the willingness of the market to supply this housing, but by land use regulations that do not permit it. Height and density limits, minimum parking requirements and other local land use regulations limit the amount of new housing that can be built in existing urban areas near transit, including inside of San Francisco.

What we do now
San Francisco is home to approximately 345,830 households. Allocations from the Association of Bay Area Governments state that the city is likely to grow to 398,280 households by 2030. Several ongoing planning processes aim to increase residential construction in the city, including the construction of new neighborhoods in Mission Bay and the conversion of some industrial lands to residential uses in the Eastern Neighborhoods. While these plans will permit more housing in San Francisco, land use regulation continues to suppress residential construction below market demand, particularly in the city’s most transit-rich areas.

What we could do
San Francisco could aim to increase the rate of residential construction by rezoning to permit residential land uses, relaxing density limits, reducing minimum parking requirements, and permitting the conversion and legalization of in-law units. With careful planning, increases in residential densities can be accomplished without compromising the character of existing neighborhoods, and can provide opportunities to add new vitality, amenities, and services to established communities. By providing more households the opportunity to take advantage of San Francisco’s compact, walkable neighborhoods, rich transit services,and access to job centers, the City can reduce regional VMT, congestion and CO2 emissions.

A policy that aims to generate new housing in San Francisco beyond current ABAG allocations would reduce regional CO2 emissions. In this analysis, we examine the impact of targeting 10 percent more than ABAG allocations by 2030, a net gain of 40,000 households.

Cost
The relationship between public cost and housing development is complex. In many cases, local governments must pay to provide sufficient infrastructure for new households. In new neighborhoods, infrastructure can mean new roads, transit, and utilities, as well as schools and parks. In existing neighborhoods, these amenities sometimes must be upgraded to accommodate new density. In some cases, tax revenues generated by the new population may not cover the cost of these investments over the long term.

In theory, new housing expands the city’s tax base, and it therefore “pays for itself” over time, even without taking into account the saved public costs of not building somewhere else. However, because the growth of property taxes in California is capped by Proposition 13, some people argue that new housing falls far short of paying for itself, from the perspective of city government. This is one way California cities have justified development impact fees.

An example of this can be found in San Francisco’s recently approved Eastern Neighborhoods plan. There, the City predicts revised zoning will allow for the construction of 4,500 new housing units by 2030. A nexus study carried out by the San Francisco Planning Department found that the public costs of infrastructure and services required for these new households (including transportation, parks, education and child care) will total nearly $77 million. This study will be used to legally justify the imposition of fees on development when it occurs. It is not likely, however, that the fees will fully cover the costs.

It is likely, however, that had the plan not been approved, the new households that will be accommodated in San Francisco because of this residential construction simply would have chosen to live elsewhere in the Bay Area, and would have required similar infrastructure and services in these other locations. The required investment in new infrastructure could be far higher, particularly if this alternative outcome required the construction of new communities outside of existing urban areas. For the purposes of this analysis, we have therefore assumed that the net public cost to the region for building new housing in San Francisco is zero.

Carbon savings potential
If we assume that each new housing unit in San Francisco is responsible for a net regional reduction of 15 vehicle miles traveled per day, or 5,475 vehicle miles traveled per year, then increasing San Francisco’s population by 40,000 households by 2030 would reduce regional VMT by more than 218 million VMT per year. This saving is equivalent to just less than 80,000 metric tons of CO2 per year. It should be noted that San Francisco’s own VMT, and its CO2 emissions, would likely increase significantly under this scenario because of the sheer increase in the number of city residents. This relationship underscores the importance of evaluating CO2 emissions from transportation in a regional context. There is no more efficient way to reduce transportation emissions than by guiding development to areas where transportation systems encourage lower rates of driving.

Endnotes
¹ MTC Station Area Residents Survey. www.mtc.ca.gov/planning/smart_growth/stars/
² “Growing Cooler,” Ewing et al, 2008. www.smartgrowthamerica.org/gcindex.htm