San Francisco Limit Gets Cheers, Jeers : Growth Curb on Downtown Building Given Mixed Reviews

It’s been nearly a year since San Francisco’s Board of Supervisors adopted the most restrictive growth-control measure in the nation, but slow-growth advocates and local developers still disagree over how well the plan is working.

“The downtown plan and the limits on new construction have turned out to be a fiasco,” said Richard Deringer, president of Deringer Development Group, echoing the sentiments of many Bay area builders. “Building here has fallen victim to the political process.”

Countered Sue Hestor, an attorney for slow-growth advocates, San Franciscans for Reasonable Growth: “Developers are just ticked off because they can no longer build what they want and as much as they want. They want a passive citizenry, and we’re not passive anymore.”

The controversial “downtown plan” limited construction of new office space to an average 950,000 square feet a year and levied hefty development fees for child-care facilities, art, housing, parks and mass transit. It also led to the establishment of an architectural review process that encourages developers to construct shorter, tapered buildings, rather than tall, box-like towers.

Projects Rejected

So far, not a single builder has been able to meet the city’s design standards. Three companies paraded their proposed projects in front of the planning commission in May, but the commission rejected all.

“The rejections were justified on two grounds,” Dean Macris, San Francisco’s planning director, said.

“First, it was determined that the city has more than adequate office space at this time. And second, it was the conclusion of the commission, after evaluation from both the staff of the department and a distinguished architectural review panel, that none of the three buildings was architecturally superior.”

Builders can’t claim the city needs more office space. San Francisco’s vacancy rate now hovers around 16%, compared with virtually zero only five years ago. Rents have fallen sharply.

‘A Total Disaster’

Still, the building limit and the architectural review process rub most builders and some architects the wrong way. Their most common complaint is that the controls have turned the development process into nothing more than a “beauty contest” with the city as sole judge.

“It has been a total disaster,” griped architect Jeffrey Heller after two of the proposed projects he designed were rejected in the spring competition. “It’s been incredibly slow and expensive, like some new kind of Chinese water torture.”

Even worse, say some disgruntled builders, the new law has proven a boon for politicians, attorneys and others who promise to push through a developer’s project for hefty fees.

“The downtown cap allows for corruption,” Deringer said. “You wouldn’t believe all the people who came to me and said, ‘If you pay me this amount of money, you’ll get a permit because I’m tied-in with this politician or that politician.’ ”

Large Contributions

If a handful of influence-peddlers have benefited from the downtown plan, so have a large number of San Franciscans. Developers have donated millions to child-care funds, refurbished run-down hotels for the needy, and paid for job-training and other social services.

One builder said such donations give a development a better chance of being approved, but another called them “legalized extortion by the city and certain community groups.”

Hestor of San Franciscans for Reasonable Growth admits that her group has used its growing political clout to pressure developers “into doing more than they’re legally required to do” for the community.

“But I don’t see anything wrong with that,” she added. “These developers are getting a lot out of this city, so it’s only right that they put something back in.”

In some ways, implementation of the downtown plan has made life a bit easier.

Fear Too Much Power

“When the plan was being formulated, the maximum dimensions for a (proposed) building sometimes changed overnight,” said John Ellis, senior designer for the San Francisco architectural firm of Kaplan, McLaughlin, Diaz. “Plans that previously complied, suddenly didn’t. It was like trying to hit a moving target.”

Some builders and others in the real estate business worry that the new law gives Macris too much power in determining which projects get built and which ones don’t. Although proposed developments are reviewed by a panel of outside architects, it is Macris who chooses the panel’s members.

Macris denies that his department has too much power. He points out that the Planning Commission, which must give final approval to any project, rejected the only proposal his department approved in last spring’s competition.

“I’d also like to think that I’ve represented the thoughts of the people,” he added. “I think the people would agree that I’ve made the right decisions.”

Another Ballot Initiative

San Franciscans may support Macris, but many of them apparently think the downtown plan doesn’t go far enough in limiting the city’s growth. An initiative that would cut the allowable amount of yearly construction in half--to 475,000 square feet--recently qualified for the November ballot.

Not all builders oppose the initiative. “The developers who already have their buildings probably wouldn’t mind a lower limit,” said Charles Froland, an executive at commercial broker Grubb & Ellis Co. “Less space would help the market.”

But many residents say the ballot initiative goes too far. In particular, there’s concern that the measure would hurt Santa Fe Pacific Realty Corp.’s 5-year-old Mission Bay project. The proposed development is south of Market Street, about a mile away from downtown.

Critics of the controversial Mission Bay development note that it calls for the construction of about 4 million square feet of office space in an area where vacancy rates are already high.

But supporters of the project, including San Francisco Mayor Dianne Feinstein, point out that the development would also add at least 7,500 units of sorely needed housing within walking distance of the heart of the city. About one-third of those homes would be sold at below-market prices.

Could Affect Project

Jim Augustino, Mission Bay’s project director, won’t speculate on how passage of the initiative would affect his development. But, he added, “the entire proposal is based on economic viability, and the project probably wouldn’t be viable if we don’t get to build the office space.”

Even Macris is concerned about the initiative. While stressing that he doesn’t want to take a stand on the upcoming measure, he said he’s concerned about how it might affect the city’s long-term economic outlook.

“Voter initiatives are very important,” Macris said. “But if the economic situation changes dramatically for the city, we’re going to need some flexibility. I’m not sure whether we’d have that flexibility if the ballot initiative passes.”

Opponents of the measure say an even tighter cap on the city’s growth will aggravate the problems created by passage of the downtown plan. They also claim that developers will shun San Francisco and build elsewhere--an argument they used in their unsuccessful attempt to thwart last year’s measure.

So far, predictions that builders would flee the city after passage of the downtown plan have proven incorrect. Although some surrounding communities have seen an increase in the number of proposed office projects, many developers are still trying to build in San Francisco.

Nine Project Proposals

Nine companies, for example, will go before the Planning Commission this fall to seek approval for their San Francisco projects, according to Macris. Two of those firms--including Deringer’s company--were among the three developers whose projects were rejected in the spring.

Deringer has reworked his project’s design, but he’s not looking forward to what he calls “the upcoming beauty contest.”

“There are going to be nine developers with nine of the most expensive attorneys, nine of the most expensive architects, and nine of the most expensive public relations firms,” Deringer said. “We’re going to have ourselves a nine-ring circus up here.”