Bill proposes grants to convert vacant offices to housing
In the three years since the pandemic emptied out downtown San Francisco, the idea of converting office buildings to housing has been discussed ad nauseam in the city’s civic and political circles.
There have been special reports, panels, academic white papers and architectural studies all exploring the feasibility of converting vacant office buildings into housing.
Yet, despite the interest, the number of actual conversion applications that have come into the city planning department can be counted on one finger. Only the owner of 988 Market St., the historic office building next to the Warfield Theater, has submitted a conversion application. Another housing group bought a building at Sutter and Taylor and intends to convert it to housing, but has yet to file paperwork with the city.
Now, Assembly Member Matt Haney has introduced legislation that could make office-to-residential conversions faster, easier and less expensive. Taking a page from a program in place in the Canadian city of Calgary, it would even offer grants to developers willing to do conversions.
The Office to Housing Conversion Act, or AB1532, would “stop local governments from slowing down or killing officeto-housing conversions by making their approval automatic and imposing strict time limits on all building permits,” according to Haney’s office.
It would also “block local governments from ‘nickel-and-diming’ projects to death by capping unnecessary fees and design requirements.” The creation of a fund — the California Downtown Recovery Catalyst Fund — would provide grants to projects that turn unused office space into housing.
The legislation could face opposition from local groups that won’t want to lose control of the planning approval process. In addition, the idea of giving taxpayer grants to developers will likely be opposed by some.
The bill is being sponsored by YIMBY Action, which advocates for legislation that will remove barriers to housing production.
“Isolating jobs from housing was always a mistake,” said Laura Foote, executive director at YIMBY Action. “It’s time to use the space we have to reimagine what’s possible for our downtowns. It’s time to create vibrant, mixed-use communities.”
Since the pandemic began, San Francisco has struggled to bounce back, with a 27 percent vacancy rate and a daily occupancy rate that is roughly 40 percent what it was prior to March 2020. About 35 percent of Bay Area residents currently work from home. Downtown San Francisco currently has about 150,000 fewer workers on an average day than it had before the pandemic.
Haney said that “turning empty offices into housing is one of the only paths forward to saving our downtowns.”
“How people work was permanently changed by the pandemic and the downtowns that relied on commuters are starting to look like ghost towns,” said Haney.
Under the legislation, city councils, boards of supervisors and planning commissions would not have the power to deny and delay conversions. Conversions would be allowed in all parts of cities, regardless of local zoning. And planning departments would have to respond to all conversion applications within 90 days.
All projects would have to ensure that 10 percent of proposed units be affordable to low- and moderateincome families, which is significantly less than the 22 percent currently required in San Francisco in new developments.
Based on the program in Calgary, the California Downtown Recovery Catalyst Fund will provide grants on a square footage basis to projects located in high density, historic downtown areas that convert unused office space to housing.
Haney said the details of who would be eligible for conversion grants — it would likely target projects with higher levels of affordability — would have to be worked out.
“It’s not going to be every building, but there are a number that could work,” he said. “We have a desperate need for housing and plummeting demand for office space so this just makes sense.”
He said the legislation was crafted with the input of developers and those in the construction trades who are looking at potential conversions, and their message was clear: “It has to happen quickly. They can’t have a bunch of fees piled on top. And it should happen without a lot of roadblocks.”
And Haney said the issue isn’t going away: As current leases start to expire over the next few years, the office vacancy rate could jump even higher
“This is a statewide challenge,” Haney said. “California has a number of cities that have been the slowest to recover. Our downtowns were built for a different type of work where most people came to cubicles in big office buildings. Those workers are not coming back.”