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Monday, February 2, 2009

'How's Business?' San Francisco Builder: 'What Business?' -- Home Construction Totals Hit Bottom, Start to Dig

Posted By on Mon, Feb 2, 2009 at 7:30 AM

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The statistics for home-building in 2008 are in -- and, like receiving the red pen-strewn remnants of a test you figured you'd botched, it hurts ever that much more to be tangibly informed of bad news you already knew.

According to the California Building Industry Association, the 65,380 permits issued statewide in '08 for houses and apartments represents a 42 percent drop from the year before and a 69 percent slide from 2004.

Locally, however, the statistics aren't quite so bad -- largely because the amount of residential construction in San Francisco is infinitesimal compared to other California counties. In 2008, permits were issued for 52 single-family homes, down from 57 the year before. Permits for 2,395 multiple-family dwellings were issued last year, a drop from 2,791 the year before. By comparison, 95 single-family homes were greenlit last year in Yuba County (down from 680 in '07) and 1,857 apartments were permitted in Orange County last year -- a massive drop from 4,890 in 2007.

The fact San Francisco is faring less horribly than the rest of the state was cold comfort to local builders -- who were, not surprisingly, available to take SF Weekly's calls in the middle of the day. It was Residential Builders Association President Sean Keighran who responded "What business?" to our query of "How's business?"

Keighran wasn't surprised by statistics indicating only a miniscule drop in the number of permits issued last year as opposed to 2007. After all, before a builder "closes a site, assembles a design team, and has something to submit in the form of an application," he or she may have already invested nine months to a year of time. What's more, apartment buildings completed last year may have been in the works since 2005 or earlier.

"What you're seeing now with these statistics is the caboose of the train," Keighran said. "Since the financial collapse occured in the third and fourth quarters of 2008, you won't be truly seeing it statistically until probably the second or third quarter of '09."

While navagating even a small, residential building from the design process to construction in the city often takes longer than World War II, Keighran did have some suggestions as to how San Francisco could make life a little easier for builders:

  • Defer city fees to the end of the job rather than up front when banks require large deposits from builders;

  • If a builder decides to temporarily rent out a structure originally intended to house condominiums to wait out a poor market, does the city really need to assess the structure as if it's still a condominium? This sticks the developer with a massive property tax, and discourages placing potential rental units on the market.

Supervisor Sean Elsbernd, incidentally, said he liked the first idea. As for the second: "That's asking for a little help you shouldn't be getting. If you built as condos and the city gave you permisson to build condos, you're getting assessed as condos. Sorry."

Elsbernd's pet project would be "grandfathering in all the condos in the lottery" -- in order to get all of those buildings up to current code, the supervisor foresees tons of business for local plumbers and contractors (This plan is not universally loved).

SF Weekly's calls to the Mayor's Office of Economic Development, meanwihle, was not returned immediately. Apparently, unlike Keighran, they're still keeping busy.

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About The Author

Joe Eskenazi

Joe Eskenazi

Joe Eskenazi was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left. "Your humble narrator" is a staff writer and columnist for SF Weekly, which he has written for since 2007. He resides in the Excelsior with his wife, 4.3 miles from his birthplace and 5,474 from hers... more


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