San Francisco moves to revoke Prop M allocations from stalled projects
The entitlement you are sitting on may no longer be yours to sit on.
San Francisco Planning Director Sarah Dennis Phillips has told the Planning Commission the city could begin revoking Proposition M office allocations from projects that have made little or no progress, converting a dormant entitlement from a free option into a wasting asset.
Why it matters
Prop M, the 1986 voter-approved measure that caps how much large office space the city can approve each year, has always been treated by developers as something you win once and hold indefinitely. Dennis Phillips laid out a tougher enforcement posture in a memo to the Planning Commission that would change that. Projects showing little or no progress toward development could lose their allocations immediately. Developers that have proposed community benefits but have not pulled building permits would have up to 18 months to do so before risking forfeiture. The Real Deal reports the effort is part of Mayor Daniel Lurie’s push to speed downtown’s recovery and stop developers from holding entitlements indefinitely.
The exposure is concentrated in Central South of Market, where developers have sought to swap once-envisioned office megaprojects for thousands of residential units while continuing to hold the office allocations attached to the original plans. That is the precise fact pattern the memo targets: a pivot on the program without a release of the entitlement.
The numbers
The scarcity is what gives this teeth. Under Proposition E, passed in 2020, the amount available for Large Allocation projects is reduced each year when the city does not build enough affordable housing. San Francisco has fallen short of its state housing goals, and less than 100,000 square feet of new office allocation was added last year, with only 100,000 to 200,000 square feet expected annually in the near future. Planning rules require an allocation for any project with more than 25,000 gross square feet of office space.
Meanwhile there is live demand. Hines’ 77 Beale Street and Lincoln Property Company’s 536 Mission Street are both seeking allocations, together representing nearly 2 million square feet. The memo does not put a public square footage figure on how much dormant allocation could be reclaimed.
What’s next
This sits at the memo stage, submitted to the Planning Commission, not yet an adopted rule. Developers holding allocations on projects that have not moved should read the 18 month window as the operative clock and assume that evidence of progress, specifically pulled building permits, is what preserves the entitlement. The reallocation math is the second half of the story: every square foot clawed back is a square foot that can be redirected to an applicant that is ready to build. More at the San Francisco hub.