668 Guerrero & 400 Divisadero: SB 423 and AB 2011 Hit the Mission and Haight

Here's a question for you. What happens when you finally fix the thing everyone said was broken — and the housing still doesn't get built?

That's literally what's playing out right now on two San Francisco streets. State laws blew open the approvals bottleneck. Projects are sailing through in weeks instead of years. And then — nothing.

We're talking about 668 Guerrero in the Mission and 400 Divisadero in the Lower Haight. Two projects using California's big streamlining laws — SB 423, AB 2011 — to skip the old discretionary hearing gauntlet entirely. Ministerial approval. Check the box, you're in.

And 400 Divisadero? Two hundred and three units, eighty-five million dollar build, approved over a year ago. Construction start date? Still TBD. [SFX: DRAMATIC_STING]

The city's own planning chief of staff said it out loud — the real go-or-no-go is the financial one.

So today — the gap between "approved" and "funded." Why Sacramento solved one problem and the next one might be harder.

That's coming up.

Good morning, I'm Holden Carter.

And I'm Naomi Zhao. It is March 17th, 2026, and today we're talking about two housing projects in San Francisco that tell a much bigger story about what's actually working in California's push to build more homes — and what's still broken.

So here's the setup. California passed these landmark laws — SB 423, AB 2011 — that basically tell cities: if a housing project checks the right boxes, you have to approve it. No years of hearings, no political gauntlet. Ministerial approval. Done.

And San Francisco, a city famous for taking forever to approve anything, is now ground zero for testing whether these laws actually deliver real buildings with real people living in them.

We're tracking two projects. Number one: 668 Guerrero Street in the Mission District. Twelve units, six stories, using SB 423. The developer is targeting construction this spring — like, *soon*. Number two: 400 Divisadero in the Lower Haight. Two hundred and three units, eight stories, approved over a year ago under AB 2011. Eighty-five million dollar build. And as of today — no construction start date.

And that gap right there is the whole story. Because getting approved is no longer the hard part. Getting *funded* is.

Exactly. So today we're going to walk through how each project used these state laws to skip San Francisco's notoriously slow process. We'll dig into why approvals are stacking up faster than financing can follow. We'll look at this wild cost spiral where every delay triggers new building codes that add millions. And we'll ask the big question —

Are we building housing, or are we just building a really impressive pile of permits?

Here's how we're going to do this. We'll start with 668 Guerrero and the SB 423 pathway. Then we'll cross town to 400 Divisadero and AB 2011. We'll break down the financing wall both projects are hitting. And we'll end with what policymakers are trying to do about it.

Let's get into it.

Okay, so to really understand what's happening with these two projects, we need to rewind a bit. Because California has been waging a quiet revolution against its own cities on housing approvals. And San Francisco? San Francisco is ground zero.

The city that made "not in my backyard" an art form.

Exactly. So here's the backstory. For decades, if you wanted to build housing in San Francisco, you entered what developers literally call the "discretionary gauntlet." Public hearings, design review, appeals, environmental challenges — a project could spend three, five, sometimes seven years just getting permission to exist. And Sacramento finally said: enough. They started passing laws that bypass all of that.

And the two laws we're talking about here are SB 423 and AB 2011. Break those down for me — what do they actually do?

Think of them as two different doors into the same room. SB 423 is the successor to SB 35 — it extends streamlined ministerial approval through 2036. "Ministerial" is the magic word here. It means if your project checks the boxes — right zoning, objective design standards, required affordability percentages — the city has to approve it. No hearings. No neighbor vetoes. No Planning Commission drama. You fit the box, you get the permit.

And AB 2011?

AB 2011 does something similar but specifically targets commercial corridors. If you've got a car wash, a laundromat, a strip mall on a transit-served commercial street, and you want to convert it to housing? AB 2011 says: meet the labor standards, meet the affordability rules, and you get ministerial approval. No discretionary review.

So that's exactly what's happening at 400 Divisadero — the old car wash site.

Bingo. That empty lot on Divisadero has been a political symbol of SF housing dysfunction for years. Everyone could see it was a perfect housing site. Nobody could get it built. 4Terra Investments finally used AB 2011 combined with the State Density Bonus to push a 203-unit, eight-story building through. Base zoning would have allowed 131 units. The density bonus took them to 203. And crucially — no discretionary hearings.

And 668 Guerrero is using the other door — SB 423.

Right. Smaller project, twelve units on Guerrero Street in the Mission. The owner, Real Equity Group One out of Mill Valley, filed their SB 423 Notice of Intent in May 2025, got an informational presentation at Planning Commission that June, and by January 2026 had their formal application in. We're talking about a timeline that would have been unthinkable five years ago in San Francisco.

Okay, and there's a key reason San Francisco specifically is seeing so many of these SB 423 filings, right?

Yes — and this is important. San Francisco has fallen short on its state-mandated housing targets, its RHNA numbers. That triggers an accelerated compliance cycle, which means more projects qualify for ministerial review. So developers are now literally designing their projects to fit SB 423 eligibility rather than trying to survive the old political process. [PAUSE: 2s]

But here's where we hit the wall. And I want to be really clear about this because it's the central tension of this whole story. Getting approved is not the same as getting built.

The financing gap.

The financing gap. SF Planning's own chief of staff, Dan Sider, told the SF Standard that the "real go/no-go determinant" for 400 Divisadero is — his words — "the financial one." That project has an eighty-five million dollar construction price tag. And as of right now? No construction start date. The approval came in January 2025. More than a year later, no shovels.

Because lenders aren't lending?

Because the math doesn't work yet. High interest rates. Construction costs that keep climbing. Uncertainty about what rents or condo prices you can actually get. And here's the really vicious part — Supervisor Bilal Mahmood has been pushing what he calls a fix for the "housing death spiral." Every time a project gets delayed, it has to comply with newer building codes. That adds five to seven percent to costs. 4Terra estimated that if they could lock in 2016-era building codes for their long-running application, they'd save four million dollars.

So the delays literally make the project more expensive, which causes more delays.

That's the death spiral. Mahmood said, quote, "We wanted to see if we could solve the housing death spiral in which each delay results in other delays, compounding the problem." And 4Terra's partner Amir Massih said a code-lock would give them, quote, "a little bit of relief in lower construction costs." So the state has solved one problem — you can get entitled fast. But the market has to solve the other — making the numbers work to actually build.

Alright, let's get into it. Two projects, two different state laws, one big question: can Sacramento actually force San Francisco to build housing? We're talking about 668 Guerrero Street in the Mission and 400 Divisadero in the Lower Haight. And what makes these fascinating is they're basically test cases for whether California's streamlining laws can break through the city's infamous approval logjam.

So let's set the table here. For years, if you wanted to build housing in San Francisco, you were looking at a discretionary review process that could take years. Public hearings, appeals, political negotiations, the whole thing. Sacramento said enough. They passed laws like SB 423 and AB 2011 that create what's called a ministerial pathway. If your project checks the right boxes — zoning, affordability, labor standards — the city basically has to approve it. No hearings. No political horse-trading.

Right, and San Francisco is specifically in the crosshairs here because the city has fallen short on its state-mandated housing targets, its RHNA numbers. That triggers an accelerated compliance cycle, which means more projects qualify for this fast-track ministerial review. Developers are literally designing their projects to fit these state law boxes rather than trying to survive the old political gauntlet.

So let's talk specifics. 668 Guerrero, Mission District. This is a smaller project — a six-story, roughly 68-foot building, twelve total units including an ADU. The owner is Real Equity Group One out of Mill Valley. The architect is RG Architecture. Mix of one- to three-bedroom units, about ten parking spaces. It's not a massive tower. This is missing-middle infill.

And here's what's important about the pathway. They filed under SB 423, which is the successor to SB 35, combined with the State Density Bonus. That combo gets them roughly a hundred percent bonus above what base zoning would allow. Two of the twelve units are designated affordable. The Notice of Intent went to SF Planning back in May 2025. They had their informational presentation at the Planning Commission in June 2025. And then in January of this year, 2026, the formal permit application was filed.

And Mission Local reported in February that Planning was expected to approve it within about ninety days. So we're talking about a timeline where a project goes from notice of intent to expected approval in under a year. For San Francisco, that is lightning speed.

The sponsor is publicly targeting a Q2 2026 construction start. Which would be remarkable.

Now let's jump to the bigger project. 400 Divisadero. This one is an eight-story, 203-unit building in the Lower Haight. The developer is 4Terra Investments. BDE Architecture is the architect. And this site — Holden, this site has been a symbol of San Francisco housing dysfunction for years.

The empty car wash lot!

The empty car wash lot that everybody in the neighborhood has been staring at, waiting for something, anything to happen. And in January 2025, it finally got ministerial approval under AB 2011. That's the law specifically designed for housing on commercial corridors. 4Terra combined AB 2011 with the State Density Bonus to push from a base zoning capacity of 131 units all the way up to 203. No discretionary hearings required.

So the approval is done. Great. But here's where both of these stories converge on the same brutal reality. [SFX: DRAMATIC_STING] The construction cost estimate for 400 Divisadero? Eighty-five million dollars. And at the time of approval, a construction start date was — and I'm quoting the coverage here — "not established." Dan Sider, the chief of staff at SF Planning, told the SF Standard that the real go/no-go determinant for this project is, quote, "the financial one."

And that's the whole story, right? Approved is not funded. These state laws have genuinely solved half the problem. They've compressed the time-to-approval dramatically. But they cannot solve the time-to-financing gap. Construction lenders are cautious. Interest rates have been high. Construction costs are volatile. And developers still have to lock in guaranteed maximum price contracts with builders, line up equity, and make the whole thing pencil at today's rents or condo prices.

And there's this vicious cycle that Supervisor Bilal Mahmood has been trying to address. He calls it the housing death spiral. Here's how it works: a project gets delayed for whatever reason. While it's delayed, the building code gets updated. Now the developer has to redesign to meet the new code. That redesign adds five to seven percent to costs and triggers more delays, which can trigger another code update —

And around and around it goes.

Exactly. For 400 Divisadero specifically, 4Terra estimated that if they could build under the 2016-era code that was in effect when they first applied, they'd save about four million dollars. Amir Massih, a partner at 4Terra, said it gives them quote, "a little bit of relief in lower construction costs."

So Mahmood proposed a code-lock concept — basically freezing the applicable building code at the time of application so delays don't keep ratcheting up costs. It's a clever idea, but it doesn't substitute for the fundamental market conditions. It doesn't lower interest rates. It doesn't make construction labor cheaper.

And this is the tension that I think people need to understand. The pro-housing advocates are right that SB 423 and AB 2011 are working as designed. They cut litigation exposure, they eliminate political veto points, they reduce entitlement risk. That's real. That matters. But the finance-first skeptics are also right that what you can end up with is paper housing — projects that are approved on paper but never actually get built because the money isn't there.

The city's own planning officials are saying the policy conversation needs to shift. It's not just about entitlement reform anymore. It's about project delivery tools. Code-lock proposals, fee timing adjustments, gap financing where it makes sense. The bottleneck has moved downstream.

So where do we stand right now, mid-March 2026? 668 Guerrero is in advanced permitting. The ministerial clock is ticking. The big question is whether the sponsor can close their capital stack fast enough to hit that Q2 2026 construction target. 400 Divisadero has had its approval for over a year now, and the start date is still framed as dependent on financing and cost stability.

Two corridors. Two state laws delivering exactly what they promised — faster approvals. But the gap between an approval and a shovel in the ground? That gap is where San Francisco's housing future is actually going to be decided. [PAUSE: 2s]

And it's worth noting — this pattern isn't unique to these two projects. It's the defining dynamic across SF development right now. The entitlement pipeline is moving. The construction pipeline is not keeping pace.

Okay, so let's step back from the details for a second and talk about what this actually means. Because I think there's a really tempting narrative here, and then there's the more complicated truth.

Oh, I know where you're going.

The tempting narrative is: California fixed it. Sacramento passed these streamlining laws, SB 423, AB 2011, and now housing is getting approved faster in San Francisco, of all places, the city that became a national punchline for how hard it was to build anything. And look, 400 Divisadero, ministerial approval, no discretionary hearings, 203 units, done. 668 Guerrero, twelve units, SB 423, Planning's expected to approve within about ninety days. That is a genuine transformation of how the entitlement process works.

And it IS real. Let's not minimize it. The old system, you could spend years, literal years, in hearings and appeals. Projects would get redesigned four, five times to satisfy different political constituencies. Developers would budget hundreds of thousands of dollars just for the entitlement fight before a single shovel went into the ground. That world is changing on these corridors.

Completely agree. But here's the more complicated truth, and this is the part that I think a lot of people miss. Dan Sider, the chief of staff at SF Planning, said it pretty plainly about 400 Divisadero. The real go-or-no-go determinant is, quote, "the financial one."

And that is the whole ballgame right now. You can have your approval framed and hanging on the wall. If your construction lender won't fund the deal, if your equity partner is sitting on the sidelines because interest rates make the math not work, that approval is a piece of paper.

So we're seeing this weird split, right? The approval pipeline is moving faster than ever, but the construction pipeline is not keeping pace. And the risk is what some skeptics are calling "paper housing." Projects that are approved, entitled, ready to go on paper, but that just sit there.

And 400 Divisadero is Exhibit A for that. January 2025, ministerial approval under AB 2011. Eighty-five million dollars in estimated construction costs. And as of right now? No established construction start date. That's over a year since approval with no confirmed timeline for breaking ground.

Now here's where it gets really pernicious, and Supervisor Bilal Mahmood zeroed in on this. He called it a "death spiral." Every time a project gets delayed, it risks having to comply with newer building codes. And each code cycle can add five to seven percent to costs and force a redesign. 4Terra, the developer at 400 Divisadero, estimated that if they could use the 2016-era code from when their application started, they'd save about four million dollars.

Four million dollars! On a single project, just from code creep during delays. That is a staggering number. [PAUSE: 2s]

So let me lay out the three perspectives here because I think they're all partially right and they're in tension with each other. Perspective one, the pro-streamlining view: this is working. You've cut the political veto points, you've reduced litigation exposure, you've compressed approval timelines. Entitlement risk used to be one of the biggest costs of building in San Francisco, and these laws are systematically reducing it. That's a win.

Perspective two, the finance-first skeptics: streamlining is necessary but not sufficient. It doesn't change interest rates. It doesn't change construction costs. It doesn't change whether rents or condo prices justify the investment. And until those numbers work, faster approvals just give you faster disappointment.

And then there's perspective three, which I think is the most interesting, the city operations view. Officials are essentially saying, look, we've largely solved the entitlement problem on corridors, or we're well on our way. The policy frontier has shifted. Now we need project delivery tools. Code-lock proposals so your costs don't spiral during delays. Fee timing adjustments so developers aren't front-loading cash they don't have yet. Maybe targeted gap financing for projects that are close to penciling but not quite there.

And that shift in framing is really important, Holden, because for twenty years the housing debate in San Francisco was about NIMBYs and hearings and appeals and political obstruction. And now the conversation is increasingly about capital stacks and GMP contracts and construction lending terms. That's a fundamentally different policy problem.

Right. It's moved from a political problem to a financial engineering problem. And those require very different tools.

Here's what I keep coming back to though. The emerging pattern on these corridors is powerful. Streamlining law plus density bonus equals a larger project without discretionary hearings. 400 Divisadero went from a base zoning of 131 units to 203 units through that combination. 668 Guerrero reportedly got about a hundred percent density bonus above base. These laws are stacking in ways that make corridor sites dramatically more productive.

So when the financing environment does shift, when rates come down, when construction costs stabilize, there could be a wave of shovel-ready projects waiting to go. The approvals infrastructure is being built now, even if the shovels aren't moving yet.

That's the optimistic read. The pessimistic read is that by the time financing loosens up, you've got a new set of code requirements, new fee schedules, new cost realities, and projects have to start the feasibility math all over again. That's the death spiral Mahmood was talking about.

Which is exactly why the code-lock idea matters so much. It's a small, technical-sounding policy that could be the difference between corridor transformation actually happening and a whole generation of approved projects just quietly expiring.

The bottom line, and I think we have to be honest about this: California has done something genuinely impressive with these streamlining laws. The entitlement regime in San Francisco is being fundamentally rewired. But approvals are the beginning of a process, not the end. And right now, the hard part isn't getting the city to say yes. The hard part is getting a lender to say yes.

Approved is not funded. Simple as that.

Okay, so what does all of this actually mean for you? Whether you're a renter, a homeowner, a neighborhood advocate, someone trying to build housing in this city — here's what you need to know.

Number one — and this is the big one — approved does not mean funded. The SF Planning Department's own chief of staff, Dan Sider, told the SF Standard that the "real go/no-go determinant" for 400 Divisadero is "the financial one." That's the city itself saying: don't count your apartments before they're built.

So if you live near one of these projects and you're wondering when construction starts, the honest answer is: nobody knows yet. An approval is a huge milestone, but the financing gap is real. 400 Divisadero got its green light in January 2025. More than a year later? No construction start date.

Number two — if you're a developer or you work in real estate, the playbook has changed. The winning formula on SF corridors right now is: state streamlining law plus density bonus equals more units, no discretionary hearings. 400 Divisadero went from 131 base units to 203 using that combo. 668 Guerrero roughly doubled its density. You design to fit the box Sacramento created, and you skip the political gauntlet.

Number three — watch for the "death spiral" problem. Every delay can trigger new building code requirements. Supervisor Bilal Mahmood put it perfectly: "Each delay results in other delays, compounding the problem." For 400 Divisadero, using 2016-era code instead of current code could save four million dollars. That's not trivial on an 85-million-dollar project. [PAUSE: 2s]

And number four — for neighbors, for community members — the era of fighting projects at public hearings is fading on these corridors. Ministerial means ministerial. If a project checks the state's boxes on affordability, labor standards, and zoning consistency, it gets approved. Period. The leverage point has shifted. If you care about what gets built, the action is now in Sacramento — shaping the laws themselves — not at Planning Commission meetings.

So bottom line: the approval bottleneck in San Francisco is genuinely loosening. That's real progress. But the money bottleneck? That's the new chokepoint. And until interest rates, construction costs, or public gap financing shift meaningfully, we're going to keep seeing this pattern — projects approved on paper, waiting for someone to write the check.

Alright, rapid fire — let's rip through the SF housing pipeline. First up: 668 Guerrero in the Mission just filed its formal permit application in January — six stories, twelve units, using SB 423 ministerial streamlining with a hundred percent density bonus above base zoning.

And they're targeting construction by Q2 of this year, which is ambitious. Meanwhile, 400 Divisadero — that famous empty car wash lot — got its 203-unit approval under AB 2011 over a year ago, and still no construction start date.

The city's own planning chief of staff said the "real go/no-go determinant" is the financial one. Approved is not funded, people.

Here's a wild number — every time 400 Divisadero got delayed into a new building code cycle, costs jumped five to seven percent. The developer says locking in the older code could save them four million dollars.

Supervisor Bilal Mahmood is actually pushing a code-lock fix for exactly that — trying to break what he calls the "housing death spiral" where delays breed more delays.

And the emerging playbook on SF corridors is now clear: stack a streamlining law plus the state density bonus, skip discretionary hearings entirely, and pray the financing gods smile on you.

Paper approvals are piling up. Actual shovels? Still waiting on interest rates.

Alright, that is our show for today. The big takeaway — Sacramento has genuinely changed the game on approvals. SB 423, AB 2011, these laws are working. Projects like 668 Guerrero and 400 Divisadero are proving that.

But approved is not built. That's the line we keep coming back to. Until the financing piece catches up, a lot of this stays on paper.

Exactly. Watch the money, not just the permits. We'll keep tracking both of these projects. Naomi, thanks as always.

Thanks, Holden. Good one today.

Thanks to all of you for listening. We'll be back tomorrow morning. I'm Holden Carter.

I'm Naomi Zhao.

Have a great day.