Caught in a Pickle?: A CEQA Challenge to the SF Family Zoning Plan Creates Uncertainty for Developers and the City

A challenge to the San Francisco Family Zoning Plan filed earlier this month in San Francisco County Superior Court creates substantial uncertainties for project developers and the City and County of San Francisco (the "City").  The challenge (Case No. CPF26519501), filed on January 9, 2026, by Neighborhoods United SF; Small Business Forward; Romalyn Schmaltz and Paul Erickson (collectively, the "Petitioners"), alleges that the City violated the California Environmental Quality Act (CEQA) because, according to their writ petition, it should have required a supplemental environmental impact report ("SEIR") for the plan, rather than finding that one was not required.  The City had found, generally speaking, that an SEIR was not required because the EIR for the 2022 Housing Element discussed the types of environmental impacts that the plan might have on the environment.  

The Petitioners allege otherwise. They allege that because the 2022 Housing Element did not plan for, among other things, buildings as high as 650 feet and increased building height throughout the north-west area of the City, the EIR could not have analyzed related environmental impacts.  The Petitioners contend that the City prejudicially abused its discretion, in violation of CEQA, when it adopted the Plan without preparing and certifying an SEIR.  

If the court agrees with the Petitioners, they request that it order the City to prepare an SEIR and rescind its approval of the Family Zoning Plan until a CEQA-complaint SEIR has been certified.  

It's this request for relief that creates substantial uncertainty for project developers and the City.  For project developers, rescission of the plan would likely render projects that have been proposed under the expansive height allotments under the plan no longer valid unless they have obtained a building permit.  For the City, recission of the plan could mean that it is no longer compliant with its housing unit allocation under the state Regional Housing Needs Allocation ("RHNA").  

A project developer who has a building permit for a project approved under the Family Zoning Plan would have a vested right to continue with the project even if the court orders the city to rescind the plan pending certification of an SEIR.  California courts hold that a developer’s right to complete a project as proposed does not vest until (1) a valid building permit, or its functional equivalent, has been issued, and (2) the developer has performed substantial work and incurred substantial liabilities in good faith reliance on the permit.  (Avco Community Developers, Inc. v South Coast Reg’l Comm’n (1976) 17 Cal.3d 785.)  Thus, a project developer with a valid building permit and some work performed on the project before a decision adverse to the City is rendered by the court will be in the clear to proceed with the project.  A developer without a building permit would not.  

This might mean that as the CEQA case moves forward, developers will encourage the City's planning department to issue building permits expeditiously.  

They might also seek to protect their development rights by proposing the City enter into a development agreement under Government Code sections 65864–65869.5.  This would lock in their entitlements under laws, regulations, and land use approvals in effect at the time of execution of the agreement.  

As for the City, the consequences could be dire if it is ordered to rescind the Family Zoning Plan.  Under state law, the City was required to rezone to provide sufficient capacity for an additional 36,200 housing units by 2031.  That rezoning plan, which is the Family Zoning Plan, was required to be implemented by January 31, 2026.  On December 12, 2025, the City adopted the Family Zoning Plan, which took effect January 12, 2026, satisfying the state-mandated deadline.  However, if the court grants the CEQA petition and commands the City to rescind its approval of the Family Zoning Plan, the City may be out of compliance with RHNA because it would no longer have a zoning plan establishing the requisite number of housing units.  This could trigger a number of significant penalties.

According to the City Planning Department, the penalties could include "loss of tens to hundreds of millions" of dollars in State funds that support, among other things, transportation, utility service improvements, and building affordable housing. It would also include the "builder's remedy," meaning that the City would be required to approve any proposed project that meets basic life-safety standards.  

The court may be able to fashion a remedy, exercising its equitable powers, that does not unwind the plan to such a degree that it jeopardizes state funding for the city and local control over zoning decisions.  For example, it could stay approvals of projects that, say, propose building heights allowed under the Family Zoning Plan, but let the zoning stay in place pending certification of an SEIR.  

Still, even if there is a clever remedy that could minimize disruption to the City's compliance with RHNA, project developers would be left in a sort of limbo waiting to see what zoning regulations will control their projects.