Supervisor Jane Kim, while open to compromises, is proposing that the city mandate a threshold of 30% below-market-rate housing in all new developments starting next year. The proposal, which we first heard about in April, is set to go before the Board of Supervisors today with two options for approval one of which would be by ballot initiative in November is set to create a shouting match between developers and the pro-development set and affordable housing advocates.
The new measure, as the Chron reports, would trigger an extra conditional use process anytime the ratio of affordable housing in the city's development pipeline slips below the 30 percent threshold. It's unclear if this means that developments that do meet the 30% standard would then be somehow fast-tracked, or if it just means that those who don't meet the standard would be slow-tracked, or essentially killed.
Kim is introducing identical measures today, one that will be open to changes and compromise through the end of July with the support of five other supervisors; and another that would be unchangeable and go on the November ballot.
Under current city policy, all new market-rate developments must meet a threshold of 15% "affordable" or below-market-rate units, typically in the form of units that are reserved, and applied for, by income-qualified individuals who earn below a specified percentage of Area Median Income. Alternatively, developers are allowed to opt out of building those units on site, and can instead contribute a fee equivalent to 20% of their construction budget to the city's Affordable Housing Fund. Since this law was put into place, an estimated 55% of developers have opted out and chosen the second option, and those funds have largely not been put into use in the form of new units. (For more background, check out this fairly concise paper from the Mills Policy Institute, which is a far better explainer than that lengthy TechCrunch essay that no one read but everyone shared.)
Kim's new proposal is being called "laudable" but unrealistic given that we already have a lengthy and costly environmental review and permitting process that hinders development in San Francisco, and given that private-sector developers already view the 15%affordable threshold as eating into their returns. Most will argue that 30% makes development essentially unprofitable.
Kim argues that this is a compromise given that affordable advocates have been pushing for 50% affordability. She's further willing to compromise in the current proposal by making this rule only apply to developments larger than 25 units, and to those not already in the pipeline by year's end.
A big issue already is the length of time it takes, and the bureaucratic difficulty, in getting units completed. As the Mills paper points out:
Many of City’s largest projects currently or recently constructed were approved as part of the Market-Octavia plan. That plan took nearly 10 years from inception to construction. In 2004 and 2005, over 600 new projects were filed with SF Planning Department, but only approximately half of those projects were approved. Two to three years later in 2007, 25,000 new housing units from those previously approved projects were filed without being approved until 2011. The units won’t be complete until this year. Currently, only 18% of all approved projectswith a net of 4,600 new unitsare under construction.
One can argue that developers are going to want to continue to build in this city no matter what, so long as the local economy remains strong. However without the San Francisco Redevelopment Agency in existence anymore, it will require more action from the Mayor's Office to broker the kinds of deals that make the construction of affordable housing feasible for private developers.
Also, measures like this one, which will discourage the "Manhattanization of S.F." that everyone dreads via tons of new luxury housing, will also further impede the construction of housing in general. This brings us back to the supply-and-demand argument that everyone loves to whip out lately, which no one has proven will actually result in more low- and middle-income housing.
So, in short, this should be a fun one.