In a report that is sure to spark debate for the coming months ahead of the November election, City Controller Ben Rosenfield has completed a feasibility analysis requested by the Board of Supervisors that appears to support the claims of Mayor Ed Lee and moderate members of the Board that the city is edging close to asking too much of developers when it comes to including below-market-rate units. In particular, as the Chronicle explains, Rosenfield's analysis says that 18 percent is the cap at which developers of rental housing begin to want to pay less for the land they'll be developing, thereby potentially driving land values down if they're required to include as much as 25 percent affordable units, as mandated (with caveats) by Prop C, which voters passed in June.
Condo developers, says the report, can afford to build a few more affordable units, about 20 percent, but Rosenfield notes that these developers are three times more likely to take the city's option of paying an in-lieu fee rather than build the units on site and he suggests that the city raise that fee in order to encourage more affordable units to be built.
Proponents of affordable development say that the issue is getting confused here, though, and maybe we should be driving land values down. Rosenfield would argue that property owners are simply going to sit on their property and impede development if that's the case, but non-profit developer John Elberling, executive director of Todco, says via the Chronicle, "The landowners took the benefit of the boom. There is no public-policy reason for them to be protected at all."
Multiple developers of large-scale properties have agreed to well over 20 percent affordability, including the massive 5M development in SoMa, and Lennar's 157-unit development taking shape at at 1515 South Van Ness.
Supervisor Jane Kim, who with John Avalos was behind Prop C but compromised with other supervisors to say that it could be amended pending the results of a feasibility study, has yet to comment publicly on the report, which is set to be finalized in September.
SFist reached out to Kim's office and awaits comment.