Pieds-A-Terre: The Scale of the Problem

9 08 2017

Construction of luxury condos on Folsom Street. Credit: Noah Arroyo, San Francisco Public Press.

The idea of a “pied-a-terre” tax has been in the headlines recently, with Vancouver and other cities taking the lead in disincentivizing unoccupied housing units.

Secondary/non-primary residence homes (NPRs, or what are more colorfully called “pieds-a-terre”) in San Francisco are significant in number, and the numbers and value of these homes continue to rise, inflating market housing and contributing to the scarcity of available housing.  As of 2014 data (the most recent available) NPRs now comprise nearly 30% of all vacant housing units in the City, and the increase over recent years is equal to 26% of all the new housing production in the same period.

San Francisco has seen a significant increase in NPRs in the past 10 years. Whether these housing units are second homes for the wealthy or units that are rented as short-term vacation rentals, NPRs take housing units out of the rental market, depleting the supply of available housing for San Francisco residents and adding pressure to rising housing prices.  This has become not only a San Francisco issue but a phenomenon in other major “hot market” cities nationwide and even internationally.

 

The scale of the problem

There are three key takeaways from recent research: The number of NPRs in San Francisco is increasing rapidly, pieds–a-terre seem more prevalent in newly constructed housing, and these secondary vacation home units constitute a significant portion of the City’s total vacant units.

The most recent 2014 ACS data shows that San Francisco had 9,307 seasonal units. In 2005, the number was 5,822. That is a 60% increase in secondary/vacation homes since 2005. When compared to the total number of vacant units in the housing stock, the number of NPRs are significant in any year.  In 2005 the total number of vacant units citywide was 32,564, making seasonal homes 18% of those unoccupied units.  By 2012, the total number of vacant units dropped to 30,057 while the number of seasonal units almost doubled to 9,075 accounting for 30% of all vacant units.  To put that in relative terms, the number of new pieds-a-terre over that 2005-2012 period was equal to 26% of all new housing production over those same years.

While San Francisco has not approached the number of secondary units affecting housing markets in places like New York City and Miami, it outstrips other cities when we look at the rates.  Secondary units in New York account for a lower percentage of overall vacant units than in San Francisco. In 2014, there were 63,916 recreational units in New York City, out of 290,675 unoccupied units. That means 21% of vacant units in New York were secondary homes, a significant number but still much lower than in San Francisco where pieds-a-terre account for roughly 30% of all vacant units.[1]  New York, like San Francisco, has seen these numbers increase since 2005, when secondary units only accounted for 17% of vacant units.  However, unlike San Francisco, New York has begun to actively talk about regulating these homes. [2]

 

Conclusion

There is a clear policy and even moral logic in implementing a policy to disincentivize this trend of “ghost units,” and, to the extent that this market behavior continues to persist, to ensure pieds-a-terre are subject to a “luxury tax” that can help fund affordable housing and offset the impact on the City’s housing supply.

 

[1] 2014 ACS 1-year estimate, American Factfinder

[2] http://www.nytimes.com/2014/10/26/realestate/pieds-terre-owners-dominate-some-new-york-buildings.html?_r=0





Take Action! Call for Amendments to SB 35

10 07 2017

SB 35 will silence the voices of working-class communities facing potential displacement in cities like Richmond, San Pablo, East Palo Alto, Oakland, and even San Francisco and LA.

It doesn’t target NIMBYs – it targets gentrifying communities. We need a tool to encourage the housing that we need in anti-housing jurisdictions, but this isn’t it.

Ways to Take Action:

  • Sign the petition to state legislators telling them to oppose SB 35 unless amended
  • If you live in San Francisco, call Assemblymember David Chiu (916-319-2017) and urge him to oppose SB 35 unless amended in the ways called for by the statewide community coalition, Californians for Affordable Housing, including a safe harbor provision for at-risk communities.

If you want to know more about SB 35, here’s a great fact sheet from Californians for Affordable Housing.

Credit: Jonathan McIntosh, Creative Commons.





Alarming Housing Bill Headed for Approval

10 07 2017

Our latest op-ed in 48 Hills.  Check out the original posting here.

Senate Bill 35 is a huge game-changer about to hit SF and other gentrifying cities.  As it says at the end of the article, if you are concerned about SB 35, let your voice be heard before Wednesday’s Committee Meeting!

Emails and calls to:

David.Chiu@asm.ca.gov 

916-319-2017

A sign-on petition has also been created and you can access it here.

Senate Bill 35, heading to Assemblymember David Chiu’s Housing and Community Development Committee Wednesday/12, is a potentially serious threat to California’s most vulnerable urban communities. It will disenfranchise working-class communities of color who bear the brunt of gentrification and prevent them from having a say in how their neighborhoods are developed and from pressing for housing development to be affordable.

A huge market-rate housing project at 16th and Mission could lead to gentrification -- but SB35 would undermine community oversight
A huge market-rate housing project at 16th and Mission could lead to gentrification — but SB35 would undermine community oversight

SB 35 is one of 130 housing and development-related bills in the State Capitol – a record number – and so far, it’s been quietly gliding through under the radar. SB 35 is different from the other housing bills that seek to enforce zoning, or create funding for affordable housing or strengthen local tools like Inclusionary Housing. Despite some real potential benefits in suburban anti-housing jurisdictions, SB 35 could actually end up making housing development less affordable in low-income neighborhoods of San Francisco, Oakland, Richmond, East Palo Alto and many similar urban core communities across the State.

Known as the “By-Right Development” bill, Senate Bill 35 would eliminate the role of the community and the local planning commission or city council in the approvals of “infill” real estate development projects. Virtually every project in San Francisco qualifies as infill, and the same is true of Oakland, Richmond, San Leandro, East Palo Alto, and much of San Jose. Most of the “by right” development pursuant to this bill will likely happen in urban communities.

Under the SB 35 legislation, cities will be required by State law to approve market-rate projects “by-right” unless developers have built 100% of a city’s market-rate housing planning goals, regardless of how much or how little affordable housing has been built.

Eliminating public process is a simplistic scapegoat that ignores the real impediments to housing: a lack of cheap land zoned for housing, limited funding for affordable housing, and the boom-bust nature of economic cycles. But SB 35 is a convenient way for its proponents to “do something” to address the crisis, without changing the underlying fundamentals of the crisis. And of course the real estate industry absolutely loves the idea of eliminating public process and local city “control” over approving development.

So what is there to possibly like about SB 35?

The premise on which SB 35 is supposedly based is a fine one: “all cities need to do their fair share to build housing.” We wholeheartedly agree.

The idea behind SB35 is that the principal reason for California’s affordable housing crisis is that communities abuse public process to stop or delay housing development. We all know of cases where that has happened, including to stop affordable housing. With Silicon Valley pumping out thousands of jobs while cities like Palo Alto, Cupertino, Menlo Park, Brisbane, and many other slow-growth, middle-class cities do little to facilitate new housing, there’s a lot of “fairness” that needs to be spread around the region.

From an affordable housing perspective, the big upside is that SB 35 will make proposed affordable housing projects By-Right throughout the State of California. Given the opposition to affordable housing projects in many California communities, streamlining could benefit affordable housing in suburban jurisdictions – which is why a few affordable housing developers have endorsed SB 35.

But even with these benefits to affordable housing, our Council of Community Housing Organizations coalition representing San Francisco’s affordable housing and tenant’s rights organizations, along with tenant, housing and social justice organizations up and down the state, still think SB 35 in its current form will do far more harm to urban gentrifying communities than it will do good in suburban exclusionary cities. A broad coalition of statewide organizations has made calls for amendments to SB 35 that would address the issues with the bill, and mediate the potential threat it poses to low-income and communities of color.  These appeals have been repeatedly ignored.

What are the downsides of simply “streamlining” more development?

The real problem is in the way SB 35’s authors fail to distinguish between communities where eliminating discretion of approval and public process is harmful and where it could be a benefit. The By-Right bill makes no distinction between communities that have “hot” real estate markets and communities with little development activity, or between communities with low-income populations vulnerable to displacement and those neighborhoods and cities that are totally stable with no gentrification risks.

SB35 is supposedly meant to incentivize market-rate housing only in cities that have not met their market-rate housing goals for a given period. But even in “hot market” cities like SF, San Jose and LA, which in most years build even more market-rate housing than their planning goals, SB 35 could end up eliminating public participation after a recession period when production goes down, precisely at the time when developers begin ramping up for the next development boom cycle.

As currently written, the practical outcome of SB 35 will be to further expedite and accelerate market-rate approvals in the small handful of California communities where the real estate market is already hot – communities that are overwhelmingly urban, low-income, and predominantly people of color. These are the same communities that are currently grappling with displacement and gentrification, and typically have terrible imbalances of market-rate housing development compared to affordable housing. Simply accelerating approvals in those communities is just a recipe to spur even more aggressive gentrification.

Yes, we need a lot more infill housing in California, but we need development that is fairly distributed across all communities and that really meets the needs and incomes of existing and incoming residents. If there were a “safe harbor” in SB 35 to ensure that streamlining doesn’t apply in communities already experiencing rapid development and displacement, then the benefit of the bill could be to steer some new development activity to cities with truly low housing production, but SB 35 does nothing to ensure this.

And in a one-two punch, SB 35 not only encourages accelerated market-rate approvals in vulnerable neighborhoods, but then takes away some of the very tools low-income communities rely on to mitigate gentrification impacts on their neighborhoods. With public participation cut out of the approval process, communities lose their ability to negotiate for higher levels of affordable housing and other community benefits like public open space and pedestrian improvements and protections for small businesses. Moreover, SB 35 explicitly prohibits cities from requiring more affordable housing from By-Right projects than already locally required, preventing communities from re-capturing any of the monetary benefit given to developers by this By-Right Development bill.

Does this trade-off really get anything?

While SB 35 will clearly accelerate approvals in hot market areas, we think it’s unlikely that it will have the positive impact of speeding up development in slow-growth areas of the state with little ongoing housing construction. Many of these are areas that have intentionally ducked their responsibility to provide housing, or where the developers cannot get high enough returns from low rents and sales prices. And, because of the sloppy way it is written, the bill lets many middle- and upper-class growth-averse cities off the hook, places like Dublin, Pleasanton, Danville, Lafayette, Orinda, Walnut Creek, Corte Madera or Los Altos or many other places across the state that aren’t doing their “fair share” to absorb new housing needs, while urban communities struggle with gentrification and displacement symptoms of over-concentrated development.

SB 35 also critically lacks the key element of a meaningful two-year “use it or lose it” provision, which would give the By-Right approval an expiration date to ensure that developers actually build their approved projects in a timely manner, rather than simply selling off their “approved project” to the ever-larger speculative pool of “entitlements” (San Francisco, for example, even though it’s building units at the full capacity of available labor and building cranes, already has a pipeline of 38,000 approved units). Under SB 35 development sponsors have up to four years to apply for a construction permit after getting by-right approval.

Even if a soup-to-nuts project approval for, say, a 50-unit development was pushed through in 12 months, under SB35’s streamlining rules, if the developer can sit on that approval for up to 4 years and then with a typical 2+ year construction period, that is a total of 7 years to get “By Right” housing units on the ground and ready to occupy. That’s “streamlining?”

More significantly, SB 35 does little to tackle the underlying issue: that development investors – not city government, nor public policy goals, nor actual community need — determine where, when, how fast, and what types of housing are built.  Instead of addressing this, SB 35 makes it even easier for investors and developers to pick and choose the best way to play the California real estate market—it doesn’t take much imagination to see the outcome of developers continuing to focus on the most profitable housing in the most profitable areas, irrespective of broader regional need. In the absence of use-it-or-lose-it accountability or other mechanisms that ensure actual housing construction in places where development isn’t already happening, SB 35 gives a lot but gets very little in return.

Silencing those most impacted: race and class

Even if it does succeed in encouraging more development in slow-growing areas, which is a laudable goal, the SB 35 By-Right bill in its current form makes an unconscionable trade-off: sacrificing vulnerable urban communities in the hopes of facilitating development in stable ones.  SB 35 will silence the voices of working-class communities facing potential displacement in cities like Richmond, San Pablo, East Palo Alto and Oakland, and even in gentrifying neighborhoods of San Francisco during “hot market” years.

The rapid gentrification of California’s urban core communities is real. The outmigration of low-income and working class residents to far-flung suburbs as a consequence is also real – much has been written about the increasing suburbanization of poverty. The shrinking African American and Latino populations from city neighborhoods and the changing race and class profile of many low-income communities is a real thing. “Trade-offs” have historically decimated vulnerable communities that found themselves on the front lines of real estate agendas. This trade-off feels all too familiar, and is not one we can afford to make again, especially under the guise of increasing affordable housing.

The SB 35 bill may have some good intent, but for low-income urban communities already struggling with gentrification and displacement from San Francisco and Oakland to Los Angeles, Long Beach and Fresno, it is a potential looming threat.

So what can we do to fix this mess?

Our coalition organization, CCHO, continues to work with dozens of other local and state affordable housing and tenant advocate organizations to press for amendments to the bill addressing these concerns. The minimum “fixes” for SB 35 should include:

  • A safe harbor provision exempting low income communities where development is already “hot” and communities are already grappling with gentrification and displacement pressures;
  • A higher affordable housing requirement in exchange for By-Right approval;
  • At least half of the affordable housing in By-Right projects should be for households under 50% of the median income;
  • A meaningful two-year “use it or lose it” expiration date on how long a By-Right approval lasts before the developer must start actually building the project.

So far these proposed amendments have been rejected by the bill’s author, raising the question of whether this bill is really intended to steer development to no/slow-growth cities, or whether the goal is to accelerate gentrification and constrain public participation by communities of color facing the brunt of displacement. In the way that legislation in Sacramento can sail through the process inside the political bubble of what is known as “the building” at the Capitol, this SB 35 By Right Development bill has advanced seamlessly and disconnected from any community voices on the ground.

The primary support testimony at the June 28th Assembly Local Government Committee hearing on SB 35 was an interesting display – they were representatives from the California Association of Realtors, the California Apartment Association, national developer Bridge Housing, and San Francisco Mayor Lee.

But we remain hopeful that legislators in the Capitol will do right with By-Right and not do harm. That said, it will require making enough noise so up there in “the building” they hear voices from the ground.

The SB 35 bill now heads to the Assembly Housing and Community Development committee on Wednesday July 12th, chaired by David Chiu. As chair of that key committee, much rests on Chiu’s leadership to push for amendments addressing these concerns with the serious unintended consequences of the By-Right bill, including a safe harbor to communities impacted by gentrification and displacement. If you are concerned about the consequences of this By-Right Development bill for San Francisco and other urban gentrifying communities, let your voice be heard.

Emails and calls to:

David.Chiu@asm.ca.gov 

916-319-2017

A sign-on petition has also been created and you can access it here.





Senate Bill 35 Will Cause Further Displacement of Communities of Color

6 07 2017

The latest in the Eye on the State series in the S.F. Examiner, a monthly column that examines the local implications of housing proposals brewing in the Capitol from the perspective of community, housing, labor and environmental advocates representing everyday people.  Read the original posting here.

Read the rest of the series here.

By Luis Granados and Erick Arguello

New development in the Mission. Credit: Mike Koozmin, S.F. Examiner.

Let’s set the record straight: Our organizations understand the need for more housing across the state, in San Francisco and in the Mission. It just can’t be housing that harms our most-vulnerable community members. We say, “Yes to Equitable Development In My Backyard” (YEMBY).

Most would agree that building market-rate housing in San Francisco’s Mission would be different than in The City’s Marina. Same for Palo Alto versus East Palo Alto, where market-rate housing would have very different community impacts. There is no one-size-fits-all urban regional planning guide.

So why is the state legislature looking to impose such a uniform policy around housing approvals across all California communities?

If passed as currently drafted, state Sen. Scott Wiener’s by-right development bill, Senate Bill 35, would mean eligible market-rate housing proposals across the state would be approved “by-right” — they would not be subject to case-by-case local approvals or review under the California Environmental Quality Act.

A uniform policy to expedite all development is based on the concept that more building equals lower housing prices. While this may be true long-term on a regional or statewide level, this concept tells only half the story, as it fails to add into the equation how market-rate developments are often a short-term catalyst for displacement of low-income communities of color. When market-rate developments are built in these communities, they are likely to be at price points that are completely out of reach of local residents, making these developments essentially luxury housing.

Proponents of SB 35 might claim that communities such as the Mission experience gentrification and displacement even during periods of little development; therefore, they argue that luxury development does not contribute to these harmful impacts. This is spurious logic: if A, therefore not B. Luxury development greatly exacerbates the cycle of gentrification and displacement in the Mission and in similar vulnerable low-income communities across the state.

A few years ago, the Mission community — facing a glut of luxury housing developments and a paucity of affordable housing units — started making our voices heard. This happened on the street, at the Planning Commission and through city-planning processes such as the Mission Action Plan 2020. This advocacy translated into several affordable-housing developments now in the pipeline and also many greatly improved market-rate projects that mitigated some of the most harmful impacts of this wave of luxury development.

Community involvement has resulted in increased 25 percent inclusionary affordable-housing commitments, land dedication for 100 percent affordable housing, additional space in new developments for community nonprofits and blue-collar spaces, and below-market retail for neighborhood community-serving businesses.

This all happened on a local level. If the state had previously stepped in with by-right approvals for these market-rate developments, the community’s voice would have been silenced and its needs gone unaddressed — with devastating impacts.

To ensure SB 35 addresses the needs of California’s most-vulnerable communities now and into the future, it must provide:

-A “safe harbor provision” for low-income communities within cities where development is already happening and communities are facing gentrification and displacement pressures.
– A higher affordable-housing requirement above what is already required locally in exchange for state-imposed by-right approval.
– A time limit on each by-right approval before the developer must start actually building the project, for without an expiration date on building approvals the bill’s metrics become unreliable and subject to manipulation.

Our organizations support these critical amendments to SB 35 that would ensure its application would result in more equitable outcomes. Housing is a civil rights issue: All communities are not alike, and the impacts of this proposed legislation will be radically different and inequitable across California’s diverse communities.

Luis Granados is the executive director of the Mission Economic Development Agency. Erick Arguello is president of Calle 24 Latino Cultural District. 

 





Inclusionary Housing Is a Lasting Legacy Policy

5 07 2017

Our latest op-ed in the S.F. Examiner.  Read the original posting here.

A rally in April where San Franciscans pushed back against local cuts to inclusionary housing, as well as federal housing cuts. Credit: James Chan, S.F. Examiner.

We’ve reached a major milestone in the evolution of The City’s “inclusionary housing” policy, which ensures that market-rate developers build mixed-income communities that include a percentage of permanently affordable units. After a year of advocacy — from the work so many housing advocates put into passing Proposition C last June 2016, which raised the bar and for the first time added a “middle-income” tier, to the hardy souls who sat through the Controller’s Technical Advisory Committee last fall, to all the folks who organized and demanded no loss to low-income housing, and through these last weeks of late-night negotiations — we now have final legislation before the Board of Supervisors. It just passed its first adoption hearing on Tuesday, and will have its second and final “reading” in two weeks.

None of this could have happened without the broad coalition of housing advocates from our Council of Community Housing Organizations to the Tenants Union and Homeownership SF, from Faith in Action to Glide Memorial, from the teachers’ union UESF to Jobs with Justice, from SF Rising, Market Street for the Masses, Affordable Divisadero, and Neighbors United to the Sierra Club. As with any negotiated process, both sides made concessions. But overall, the landmark inclusionary housing policy made great strides.

We fought for the things that mattered: maximizing affordability, preserving opportunities for low-income households and ensuring family housing.

But we also succeeded in addressing the moderate/”middle”-income earners who have been left behind by the for-profit housing market. Over the years, our affordable housing advocates have created new programs to serve this demographic, including the largest first-time homeowner down payment program in the state, an acquisition program for mixed-income apartment buildings, dedicated funds from the 2015 housing bond, and now we’ve expanded the inclusionary policy to further serve that middle-class. Importantly, we’ve done it without reducing housing opportunities for lower-income residents. And a cap on middle-income BMR pricing will ensure that “below-market” units are actually at least 20 percent below local market-rate pricing.One of the compromise points was to begin this year at an 18 percent inclusionary requirement for rentals and 20 percent for ownership projects. But persistent advocacy, as well as in-depth financial analysis, prevailed, ensuring a graduated increase to 20 percent for rentals and 22 percent for ownership projects within the first 18 months, including a return to 12 percent of the below-market units dedicated for our lower-income workforce. Then increasing by 0.5 percent per year after that, based on recapturing a portion of the unearned income from the astronomic rate of inflation of land prices.

The updated policy also requires a minimum 10 percent three-bedroom units and 25 percent two-bedroom units. And stronger requirements have been established for protecting existing rent-controlled units. Finally, given the ongoing gentrification and displacement in the Mission and Tenderloin and the financial precedent set by several projects that have already agreed to over 25 percent inclusionary, those neighborhoods will retain higher standards for the foreseeable future.

We still have to deal with the financial incentive for developers to “fee out” rather than building the affordable units on-site and in real time. Both sides agreed to revisit the fee methodology over the next few months to ensure equivalency with the cost of providing onsite units, as was recommended by the Controller.

The big lift for all of us now is ensuring that Assemblymember Phil Ting’s bill, AB 915, passes in the state Legislature, so that this carefully worked out “deal” applies to state density bonus projects. Almost all sides, from market-rate developers to supervisors to the Mayor’s Office, have come together to support AB 915 so that all this hard work does not fall apart. Despite our local consensus, some ideologically motivated groups are still opposing, so the work is not over.

San Francisco’s inclusionary policy is by no means our only strategy for furthering affordability. But it has already produced more than 4,600 units, and is the one tool that ensures that developers create truly mixed-income communities, rather than furthering the economic and class divides of The City. The lesson learned here is that persistence, and a desire from both sides to go beyond ideological fault lines and rhetoric to create programs that actually build units for the breadth of The City’s residents, can work. The final vote on the inclusionary housing legislation is scheduled for the Board of Supervisors on July 11.





Eye on the State: Labor Can Bargain for Broader Housing Needs

19 06 2017

The latest piece from the SF Examiner’s monthly column “Eye on the State,” which examines the local implications of housing proposals brewing in the Capitol from the perspective of community, housing, labor, and environmental advocates representing everyday people.  Read the original article.

By Gordon Mar and Ken Tray

SF Examiner, courtesy photo.

The housing affordability crisis continues to be a defining issue for maintaining stable, diverse communities, not only in the Bay Area but also statewide. Throughout California, many communities also lack housing opportunities for the growing workforce of union members and other working families who keep California’s economy strong. Labor unions and worker organizations can and should play a constructive role in comprehensive solutions to our local and statewide housing crisis in partnership with affordable housing and tenant rights groups and other stakeholders.

We need more housing, at a variety of household income levels, across the cities of California around job hubs. For example, Brisbane is in the same workshed as San Francisco and is considering a massive commercial development project, but lacks commitment to facilitating new affordable or even market-rate housing for their growing workforce. This puts extra pressure on San Francisco housing prices, already out of reach for so many low- and middle-income workers.

But the crisis of exclusion from the real estate market and displacement from homes and hometown neighborhoods is an equivalent crisis. This is a particular problem in urban “hot-market” communities, where development has been concentrated in recent years, and caters primarily to wealthier, white-collar workers. We need increased affordable housing to close the gap with the tremendous boom in market-rate development — a dramatically improved “affordable housing balance.” Just as importantly, we need stronger anti-displacement and housing preservation measures to combat speculative behaviors of the over-heated real estate market. These include expanding rent control, restricting evictions, regulating Airbnb, funding legal defense for tenants and public funding for homelessness services.

Labor must continue to advocate for the housing that is built to be affordable to low- and middle-income workers and, in the process, for protection from gentrification for the communities where construction is booming. It’s a tall order, but labor can and should see housing policy “solutions” from both those perspectives in addition to ensuring fair labor standards for housing construction. The increasing strain to stretch incomes farther to afford housing demands that labor and community rally together in support of working households struggling to survive in today’s speculator-driven real estate market.Solving for these two problems simultaneously is the challenge, and labor is situated to advocate and bargain for both, while also ensuring good wage standards from the construction of housing. This is particularly the case when it comes to the prospect of the state imposing “by-right” development on all California communities. It might be an opportunity for more construction jobs, and with a strong wage standard, as was recently negotiated by the State Building Trades with state Sen. Scott Wiener on Senate Bill 35, but this shouldn’t be the end of labor’s leverage to ensure that this sweeping bill protects vulnerable communities.

We agree with the Dec. 5 statement signed by more than 40 community and labor organizations statewide — under the banner of Californians for Affordable Housing — that the dual agenda of affordable housing and protecting against displacement are clear:

  • We need policies at the state and local level that combat displacement and ensure that residents in our California communities are safe and stable in their housing.
  • We need state policies to strengthen and enforce existing laws designed to make sure each community is contributing its fair share of affordable housing. In addition, we need to ensure that all California communities have the resources and policy tools to perform and to succeed as “good actors.”
  • Policies to solve the affordable housing crisis must be cognizant of a jobs-housing “fit” — that is, both incentivizing housing in California communities that is affordable to the actual workforce of those communities and promoting jobs that pay a good wage.

Labor unions, worker organizations and all our allies in the affordable housing, social justice and environmental movements need to stay together and bargain for the broader good. If the state intervenes in local communities with housing policies like by-right development — which means intervening in our places of work, places of community and places of play and worship — then let’s make sure it is done truly in the interests of all our workforce, not a trade-off pitting our labor brothers and sisters against each other, or pitting our labor interests against the communities we serve and work in.

Gordon Mar is the executive director of Jobs with Justice San Francisco. Ken Tray is the political director of United Educators of San Francisco. 

Check out past “Eye on the State” Columns:

 





How Do We Decide What to Build? Jobs-Housing Fit

15 06 2017

Our recent post in Rooflines, the Shelterforce blog.  Read the original post here.

A Jobs-Housing Fit seems like the simplest of ideas: the housing that a region plans for and builds should match the needs of the people that live there now and in the future. But as we, the Bay Area’s residents, policymakers, advocates, and leaders, struggle with the housing affordability crisis, the housing that is being built doesn’t always meet this simple rule. We can benefit from a clearer framework for understanding what the housing needs of our region actually are and evaluating how housing production is meeting those needs. Jobs-Housing Fit is that framework.

Quite simply, a Jobs-Housing Fit analysis compares how our population is growing at different income levels to the affordability of housing within the same geography, allowing us to evaluate the fit between housing needs and housing production. The geographic scale of Jobs-Housing Fit analysis, a technique pioneered by Dr. Chris Benner of UC Davis, is a consideration in itself, and is a policy discussion that we encourage in thinking how this framework can be practically applied.

The virtues of a fit are obvious and intuitive: If housing is available and affordable for all residents in a region, households at all income levels will have a stable place to call home, leading to increased job security, higher community engagement, potentially shorter commutes and reduced greenhouse gas footprints, and a generally increased quality of life. Conversely, communities that build for only the highest income levels create economic segregation, to the detriment of the region as a whole.

It is an incontrovertible fact that our region is growing, and that our growing population demands more housing. However, this need cannot be sufficiently addressed by talking only about numbers of units built. The affordability and geography of housing production are essential factors that are too often left out of policy discussions. To create a Jobs-Housing Fit, where everyone can find and afford housing, policymakers need to remember the wide range of incomes that housing must serve, now and in the future.

As part of our continuing series of infographics, the San Francisco Council of Community Housing Organizations breaks down what a Jobs-Housing Fit would look like in the Bay Area.  Read the full report here.

This analysis dives deep into five specific focus areas that together form the puzzle of a Jobs-Housing Fit: population, jobs, income distribution, housing trends, and economic diversity. Together, they provide a grounding in what considerations are essential to planning for a future where housing is available and affordable to all.

We start with population, as it is the most basic unit of understanding how the Bay Area has and will continue to change. Beyond the top line figure, we look at predicted demographic shifts, and how those relate to housing preferences as we begin to craft our model.

After population, we examine jobs and the state of employment more generally. As profession and income level are major determinants of the type of home someone can afford, looking at how fields will change in the future is crucial to determining what types of housing we will need.

 

Following jobs, we dive into income distribution. This page is tightly tied to employment trends and reveals that, despite the Bay Area’s increasing prosperity compared with the rest of the country, much of our household growth will be in the lower income categories.

Housing trends show that our future planning and construction should have a renewed focus on increased density in response to changing preferences, especially among newer segments of the population, and environmental sustainability.

Next is economic diversity. Within the Bay Area, income inequality has increased, leading to increased economic segregation. Communities of concern, designated by the Metropolitan Transportation Commission using eight metrics that identify disenfranchised or vulnerable populations, often overlap with planned new development corridors. Intentional strategies, including basing development on a Jobs-Housing Fit analysis, must be employed to prevent displacement and ensure that low-income and communities of color equitably benefit from new development.

Finally, we look at our current performance in achieving a housing fit. In the Bay Area, the trend of housing production has not been in proportion to the affordability needs of the growing population. For this analysis, we use the Regional Needs Housing Allocation performance as a measure of how well the region is working toward a fit. There could be other baseline projections and metrics to use for a Jobs-Housing Fit analysis; we chose the RHNA as it offers current established projections for the region.

We encourage the housing policy discussion to incorporate this framework of a Jobs-Housing Fit. At whatever scale—local, multi-jurisdiction, or subregional—it is a powerful gauge for how housing policies and the housing market are on target with the needs of the current and growing workforce.

All of the eight graphics in this package can be found here. Please share the page with your colleagues, and comment here if you’d like to weigh in with your ideas to achieve a Jobs-Housing Fit.





The Future of Inclusionary Housing

31 05 2017

1400 Mission, containing 190 inclusionary middle-income units. Credit: TNDC.

We’ve reached a major milestone in the long hard road of inclusionary.  After a year of advocacy —  from the work all of you put into passing Prop C last June, to the hardy souls who sat through the Controller’s Technical Advisory Committee and then worked through the maze of proposals for the trailing legislation (especially our rental and homeownership counseling experts), to all the folks who organized and demanded no loss to low-income housing, both within CCHO and with our broader set of allies (from the teachers’ union, to Glide memorial to SFRising to Jobs with Justice and Homeownership SF), and now through these last three weeks of late night and weekend negotiations – we now have almost final inclusionary legislation. As with any negotiated process, concessions had to be made, but overall we believe we’ve landed in a good place.

We fought for the things that mattered: maximizing affordability, not reducing low-income units, and ensuring family housing. CCHO staff got into the weeds to make sure the proposal would increase over time (recapturing a portion of land price inflation), to ensure that the state density bonus would not undermine inclusionary, and to deal with the monetary incentive to fee out rather than build on-site affordable units.

We were all forced to compromise on the size of the inclusionary housing pie for practical purposes, starting at 18% for rentals and 20% for ownership projects. But the persistent advocacy still prevailed by ensuring annual increases to the inclusionary percentage, rising to 20% for rental projects and 22% for ownership projects within the first 18 months and then by .5% per year after that.

The settled-upon proposal will also begin with 10% of the below-market units dedicated for lower-income households (priced at 55% of Median Income and eligible to households up to 65%AMI) increasing to 12% in 18 months, and an additional 8% moderate and middle-income units. Ownership projects will begin with 10% lower-income units (priced at 80% of Median Income and eligible to households between 70%-90% AMI) increasing to 12% in 18 months, and an additional 10% moderate and middle-income units.  These allocations of 12% of below-market units for lower-income households is double where the proposal began – at only 6% allocation – so the much-improved final agreement is an accomplishment and greatly a result of persistent advocacy from the community.  We clearly held the line and won the debate to protect lower-income households.

The fee methodology will be reworked over the next few months to ensure equivalency with the cost of providing onsite units. A cap on middle-income BMR pricing will ensure that “below-market” units are actually at least 20% below local market-rate pricing. The proposal also includes a minimum unit-mix across the City of at least 10% 3-bedroom units and 25% 2-bedroom units, and prescribes minimum unit sizes for BMRs. Finally, given the risk of displacement in low-income working class communities in the Mission and Tenderloin, and given that several projects in the Mission have already agreed to 25% and 27% inclusionary, the standards will remain at Prop C levels in those neighborhoods until they complete a local planning process.

The big lift for all of us now is ensuring that Assemblymember Phil Ting’s AB915 passes in the State legislature, so that this carefully worked out “deal” applies to state density bonus projects. We’ve worked hard to finally get all sides, from developers to Supervisors to the Mayor’s office, to come together to support this state density bonus amendment so that all this hard work does not fall apart.

In sum, it has been a long year, but in the end we still have a strong and effective inclusionary policy for San Francisco looking forward. The final inclusionary legislation is scheduled to be presented to the Land Use committee on June 5.





Eye on the State: Communities of Color Must Benefit from Housing Policy

11 05 2017

The latest piece from the SF Examiner’s new column, Eye on the State, which is a monthly report that examines the local implications of housing proposals brewing in the Capitol from the perspective of community, housing, labor and environmental advocates representing everyday people.  Read the original article.

By Wade Woods

Lennar’s SF Shipyard housing project in Hunters Point. Photo: Dan Chambers, SF Examiner.

With growing needs for housing as our urban population grows, we need to be pro-housing but explicitly pro-affordable housing, not just whatever housing “the market” wants to put on the ground anywhere. As older cities in the Rust Belt continue to die and become more unlivable, more and more people eyeing the high-income tech industry see California as a desirable location. But as our state leaders simply promote development without clear and strong affordable housing objectives, this leaves individuals and families to fend for themselves based on their income status. This is especially true for people of color in general and African-Americans in particular. There are already inequities of access to housing. Are those inequities rebalanced with current and proposed policies or are they being made worse?

Communities of color are most at risk of displacement when market-rate development is incentivized. State leaders should learn from the historic lessons of Urban Renewal and Redevelopment. In the 1960s and ’70s, as urban renewal destroyed and tore down the housing in inner cities to make way for new development and affluent whites moved to the suburbs, many people of color were forced from San Francisco. To partially offset this displacement, affordable and subsidized housing was built in its place, and people of color moved in. Now, because of the looming crisis of expiring affordable housing deed restrictions, housing is going to market prices, and neighborhoods are becoming “hot” for young people moving to cities.

Gentrification and displacement in low-income and communities of color is a real thing: It is happening in San Francisco and other urban cities at an accelerating pace. It’s not just hyperbole. That means that any policy proposals from the state capitol need to ensure they don’t cause harm to some people while benefiting others. The situation on the ground in places like the Western Addition is not the same as in Brisbane or Pleasanton or a neighborhood of Palo Alto. Legislators need to be careful about assuming their “solutions” work the same in all places.

Addressing housing needs for the growing state population is necessary — everyone agrees. But the “devil is in the details” about who actually benefits from the specific policy proposals.

As federal budget proposals are being argued in Congress, there has been no mention of spending for housing nor has U.S. Department of Housing and Urban Development Secretary Ben Carson outlined or laid out any affordable housing proposal. A report just released by the California Housing Partnership and the Non-Profit Housing Association of Northern California found that funding for affordable housing in the Bay Area by State and federal governments has dropped by 65 percent since 2008. This being the case, it will be left to the cities and state to work out policies to solve the coming affordable housing crisis.

Increasing funding for affordable housing is important, as is allowing cities to require developers to provide some affordable below-market-rate units. And the state must make sure that the suburbs do their part in providing affordable housing and welcoming people of color, and in some cases, the state may have to enforce fair housing laws.

But there must be caution, too. Proposals for accelerating market-rate development in low-income and communities of color is risky. We need to make sure communities of color and low-income families and individuals benefit from housing policy, not get displaced by it. We also need to make sure that communities of color are involved in decision-making and are part of the solution. To this end, nonprofits composed of people of color must also be selected to be developers of below-market-rate housing, not just consumers.

Housing advocates and our electeds can and should work together to get it right. We can learn from past housing injustices and not repeat them as our urban neighborhoods are redeveloped once again. Most important, in the end, is that our state and local leaders be very clear how their housing policy “solutions” benefit communities of color.

Wade Woods is a longtime resident and organizer in the Western Addition community of San Francisco and is an elected delegate to the state Democratic Party. Woods can be reached at wade2woods@yahoo.com.





People Power at the Planning Commission

28 04 2017

On Thursday April 27, an impressive outpouring of hundreds marched from the Federal Building to City Hall, sending a strong message that connected the national and local, and that we will not stand for cuts to low-income housing. Afterwards, through a six-hour hearing, the Planning Commission heard compelling testimony from dozens of grassroots advocates, from SRO families to Mission and Chinatown residents, on the need to secure housing for low AND middle-income San Franciscans without pitting workers against each other, and without granting giveaways to developers.

As expected, the Commission accepted the lower total inclusionary of 18% for rental and 20% for condos, without incorporating the windfall profits of the state density bonus on on-site feasibility. But the mobilization and voice of the community made a difference. In a surprise move, the Commission voted to reject the extreme reduction of lower-income inclusionary housing in the proposal promoted by the Mayor and Supervisors Safai, Breed and Tang. Even a Commission with a majority of mayoral and “moderate” appointees had a hard time abandoning a pillar of Prop C: recognizing the acute needs of lower income tenants.   The acceptance of the 18% for rentals and 20% for condos was not a surprise given their reliance on the ‘expert’ Controllers report.

The vote count on the income levels was 4-3 with Commissioner Johnson joining the progressives. For rentals, this means that two-thirds of the affordable rentals would remain at 55% AMI, and 1/6 each for 80% and 110% AMI, and that two-thirds of homeownership units would remain at 90% AMI and 1/6 each for 120% and 140% AMI. It seemed the Commission also recommended other improvements to the Mayor’s proposal, spurred by public outcry: maintaining the current 55% AMI level for smaller projects under 25 units, requiring that any “middle-income” BMR unit actually be 20% below neighborhood market rates, and adding a requirement for family housing, with a minimum of 40% large bedroom units and 10% 3-bedrooms. While these recommendations are far from where we would like them to be, they are a good marker. But they will still need to be voted on by the Board of Supervisors, and may still face tough opposition.

Thank you all for the great turnout and an uplifting people-powered event. From here, it goes to the Land Use Committee on May 8, where public comment will again be critical, and for a first vote at the full Board on May 9.





ANOTHER DEVELOPER GIVEAWAY?

26 04 2017

Are the inclusionary proposals currently being discussed by the Planning Commission and Board of Supervisors a “giveaway” to developers? Let’s look at the numbers and see what the substantial differences in conveyed value are.

 

According to the Planning staff report “The Inclusionary Affordable Housing Program… has resulted in more than 4,600 units of permanently affordable housing since its adoption in 2002,” or an average of 328 inclusionary units per year.[1] If developers continue to build an average of 3,000 new units per year in San Francisco, the number of affordable inclusionary units could increase to between 500 and 750 units per year, depending on the final percentage chosen.

 

Not only are there differences in the total amount of affordable units, but also, by shifting income levels served, the total cost to developers and landowners is reduced considerably in the Safai/Breed/Tang proposal when compared to the proposal analyzed by the Office of the Controller, which used the current Prop C income split of “low” and “middle” income.

 

Here is the analysis for a rental project. The Controller used the current Prop C income levels, which result in an average of 72% AMI (Area Median Income), while the Safai/Breed/Tang proposal results in an average of 82% AMI.[2] A typical 100-unit project with 18% affordable units, and assuming 60% one-bedrooms and 40% two-bedrooms,[3] as analyzed by the Controller, would bring in an annual income of about $3,173,000, while a project of the same size under Safai/Breed/Tang would have an annual income of about $3,213,000.[4] The difference in value for a typical 100-unit rental project with 18% inclusionary, using a 4% cap rate, would be about $1 million in profit.

 

The difference in incomes served is even more stark for condominium projects. The Controller analyzed condo projects using the current Prop C income levels, which average 96% AMI, while the Safai/Breed/Proposal serves an average income of 120% AMI.[5] Using MOHCD’s assumptions and a 60/40 bedroom mix,[6] an average unit at 96% AMI would be priced at about $330,000, while an average unit at 120% AMI would be priced at $434,000. For a typical 100-unit condo project with 20% inclusionary, the added value to a developer would be over $2 million in profit.

 

Assuming that we continue to build about 3,000 new units each year, and that between 18-20% of these are inclusionary,[7] the total value conveyed to developers each year could be between $30-60 million, depending on how many are rental or condos, and how many choose to build units on-site rather than to fee out.

 

To sum up, the Safai/Breed/Tang proposal, could provide a windfall of up to $60 million into developers’ pockets as profit, unless it is amended. Another way to look at it is that instead of a giveaway, that annual $60 million cost savings to developers is value that could be recaptured by the public to continue to serve low income residents or to subsidize additional BMR units. Either way, the Commission and Supervisors have a clear decision to make: maintain the percent of low-income units while demanding a greater overall inclusionary percentage or vote for a giveaway to developers.

[1] Planning staff report for 4/27/2017 Planning Commission

[2] The Controller analyzed projects with 60% affordable units at 55% AMI and 40% affordable units at 100% AMI, which comes out to an average of 72% AMI. The Safai/Breed/Tang proposal has three tiers, evenly split at 55% AMI, 80% AMI, and 110% AMI, which comes out to an average of 82% AMI.

[3] The 60/40 bedroom mix was chosen based on typical construction trends per the Planning Department’s recent Family Housing Report. Note that the Safai/Breed/Tang proposal only mandates 25% two-bedroom units, and the Kim/Peskin proposal mandates 60% two-bedroom and larger.

[4] We assumed market rents at $4,000/month for one-bedrooms and $5,500/month for two-bedrooms, affordable rents per MOHCD’s schedule, operating expenses at $1,259/unit (less for affordable units), and 8% vacancy (less for affordable units).

[5] The Controller analyzed projects with 60% affordable units at 80% AMI and 40% affordable units at 120% AMI, which comes out to an average of 96% AMI. The Safai/Breed/Tang proposal has three tiers, evenly split at 100% AMI, 120% AMI, and 140% AMI, which comes out to an average of 120% AMI.

[6] MOHCD assumes 33% of income available for housing costs, taxes at 1.1826%, condo fees approximately $500 per month, 10% down payment and 30 year term.

[7] The Controller’s analysis, using their assumptions for income levels served, found that 18% for rentals and 20% for condos was a financially feasible target for inclusionary levels, without factoring in the use of state density bonus. The Controller found that much higher inclusionary levels were feasible if developers chose to take advantage of the state density bonus.





One Fix for Affordable Housing: Close a Loophole with AB 915

24 04 2017

Our latest op-ed in the Examiner.  Read the original article here. 

As we state below, now’s the time to take action and let Assemblymember Ting know you support AB 915: call his office at (916) 319-2019 or send him an email at assemblymember.ting@assembly.ca.gov.

Photo: Emma Chiang, SF Examiner.

As is often said, there is no “silver bullet” to solve the affordable housing crisis. But there is at least one easy fix to a current problem.

Last December, we wrote about the gift that Santa brought to San Francisco developers: a state density bonus that effectively cuts the affordable housing requirements for development projects — while giving them a substantial 35 percent bonus in market-rate units.

The good news is that San Francisco Assemblymember Phil Ting has set out to correct that this year with Assembly Bill 915, legislation that will make sure underlying affordable housing requirements apply evenly to all development projects, whether they use the state bonus or not.

That big development in South of Market back in December was the first in The City to use the state bonus, since it was made “by right” through state legislation last year, which two of San Francisco’s state legislators rightly voted against. The project exposed the giant loophole that had been created with that change. The project had a requirement to provide 18 percent affordable homes by The City’s inclusionary policy, but ended up providing only 13.5 percent after they took the state density bonus. The “value” to that particular development, in monetary terms, from the cut in inclusionary housing came out to about a $3.8 million windfall, while giving no increased public benefit to The City or everyday San Franciscans in return.

AB 915 equalizes the local affordable housing requirement with the added bonus a developer gets. It’s a simple, commonsense fix to the loophole problem and will go a long way to resolving questions currently vexing the Planning Commission and Board of Supervisors in implementing our local “inclusionary housing” law.

There is a ripe debate at City Hall right now about updates to the inclusionary housing policy; housing opportunities for both low-income and middle-income San Franciscans are on the table. But the state density bonus loophole undermines all those housing opportunities and is forcing some tenuous legislative jiu-jitsu to try to account for it.

AB 915 would fix that.

Increasing density in some parts of The City is something many people want to see — as a matter of good planning, appropriate fit and added public benefits. Assemblymember Ting’s legislation upholds the spirit of the state density bonus law, which was based on the idea that developers could get more profits only in exchange for giving back more affordable homes.

Last year, affordable housing policy in San Francisco took a giant step backward when Santa brought developers the gift of 35 percent density increase without any affordable units. This year, we can even up and step forward again. AB 915 will ensure that density bonuses are linked with housing affordability.

If you want to let Assemblymember Ting know you support AB 915 for state density bonus affordability, call his office at (916) 319-2019 or send him an email at assemblymember.ting@assembly.ca.gov.





Eye on the State: Environmental Care Part of Smart Housing Policy

13 04 2017

This is the third piece from the SF Examiner’s new column, Eye on the State, which is a monthly report from San Franciscans for Community Planning that examines the local implications of housing proposals brewing in the Capitol from the perspective of community, housing, labor and environmental advocates representing everyday people.  Read the original article.

By Katherine Howard and Susan Vaughan

A sign warns of toxic landfill near The San Francisco Shipyard housing project near Innes Avenue and Donahue Street in the Hunter’s Point neighborhood of San Francisco Tuesday, October 4th, 2016. Dan Chambers, SF Examiner.

Over the next few months, legislators will be debating new housing legislation — both state and local — to meet the pressing needs of California’s growing population. It is good that our legislators are facing the state’s affordable housing crisis head-on; having a decent home for everyone is critical. But as we work to meet that need, we must also ensure that the environment is not harmed.

Creating vibrant and complete urban communities requires a strong commitment to protecting and enhancing the quality of urban life. Some of the features shared by healthy urban communities include convenient public open spaces, parks, playgrounds and natural “unimproved” spaces. Creating these communities must also involve a commitment to preserving existing affordable housing, preventing displacement of low- and moderate-income residents, protecting cultural heritage, providing efficient public transit and sheltering existing communities from unreasonable economic and physical disruption.

It’s also critical that urban areas be non-polluting, so as to minimize our impacts upon this planet’s resources and environment.

When there is a lot of pressure for one set of needs — in this case, housing — there is the temptation to ignore other needs. There is a tendency to say that “just for this project” it is acceptable for the developer to ignore the need to carefully consider the impact on the environment.

One such short-sighted idea currently being discussed is to allow projects to be approved by-right and, in the process, to bypass environmental review now mandated by the California Environmental Quality Act.

The California Environmental Quality Act was passed in 1970 as part of a national wave of environmental protection legislation. CEQA requires project sponsors to disclose the environmental impacts of their proposed projects and accept public input on those impacts. It also requires project sponsors to mitigate those impacts. Moreover, CEQA empowers members of the public to legally challenge the adequacy of the environmental reviews.

The Sierra Club strongly supports the power of the people to participate in the development of rules, regulations, plans and evaluation criteria at every level of decision-making for their communities. Public input permitted by the CEQA environmental review process and modifications to projects in response to that input can actually make projects better.

Legislation that lets housing projects bypass the CEQA process is not fair to our communities, to our environment, nor to the very people for whom it claims to be providing housing. As new members of the community, they will also be paying the price of poor environmental decisions.

We have seen in the past that bypassing environmental review can lead to greater congestion and associated increases in air and water pollution, loss of habitat and loss of yet more species.

The environment is suffering desperately from serious stressors. The so-called Doomsday Clock — a scientific indicator of the world’s vulnerability to nuclear, environmental and political threats — is now set at fewer than three minutes to midnight. Can it be stopped? Not unless we do everything in our power to protect the planet.

Thoughtful city and regional planning with environmental protections is the best way to provide housing for people now and for a planet we can all call home for future generations. In California, CEQA and environmental review are a vital part of that planning.

Katherine Howard is a parks advocate and member of the Executive Committee, SF Group, Sierra Club. Susan Vaughan is a public transportation advocate and member of the Executive Committee, SF Group, Sierra Club.





Eye on the State: Our Housing Crisis is a Moral Crisis

13 04 2017

This is the second piece from the SF Examiner’s new column, Eye on the State, which is a monthly report from San Franciscans for Community Planning that will follow the new round of by-right bills and other proposed housing bills making their way through the 2017 state legislative session.  Read the original article.

By Reverend John Kirkley, published February 28, 2017

Courtesy photo, SF Examiner.

What makes local community sustainable and meaningful? This is a question that is too often ignored in discussions of the affordable housing crisis in California. It is a larger question of values that underlies debates about housing markets and policies. Before we can decide where and what kind of housing to build, we have to ask ourselves, “What kind of community do we wish to be?”

A community consists of a body of people who are committed to the common good of the place in which they live. Understanding the requirements of cultural and environmental health specific to a particular place requires the practice of attention and care. Such knowledge is only possible among people who have lived there and are determined to continue doing so. It requires familiarity with one’s neighbors and regard for their well-being as intrinsic to one’s own. It requires people who are not simply consumers but also citizens, who are vigilant in the defense of the common wealth. People committed to a place are an indispensable form of social capital.

One of the consequences of the affordable housing crisis is the erosion of this vital social capital. The income inequality driving housing development displaces long-time residents, without regard for their civic contributions. Development priorities cater to high-end housing while ignoring the racial, economic and cultural diversity that enriches our common life, dividing our communities rather than uniting them. Current policies force many people to live far from their workplaces, increasing economic pressures such that few people have neither the time or energy to act as engaged citizens.

Keeping people continually preoccupied about their economic security, anxious and isolated, undermines the relationships to neighbors and neighborhood that make for viable local communities. As a pastor in San Francisco for the past 15 years, I have witnessed the flight of young families, working-class people and people of color from a city they can no longer afford to call home. Congregations, local businesses and arts organizations struggle to keep their doors open. Racial and class tensions are increasing, as are tenant evictions. We are in danger of turning The City of St. Francis into a playground for the wealthy, while civic life atrophies for all of us.

The affordable housing crisis is a moral crisis. Housing cannot be reduced to a commodity or investment, when the shelter and security it provides is a basic necessity of life. Access to affordable housing is a human right. As we consider proposed solutions to this crisis, we must do so guided by the following core principles:

1. Does the proposed solution focus the state’s limited resources on meeting the most-pressing housing needs, i.e. people who don’t have a home or low- and moderate-income families paying an astronomical portion of their income for housing?

2. Does it support creation of jobs paying family-supporting wages?

3. Does it require all communities to take responsibility for making their housing accessible to people at various income levels, especially local workers?

4. Does it protect the state’s natural beauty and support its climate change goals?

5. Does it allow existing residents to remain in their community?

In short, policy proposals addressing the affordable housing crisis must be evaluated in terms of a triple bottom line: social, ecological and economic consequences. I would add a fourth bottom line: cultural consequences. How does a proposed housing policy affect the cultural diversity and richness of the community? Does it preserve the knowledge of what makes for community health acquired over time by people committed to the place? Does it include the expertise of long-time residents in the planning process? Does it enhance the variety of ways in which civic minded residents find meaning in their life together?

Engaging such questions is morally demanding. It disrupts the hyperindividualism and financial greed that privileges private profit over the common good, plundering the common wealth that is our collective inheritance for the enrichment of a few. It requires that all important virtue in public life: courage. As the active conversation inside the hallowed walls of the state capitol aims to “solve” our housing needs, may we have the courage to muster the political will to develop truly just and sustainable solutions to the affordable housing crisis.

The Rev. John Kirkley is rector of St. James Episcopal Church and a clergy leader with Faith in Action Bay Area. 





The Real Facts about the Affordable Housing Debate

13 04 2017

Our latest op-ed in 48 Hills, from March 23rd, 2017.  Read the original article.

Photo: 48 Hills.

A heated debate has raged around City Hall since last June, when voters raised the affordable housing requirements on private developers to 25 percent. There are now two competing measures to update the ordinance, and good critiques to be made of various aspects of either proposal. But healthy public dialogue is not served when incorrect assertions creep into the debate.

First a few facts: With last June’s Prop C, voters expanded the city’s inclusionary housing requirement, by restoring the 15 percent “low and moderate-income” requirement to what it had been before 2012, and adding a new 10 percent “middle-income” requirement.

What do those income levels mean? For rentals, the “lower income” units are affordable to households earning between $34,000 and $60,000 a year (minimum wage families and above), and for condos, to households earning between $60,000 and $107,000 a year. And the new “middle-income” category is affordable to households earning between $68,000 and $108,000 a year for rental units, and up to $140,000 a year for condos. That is the law today.

Prop C also tasked the city controller to conduct a technical study to determine the final total percentage based on project feasibility. This study has been completed, assuming the same split of lower and middle-income as approved by the voters (67 percent of them).

Now two separate measures about how best to implement the controller’s recommendations are being debated by the Board of Supervisors. There are a lot of nuances to the two proposals, but what has gained most of the political attention is the different emphasis on income levels served.

One measure, sponsored by Supervisors Jane Kim and Aaron Peskin, proposes keeping the 15 percent lower income units as currently exists, and growing the new tier of “middle-income” housing affordable to teachers, up to the maximum feasible amount analyzed by the controller. It’s designed to assume developers will continue to take advantage of the state density bonus, similar to the approach taken by cities like Santa Monica and West Hollywood.

To reach a broader range of incomes, the Kim-Peskin proposal would also make the income levels an average, so units would be provided at affordability levels below and above those low-income and middle-income targets. The proposal also requires that the affordable units be 60 percent family-sized units, including both two- and three-bedroom units.

The other measure, sponsored by Supervisors Ahsha Safai, London Breed, and Katy Tang, proposes reducing the lower income category from 15 percent to 6 percent, adding a new moderate category at 6 percent, and finally an upper middle-income category at another 6 percent, for a total of 18 percent. It assumes that developers who take advantage of the state density bonus could have their inclusionary percentage lowered to as little as 13 percent, but would “make up” the difference in fees. It too calls for family units, at 25 percent of units as two-bedrooms.

Unfortunately, significant misstatements of important facts were included in a recent post on BeyondChron. Here are several such excerpts from that blog, followed by the accurate information:

Mistake #1: “Every UESF teacher in a single household is barred from the city’s current inclusionary housing program.” INCORRECT. Currently, developers of rentals are required to build 10 percent of their units as middle-income, which serves many teacher households, and 15 percent of the units affordable as lower income, which serves paraprofessionals and other educators. The city’s entire inclusionary program for condos is priced to be affordable to teachers.

Mistake #2: “The vast majority of families whose students attend San Francisco schools earn too little to now qualify for inclusionary housing.” INCORRECT. The current inclusionary lower-income rental units are meant to serve minimum-wage families on up. The Kim-Peskin proposal actually expands the range of school families served. The Safai-Breed-Tang proposal lowers the percentage of units serving these families to only 6 percent.

Mistake #3: “The vast majority of San Francisco’s affordable nonprofit housing budget also goes to low-income families.” That’s true – but only because of limits imposed by external sources, which provide the lion’s share of funding. Most nonprofit affordable housing caps out at serving people up to 50 percent of median income, and much of it is meant to serve families at much lower incomes. Not only are there hundreds of applicants for every opening in a nonprofit building, but there is a critical unmet need for all the families from 50 percent of median and above.

Mistake #4: “The proposed law [Safai-Breed-Tang]… expands housing opportunities for both.” INCORRECT. Only the Kim-Peskin proposal expands housing opportunities for both categories, rather than reducing one in order to expand the other.

Mistake #5: “The city’s inclusionary law… fails to provide incentives for the two and three bedroom units that families with kids need. That’s another weakness with current law that the Safai-Breed-Tang proposal addresses.” FACT: Both proposals require some amount of family units: The Kim-Peskin proposal requires 60 percent family units, with a minimum 20 percent three-bedroom units, while the Safai-Breed-Tang proposal requires only 25 percent two-bedroom units.

Mistake #6: “The actual number of units involved in this debate is small.” INCORRECT: In the first 15 years of inclusionary housing, the program produced more than 2,000 units of permanently affordable housing, both rentals and condos. By doubling the inclusionary percentage, the next 15 years should produce another 4,000 desperately needed affordable units.

Finally, the post does not mention this, but by raising the average income targets from what was analyzed in the controller’s feasibility study, a significant financial benefit is bestowed to developers, in the millions of dollars for a typical project.

The post is correct in saying that “the two sides have far more in common than the rhetoric indicates.” There is certainly room for both sides to work on a solution that addresses many of the outstanding questions. Safai has expressed that he wants to get to an agreement that all 11 supervisors can sign on to, and both Supervisors Kim and Peskin have expressed a willingness to work toward a common solution that does indeed expand housing opportunities for all without reducing anyone else’s opportunities.

 





Don’t Gamble with Housing for the City’s Workforce

23 02 2017

Our latest op-ed in The Examiner.  Read the original article here.

San Francisco Examiner, Courtesy photo.

A new proposal to change The City’s Inclusionary Housing program is threatening to make it even more difficult for lower-income San Francisco workers to find homes.

While it is hard for many households to find housing, the challenge is most acute for The City’s low- and moderate-income workforce. In San Francisco, almost a third of these households are what the government describes as “severely rent burdened,” paying more than half their income in rent. That means little money left over for transportation, food, childcare, school and other necessities. On the other hand, almost no households above this moderate income level — individuals earning up to $90,000 per year or families of three earning up to $116,000 per year, or in more technical language, those who earn under 120 percent of the area median income (AMI) — can be described as severely rent-burdened, though in this over-priced city it’s no doubt some are paying more than 30 percent of their income in rent or mortgage.

What do we do for our “missing middle,” the low- and moderate-income workforce who have high housing cost burdens, yet who earn too much for The City’s federal and state-subsidized, very-low-income housing? Over the years, our affordable housing advocates have worked hard to create new programs to serve this low- and moderate-income workforce, including the largest first-time homeownership down payment program in the state, an acquisition program for small mixed-income apartment buildings, and The City’s Inclusionary Housing program, which is one of the most important workforce housing opportunity policies in The City’s toolbox. This program requires market-rate developments to include a certain percentage of permanently affordable units within their projects, and with last June’s Proposition C, this program was thoughtfully expanded to truly meet the housing needs of The City’s middle-income workforce.

Now, however, Mayor Ed Lee and several moderate board members appear to be launching a new proposal to change up The City’s Inclusionary Housing policy. Announced with a splashy news conference last week, this proposal would be a huge step backwards, pitting higher-income workers against lower-income workers who are all part of the same “missing middle.”

Currently because of Prop. C, which was overwhelmingly supported by San Francisco voters, developers are required to build onsite inclusionary units to serve households at two critical tiers: rental homes at 55 percent AMI and at 100 percent AMI, and homeownership opportunities for workers from 80 percent to 120 percent AMI. It was a “both/and” approach that expands the pie to create housing for the full range of residents caught in that missing middle and is truly a “Housing for All” policy. But the new proposal from City Hall eliminates the lower-income tier of the Inclusionary requirement, instead concentrating on only the higher moderate-income tier: 85 percent AMI average for rentals and 120 percent AMI average for condos, far more that The City’s unionized workforce earn, such as grocery store or hotel workers, janitors or paraprofessionals in our school district.

The core idea of last year’s Prop. C was to add to our pool of housing opportunities, not cut affordable housing for some workers to create housing for other higher-income workers, like this new proposal would. The San Francisco Realtors Association tried that approach with last November’s Proposition U, proposing to take away the low-income portion of The City’s Inclusionary Housing requirement to subsidize middle-income households, and the measure failed miserably — it only got 36 percent voter support.

All this begs the question: If we know who is being hardest hit by the affordable housing crisis, then why is this proposal cutting out low-income San Franciscans who are severely rent-burdened and also deserve the opportunity to live in mixed-income “inclusionary” housing?

There’s another catch as well. Prop. C also mandated that the City Controller do an analysis of the maximum feasible inclusionary, that just culminated two weeks ago. However, City Hall has come back with a proposal that then raises the household income levels to be served from what was assumed in the City Controller’s process. The City Hall proposal would equate to an increased profit of about $2 million to developers for a typical 100-unit development project with inclusionary rental units, and even more for a condo project. This way, the new proposal as a matter of optics can claim to hit the “maximum feasible inclusionary” that the Controller’s Office has recommended, and still save a nice chunk of change for private developers. Some might call that a real windfall!

Instead of making inclusionary housing about class politics and giveaways, we can and should continue to be bold with this city housing policy as it evolves forward. But first and foremost, leave the basic purpose of inclusionary housing policy as it is, for both low-income and moderate-income workers — the full “missing middle” of San Franciscans.





Will San Francisco Renege on Middle-Income Housing for Van Ness-Market hub?

6 02 2017

Our latest op-ed in The Examiner.  Read the original article here.

SF Examiner (Courtesy Photo).

For the last few years, The City has made big strides in recognizing the critical need for housing affordable to middle-income residents, as the affordability crisis has intensified and broadened to include more and more San Franciscans shut out of the private real estate development market. Mayor Ed Lee made middle-income housing a cornerstone of his housing plan, enshrined in Proposition K, the 2014 Housing Balance measure, which set a goal for The City to build 30,000 units by 2020, with at least one-third affordable to low- and moderate-income San Franciscans (defined as folks at all income levels up to 120 percent of the median, which equates to a family of four earning up to $120,000).

Voters have consistently supported both revenue measures and tighter affordable housing requirements to support homes for the broad population of San Francisco, without leaving behind the working class and those on fixed incomes. As importantly, San Franciscans have rejected attempts, such as last year’s Proposition U, placed by the Realtors, that proposed taking away homes from those earning less than The City’s median income in order to help those earning slightly above the median.

In November 2015, voters passed Proposition K, the Public Lands measure requiring The City to maintain “public lands in public hands,” particularly affordable housing, and that in the event that no public use was feasible, those sites could only be sold for development with a minimum requirement of 33 percent affordability for low- and moderate-income San Franciscans. Prop. K passed with an overwhelming 75 percent voter approval, setting San Francisco as a leader in the state for local public lands policy. Voters also approved a huge upzoning for the Giants’ Mission Rock projects, with a promise that the site would include 40 percent affordable units, from low-income all the way up to upper-middle-income. In November 2015, voters supported a $310 million bond with a portion of the funding dedicated to middle-income homes. And just last June, voters overwhelmingly passed Proposition C, with 68 percent support, expanding The City’s inclusionary housing by expanding requirements on market-rate developers to provide an additional 10 percent middle-income units and restoring the 15 percent low-income units The City had required until the Great Recession hit.

But when city departments own property they can speculate on to pay for other capital needs, the tune often changes.

Two years ago, the Department of Real Estate tried to sell off a five-story office building at 30 Van Ness Ave., which the Planning Department had recently rezoned for 400-foot heights (40 stories) and has a buildout capacity of 500 to 600 residential units. Real Estate tried to bypass an existing surplus properties ordinance by claiming that, because The City would still be renting office space in the building at the time of the sale, the property was never going to become “surplus.” But in early 2016, the Board of Supervisors sent the proposed sale back to the drawing board.

Now, the Department of Real Estate is back, this time trying to find a way around Proposition K, the voter-approved Public Lands measure. That measure mandated a minimum of 33 percent affordable housing on any city-owned land sold on the open market. Real Estate is now seeking another loophole, by asking for a waiver from Prop. K based on The City’s interest in using the proceeds to pay for “infrastructure” — in this case, a new office building for The City built in partnership with another private developer.

Their proposal for a waiver would build only 25 percent inclusionary, no different from what The City currently requires of private developers, rather than the 33 percent called for in Prop. K, and perhaps get some “fee-out” payments from the 30 Van Ness developer instead of actual onsite units. The difference is worth about another 45 on-site inclusionary affordable housing units, most of them designated for middle-income San Franciscans. In other words, the Department of Real Estate proposes to treat 30 Van Ness as just another private development opportunity rather than as a publicly owned asset that should command a higher public benefit. Why would they undercut desperately needed affordable homes to cover the costs of office space?

And on top of that, there is talk of rezoning the site yet again, for an even higher building, which would make the land even more valuable (but with no added public benefit). The Lumina project completed last year in Rincon Hill gives you an idea of the kind of prices a developer can expect for units in a 400-foot luxury tower: According to the Planning Department, initial sales prices for units ranged from $1.35 million to $49 million. That would seem like plenty of profit for 30 Van Ness to deliver the minimum 33 percent affordable requirements the voters asked for.

We know The City can — and should — do better. San Franciscans have continuously expressed at the voting booth a solid commitment to creating affordable housing opportunities and to building new units for both low-income and middle-income folks. Now is not the time to play procedural workarounds on a popular voter measure and squander away precious public resources.

It’s a sad day when a private development like the Giants’ proposal at Mission Rock can deliver more affordability than The City can on its own publicly owned property. It’s time to step up to the challenge and make the 30 Van Ness public site deliver affordable housing to its fullest.





Eye on the State: Housing Crisis Tied to Income Inequality

6 02 2017

This is the first piece from the SF Examiner’s new column, Eye on the State, which is a monthly report from San Franciscans for Community Planning that will follow the new round of by-right bills and other proposed housing bills making their way through the 2017 state legislative session: “Here on our San Francisco island, struggles over affordable housing and land-use policy have for decades absorbed much collective energy. Now, beyond our shores, there is a statewide “housing crisis,” and ideas about how to “solve” it are flying around the Capitol. Eye on the State will examine the local implications of proposals brewing in the Capitol from the perspective of community, housing, labor and environmental advocates representing everyday people.”  Read the original article here.

SF Examiner (Courtesy Photo).

To start, let’s get some clarity on the problem: California’s “housing crisis” is, at heart, an affordable housing crisis. Yes, housing production plummeted statewide after the 2008 financial crisis and has yet to recover. But the core question about the need for increased housing supply is: “supply for whom?”

Let’s also be clear that this affordability problem is as much related to income inequality as simply affordable housing “production.” While the dramatic rise of the tech sector with its high paying jobs is widely reported, less talked about is the up to six lower paying support and service jobs created for every tech job, driving up the need for low- and moderate-priced housing. Yet the reality is that the real estate market tends to only cater to the top-end earners.

In areas of the state where housing production has increased over recent years, it’s predominantly on the upper end of market-rate, creating an ever-widening gap for housing affordable to Californians earning less than the state median income. We know this all too well in San Francisco, where new market-rate housing is at nearly untouchable prices for even well-paid, white-collar workers, let alone The City’s majority of everyday low- and moderate-income people in need of housing.

What this top-end focus of new development has resulted in is a tremendous imbalance in the affordability of housing supply. Some California cities are “performing” quite strongly on the housing goals the state sets for them for market-rate housing, but falling far short when it comes to housing affordable to low- and moderate-income people. For example, the regional Association of Bay Area Governments reported that 99 percent of the projected market rate/above-moderate-income housing need was accomplished across the region’s 101 cities in recent years, while only 28 percent of all other needs for very-low, low- and middle-income housing were achieved.

While some cities like San Francisco are working hard to address affordable housing, many others are failing to build their “fair share,” exacerbating the load put on the Bay Area’s “Big Three” — San Jose, Oakland and San Francisco — which have absorbed more than a third of the entire region’s development in recent years (and are expected by regional planners to take on up to 45 percent of Bay Area development between now and 2030!). We must seek “regional equality” in meeting our future housing needs with policies that even out development across the region.

It is important to remember the housing market is different here than in Fairfield, Vacaville or Palo Alto, or farther afield in cities like Costa Mesa or Bakersfield. If there is such a thing as “naturally affordable” housing for the middle class, it might happen in some places with the right market conditions, but not others with hot real estate markets. As former State Sen. Mark Leno poignantly said in response to last year’s sweeping “by-right development” proposal from Gov. Jerry Brown, “one size does not fit all.” New, innovative policies must be devised at the state level, focused on higher density development in mature suburbs close to suburban employment centers. Evening out development patterns is a challenge, but with smart policies targeting the right places it can be done.

Solving the housing affordability crisis is not simple or easy. The California legislature has tried a variety of bills over the last three years, from protecting tenants, to strengthening “inclusionary” housing law and securing permanent state funding for affordable housing. But heavyweight interests, namely the realtors, the apartment association and the building industry, have fought these solutions tooth and nail.

Instead, the real estate industry is pushing the concept of development approvals “by right” — the idea that if local review processes are eliminated or “streamlined” then market-rate development will happen faster, more bountifully and with lower costs, all of which might result in more affordability for everyday Californians, everywhere. For a city like San Francisco where development is blazing and approvals are flipped out like pancakes at the Planning Commission, stripping away local public review for market-rate development is a power grab putting developers’ “right” to expect development approvals over the city and community’s “right” to push for more affordability or better environmental or labor standards in new development. Last summer Governor Brown ran a by-right development proposal up the flagpole, and it was blasted by a statewide array of community, housing, labor and environmental organizations. And this year new by-right bills are already being introduced again in the legislature.

 





A City for All Includes Families

3 02 2017

Our latest op-ed in The Examiner.  Read the original article here.

It is good to see that ”Family Housing” is getting a flash of interest in the media. It’ll be even better to see some substantive policy changes come out of all this attention. Because San Francisco’s need for family housing is not a new story.

In the 2000s, family housing was a critical component of the rezoning for the eastern neighborhoods. Those new plan areas eliminated density controls — allowing developers to shrink units to as small as legally allowed by building codes. In response, housing and community advocates fought for mandated family-sized units. As might be expected, developers strongly resisted, saying that this would distort “the market” and make development infeasible. The compromise was a reduced proposal of 40 percent two-bedroom units in some areas of the rezoning. As can be seen by the cranes all around the eastern neighborhoods, the family housing mandate did not stop construction at all.

Nonetheless, more and more developers today are concentrating on micro-units, studios, one-bedrooms and one-bedrooms “plus” — meaning that as The City’s new housing development becomes increasingly unaffordable, especially in the downtown and eastern neighborhoods, it is also increasingly unfriendly to families. This is in stark contrast to San Francisco’s historic housing stock, which is mostly units that are two-bedrooms and larger. According to last week’s report from the Planning Department: “Between January 2005 and June 2015, 61 percent of the 23,202 units of new market rate development has been studios and one-bedroom units, predominantly in larger buildings. New market rate housing produced relatively few units with three or more bedrooms.” Even in areas that require two-bedrooms, developers are barely meeting this requirement, claiming backroom dens with “borrowed light” as family bedrooms.

The current development market is “naturally” inclined toward building small units that cater to households without children. This is not because there is no market for family-sized units. (There is — in fact, this has been at the center of the demand for more middle-income housing in The City). It’s because the financial incentives for building smaller units are far greater. Real estate developers are not in the business of building housing to serve public policy needs — they are in the business of building for whatever “market demand” returns the best profit on their investments. More units per floor means more units to sell, each with higher per-square-foot prices, which means greater profit. This isn’t meant as a slight against developers; it is just the way the development market works.

By contrast, it’s our affordable housing developers who have been the primary provider of high-density family-friendly communities in the city. The typical affordable development provides units for a range of households, including single adults, couples and larger families, with approximately 40 percent two-bedrooms and 20 percent three-bedrooms and larger. We know that affordable family units actually go to families, rather than the extra bedrooms being used for home offices or entertainment rooms. Affordable developments typically have family-friendly open space, and many include on-site childcare.

If we want to keep opportunities for families in San Francisco, then it’s time for real action. The City needs to make bold policy moves, following the model set by affordable housing, not simply nibbling around the edges.

One way to achieve more family housing is a citywide unit mix requirement, beyond just the eastern neighborhoods plan areas. Emeryville, for example, has a 40 percent requirement, expecting each development to have at least 25 percent two-bedrooms and 15 percent three-bedrooms, and a maximum allowance of 10 percent studios. San Francisco could certainly match or surpass that standard. A unit mix requirement won’t necessarily guarantee that market rate units will be sold or rented to families — but if family units aren’t built, then it’s guaranteed that families won’t live there. Recognizing that neighborhoods are unique, the Planning Commission could come up with criteria for modifications to accommodate other community priorities, such as housing for seniors or single adults.

We need better standards for the design of family units, as homes that are designated “family” must actually function for families. Affordable housing already meets size and layout standards that have been derived from an empirical understanding of needs for households raising children. But in market rate housing the only “standard” is the minimum required by building codes, leaving the actual size and configuration of those two-bedroom units to each project developer. Without family unit standards, we are seeing inadequate two-bedroom units that are presented as “family” housing but realistically are marketed for singles and couples more likely to use the small second room for an office or media room.

At a minimum, the low- and middle-income inclusionary units that private developers build, which we do know will go to families, should incorporate an appropriate unit mix. This could be in line with what we already do with our 100 percent affordable housing: 40 percent two-bedrooms and 20 percent three-bedrooms, and minimum unit sizes to serve families.

Family-friendly buildings aren’t just about unit mix and size, but also about the overall design and amenities. The City could encourage developers to build units designated for family-based childcare, as Supervisor Norman Yee has recommended, which ideally would be designed to allow for better childcare sightlines and direct access to outdoor space. Open space should be designed to be family-friendly.

Finally, unlike affordable developments which often build in ground floor for childcare programs, private developments tend to fill these ground floors with parking or boutique retail. While The City charges fees to help subsidize much-needed childcare centers, there are few appropriate spaces on which to build. Instead of a fee, projects on large lots could be required to provide inclusionary childcare space.

The last few decades of development have shown us that the real estate market, left to its own devices, will not make this city family friendly. To do that will require bold policy interventions and, yes, regulation. And the developers will still build, and they will still make money. Let’s not let this flash moment of media interest go by the wayside — now is the time to refocus development on keeping families, at all income levels, in San Francisco.





What Santa Brought the Developers

15 12 2016

Our latest op-ed in The Examiner.  Read the original article here.

 

High-rise buildings in SF.  Photo credit: Emma Chiang, SF Examiner.

High-rise buildings in SF. Photo credit: Emma Chiang, SF Examiner.

Last Thursday at the Planning Commission, affordable housing policy in San Francisco took a giant step backward. For the very first time, a developer took advantage of a state density bonus law — a law that was intended to incentivize affordable housing — but in practice is becoming a big giveaway that allows developers to rack up bigger profits without providing a single additional unit of affordable housing.

Luckily, there is a clear way to correct for this giveaway — by setting our local affordable housing requirements, known as “inclusionary housing,” going forward at the appropriate level to recover the value of these giveaways.

The state density bonus law was written back in 1979 as a way to incentivize developers to build affordable housing. In exchange for building a certain number of affordable units, a developer would get a number of bonuses: additional market-rate units, or reductions in required parking, open space or setbacks.

In some markets, however, we don’t actually need to give developers extra profits to get them to build affordable units. With our incredibly hot housing market, developers can easily afford to include affordable housing in their projects — and they have been doing that since we passed our original local inclusionary requirements in 2001.

In fact, not a single project in San Francisco has ever taken advantage of the state density bonus. That is, until last Thursday, when the developer for a 200-unit market-rate project at 333 12th St. claimed the bonus.

Seems like Santa Claus came early for the developers, and he didn’t even ask if they had been naughty or nice.The problem with this state law is that it actually sets a lower standard than San Francisco’s current inclusionary requirements. Because of this, the initial intent of the law — to incentivize more affordable housing — is totally undermined. By providing exactly the number of affordable units they would have provided anyway, the developer at 333 12th St. is allowed to build 52 more market-rate units and zero additional affordable ones — drastically increasing their profits while giving nothing to The City or everyday San Franciscans in return. A project that was originally supposed to provide 18 percent affordable units will end up providing only 13.5 percent. The end result is effectively a reduction in the development’s contribution, a “value” to the developer in monetary terms of about $3.8 million. Talk about a giveaway!

Now that the very first developer has taken advantage of this bonus, a dangerous precedent has been set, and developers from here on out will want their own gifts from Santa Claus.

After Thursday’s Planning Commission hearing, Commissioner Myrna Melgar said, “It is an unconscionable giveaway. The City should not so easily stand aside and risk letting this impact on our city’s affordable housing policy become standard practice … The City really should do whatever it can, and quickly, to change our local policy to fix this problem before it escalates further.”

The hearing turned into a display of frustration, with the developer’s reps flatly, and smugly, telling commissioners there was nothing The City could do, and the commissioners one by one expressing their discontent with essentially being forced to approve a huge development that reduces affordable housing.

Commissioner Rich Hillis said during the commission’s deliberations, “It’s unfortunate that the application of a state law that’s to provide more affordable housing actually ends up with less affordable housing … to go from 18 percent we end up at 13.5 percent … I think we’d all say that’s a little odd …”

To be clear, increasing density of development is not the issue — that is a matter of good planning and design and appropriate fit. Instead, what is needed is a balance between market-rate development (with rents far beyond what the average San Franciscan can afford) and truly affordable housing. We need to uphold the initial spirit of the state density bonus law, which was based on the idea that developers could get more only in exchange for giving back more.

Moving forward, we do have an avenue for fixing this and preserving our local affordable housing policy. Currently, the City Controller is leading a process to assess the “feasibility” of the inclusionary percentages set by June’s Proposition C. The final meeting for this process is Monday and the recommendations that result will help set our inclusionary housing requirements for the foreseeable future.

In the controller’s initial report, published last month, they recommended a maximum of 18 percent inclusionary for rentals and 20 percent for condominiums, as an amount that could be easily supported by developer’s profits, and additionally suggested increasing this percentage over time at a set annual rate. However, as it is now, the controller’s calculations don’t include the state density bonus because this bonus has always been viewed as “theoretical” (since no developer had ever taken it). Well, this bonus is no longer theoretical.

With the precedent set by 333 12th St., it is very real — and it should, beyond a doubt, be included when determining how much affordable housing market-rate development can contribute to The City.

In fact, the controller has already acknowledged in preliminary recommendations that the state density bonus impact is “significant” and needs to be captured in setting the inclusionary rates. The 333 12th St. “case study” makes the answer quite clear: We need to increase the baseline inclusionary requirement by 7 percent to break even on the reduction caused by state density bonus. It is the only recourse The City has to recapture what the state has given away to developers. Let’s end the giveaways and remain true to the intent of San Francisco voters.