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.