Rethinking the Suburbs Is Integral to California’s Housing Solution

12 10 2017

This is the second essay in a two-part series on the role of the suburbs in California’s housing crisis (read the original posting on Medium here). Read Part One here

A new model of the Bay Area that we can – and should – be moving towards.

An important and often overlooked factor in the state’s affordability crisis is the dramatic drop in single-family housing production in California over the past 10 years. We break this down in the first part of this series. Despite the rhetoric repeated by real estate boosters, the media, and some politicians that California historically under-produced housing for decades, developers were actually producing roughly enough homes until recently, through the ups and downs of economic cycles, to maintain pace with the state’s growing population at a rate of about one unit per average 2.5 person household.[1]But the Wall Street financial crash of 2008 brought with it a huge decline in investment in single-family and townhouse construction that the state has not recovered from, eliminating a source of homes that were once “naturally” affordable to middle-income Californians. Single-family production is down to about 40% of the statewide total, compared to 70%-80% of all homes built through the decades until the crash.

The result has been 1) a decline in single-family construction which has left overall state and regional housing production far below historic levels, and 2) changing geographic patterns where development is now concentrated as multi-family units (ie, apartments and condos) comprise the bulk of housing construction.

Clearly, jobs will continue to expand and the population will continue to grow, from in-migration, from births, and from a growing population of seniors on fixed incomes. Statewide, and in the Bay Area, home building needs to get back to the kind of pre-meltdown balance before single-family production dropped off, when new housing more closely matched population growth (in this we are in agreement with the supply-sider critics).

But we need to come to terms with the new reality we are living in — that a once inexpensive source of homes is no longer viable at significant levels (and is no longer desirable, environmentally-responsible, or even marketable to new generations of Californians).

So how do we deal with this new decline in single-family homes, and the accompanying desire to live in more “urban” places? And how do we make this new reality affordable to the vast majority of Californians, given the increasing income inequality of the state’s urban regions?

Cities Struggling to Make Up for the Suburbs

As single-family development in suburban cities dramatically slows, attention has increasingly fallen on a few major cities to take up the slack. For example, the Metropolitan Transportation Commission crafted the recent “Plan Bay Area” that places almost half of the entire burden for future residential growth on just three of the region’s 101 cities: San Francisco, San Jose, and Oakland.[2] But is it realistic for most of California’s new homes to now be built in just a handful of core cities, with many of their low-income and working class neighborhoods already struggling with a crisis of urban gentrification and displacement? And with a greater share of units in those core cities now being built in luxury high-rises, is that any solution to our overall statewide and regional housing crisis?

The answer is no, for two reasons:

1) The gentrification and displacement impacts of this approach are very real — and they are increasingly immoral and untenable. As California development is becoming increasingly concentrated in a handful of core cities and urban neighborhoods, we are seeing a new re-segregation of metropolitan regions, with working class people being pushed out to the suburban periphery, the inner city transformed into exclusive areas for the wealthy, and nowhere for the middle-class to go. An approach to “build, build, build” that leans on core cities alone and just heightens the risk of displacing poor and low-income folks to older suburbs, forced to commute long distances to jobs in the urban core, doesn’t address either the environmental or affordability imperative of this new era.

2) Even if we wanted to put nearly all the region’s new housing in three core cities, we (city governments, legislators, planners, policy makers, activists) can’t make that happen — short of controlling either the land or the financing. San Francisco, for example, approves (the official way of saying, “yes, go ahead and build this!”) a lot more housing than is currently being actually built. 2016 was a record year with over 5,000 new homes built, yet there are still 38,000 more units already approved but not the financing or construction cranes to build those thousands of units. Why not? We can speculate, but the main thing to know is that just approving a ton of market-rate housing in “the big three” and expecting it to quickly materialize is more urban fantasy than practical market reality, not to mention the attendant gentrification and displacement impacts noted above.

Getting into why there would be financing limitations is beyond the scope of this essay, but looking back at the Chronicle’s graph, even with today’s housing boom in the core cities, developers built only 49,000 multi-family units across the entire state in 2014, compared to 155,000 single-family houses constructed at the height of suburban construction in 2005 before the Wall Street crash. Clearly, any aspirational goal that attempts to squeeze most new construction into California’s core cities won’t meet the demand at the scale needed to address the state’s overall shortfall.

Middle-class Californians increasingly want more urban living, but it can’t all be done in a handful of high-density cities or concentrated into existing working-class, inner city neighborhoods. It is time to re-think suburbia. From a public policy standpoint, we can’t afford to write off the suburbs — which have already paved over millions of acres of the California landscape in the last 50 years — as private investors have largely done since 2008. We need to reevaluate the potential of the suburbs for more multi-family development, especially suburban cities accessible to regional transit, for enabling the denser, more interconnected, more affordable, and more sustainable living that people are looking for.

A More Urban Suburbia

Bringing a degree of urbanity to the suburbs is not the same as transforming suburbs into big cities. A suburban “urbanism” is what in the 1920s and 30s would have been called “streetcar suburbs,” the kind of human-scaled, walkable, and transit-accessible communities that many middle-class people are rediscovering today. This means increasing the density of suburbs by degrees, moving from the single-story tract house landscapes of the 1960s-1990s to duplexes, three-unit walkups, small apartment buildings, and condominium clusters. This increased density can be concentrated near town centers and within primary corridors connected to commercial areas and parks. This is really just about going back to a California of pre-sprawl suburbs, what “smart growth” advocates have been pushing for twenty years (to give credit where it’s due).

With the crash of single-family construction, now is the time for the smart densification of suburbs to be part of the big-picture statewide housing solution. In our own Bay Area region we need a new vision of a multi-nodal metropolis, with denser, human-scaled, small-city suburbs around the Bay augmenting the ‘Big Three’ core cities, with both residential and employment opportunities, linked by efficient regional transportation systems. That is, if developers will reverse the trend of abandoning the suburbs in favor of high-end development in core cities, and step up again to “build, build, build” middle-class homes for a re-envisioned California suburbia.

How to Get There — and How Not to

One approach currently being pushed by some development boosters essentially draws its cues from Reagan-era neoliberalism: removing what are seen as regulatory “barriers” to residential approvals, including removal of public input and planning commission approvals, inclusionary housing requirements, or environmental review that has the potential to empower NIMBY opponents to development. As part of a wider deregulation agenda that helped to produce the very financial crisis that nearly brought production to a halt in the first place, it’s hard to accept this as a primary path forward.

However, the data detailed in the Chronicle’s graph, showing residential production since the 1990s, clearly points to something other than regulations or NIMBYs as the cause of the crisis in California’s housing supply. It’s not as if regulations or fees suddenly changed in 2006, or NIMBYs suddenly found themselves empowered to stop construction when statewide production dropped by over 70% between 2005 and 2008. Moreover, it’s important to remember that while these deregulatory approaches may facilitate “approvals,” they cannot force financial decisions that lead to whether and where homes actually get built. Hence San Francisco’s backlog of 38,000 approved units, with little control over the fickle private investment to ensure that those units are built in the foreseeable future.

To acknowledge this is not to say that the planning bureaucracy cannot be improved — there is always room for improvement. But a deregulation approach on its own will not only fail to actually produce the scale of housing the state’s growing population needs, but more importantly will fail to produce homes where they are really needed — in the suburban cities of California where construction has dramatically fallen off over the last ten years. By contrast, a universal deregulation approach that cuts local public oversight will have the potential to exacerbate gentrification and displacement in urban “hot” neighborhoods already struggling to shoulder the bulk of the state’s development, silencing the voices of those fighting to get more affordable homes in those impacted neighborhoods, and pushing existing communities to the urban periphery.

So how to get there? The exact opposite of a deregulatory approach may be required — smartly using regulation to incentivize suburban areas to build and stabilize housing at the needed affordability levels. A good start would be regional measures that make local cities’ transportation funding dependent on the adoption of new production, affordability, and anti-displacement measures. A regulatory approach could also counteract the Prop 13-induced emphasis on retail and commercial development (Emeryville, anyone?) by linking the ability of cities to approve commercial development with approvals for residential construction that meets the housing needs of new workers brought by the commercial development — what is called a Jobs-Housing-“Fit”.

Lessons from Cities

The experience of San Francisco from the last two decades serves as a partial example of how the state could begin to go about this reimagining of California suburbs. As San Francisco finally rebounded from the suburban outmigration that had depleted its population from the 1950s to the 1990s,[3] planners and community activists began a long and imperfect process of rezoning its former industrial districts and creating redevelopment plans (bringing public investment) on former military bases, train yards, abandoned freeways, and downtown parking lots. This is the approach that our organization, the Council of Community Housing Organizations, took to development in San Francisco, an approach that sought to balance jobs, housing, and affordability: in the 80s we advocated to meter new commercial offices so that housing and infrastructure could keep up (jobs-housing balance), and successfully passed jobs-housing linkage fees (funding mechanism) so office builders would contribute to homes affordable for their workers; in the 90s we advocated for residential development in areas like Mission Bay (rezoning for residential development) when the landowners and pro-growth boosters still believed the future of the city was as the region’s officehub; in the early 2000s we worked with neighbors (yes, neighbors!) to plan for their own communities to support housing with 50% affordability in the former Central Freeway parcels of Hayes Valley (rezoning, with public investment in affordable housing); and in the late 2000s we pressed for public benefits and inclusionary fees built into rezonings (“public benefits zoning”) for Rincon Hill, Market/Octavia and Eastern Neighborhoods.

All of these were hard-fought campaigns that resulted in real homes. They depended not on deregulation, but on the opposite: an understanding of what the development market will and will not provide on its own, good participatory planning, a commitment of public resources needed to attract and direct private investment, and regulations that provide certainty for development outcomes. Key to some of these successes was the use of redevelopment funding, bonding against future tax growth, to build the infrastructure and affordable housing that would kick-start private development, then demanding that the private development also include a mix of affordability (ie, “inclusionary” housing). Redevelopment was dissolved in 2011 in California, and years of talk of a replacement “Redevelopment 2.0” have come up empty. Creative local financing sources will be needed to facilitate this kind of holistic planning and investment, whether at an urban or suburban scale.

Rethinking and densifying the suburbs, as well as the old “Main Streets” of the less dense areas of core cities and towns, is not the same as building out industrial lands and former military bases — these are existing communities. So, planning will be key, as was done in San Francisco’s Market/Octavia and Central Freeway parcels where intact and vibrant communities were already in place. State bills just passed in the legislature such as AB73 and SB540 this summer may provide incentives for this kind of carefully planned growth and development supported by infrastructure and mandated minimum levels of affordability.

But to make this happen there will have to be a firm commitment to change in these suburban communities, which requires organizing and political leadership — creating an understanding and acceptance that there will berezonings, there will be increased heights and density of people, there will be a lot more activity, and things will change for the better as the old single-family suburbia model morphs into a 21st century regional urbanism. That commitment needs to come with careful understanding of potential displacement of any existing residents, and the impacts on existing small businesses those communities depend on. And any rezonings should be predicated on well-analyzed requirements to capture a portion of the added profits to landowners and developers in order to mitigate the infrastructure and affordable housing needs that planned growth will bring. Change in suburbs can happen, it’s not rocket science, but it does mean being intentional. Which is to say, we need more planning, not less regulation.

Conclusion

The changing trends in statewide residential production over the past decade are drastic. In a new era where single-family construction no longer provides the bulk of middle-class homes to support a growing population, with a generational shift to more dense urban living, and with growing income inequality, it’s time to rethink the role of the suburbs. This isn’t a question of either/or: both core cities and suburban areas will need to do their share. California’s core cities are clearly going to continue to shoulder a large responsibility for accommodating population growth, and in so doing those of us in the affordable housing and community development movement will continue to grapple with countering the pressures of gentrification and displacement while figuring out how to plan for growth.

With the shift to “infill” multi-family housing patterns, California’s policymakers, planners, and developers will have to start envisioning a smaller overall development footprint in our metropolitan regions. But this is not the end of history for the vast built landscape of California’s suburbs and small towns. The state is 770 miles long stretching from Oregon to Mexico and 220 miles wide, with 482 local cities in total and millions of acres of suburbanization over the past six decades. Suburbs will have to evolve to play a new role, if we are to have any hope of solving California’s housing affordability crisis.

[1] Comparison of census population for California to housing starts tracked by the Construction Industry Research Board.

[2] Metropolitan Transportation Commission, Plan Bay Area 2040, Final Preferred Scenario: regional growth pattern & investment strategy. November 2016.

[3] Like many core cities across the US, San Francisco lost population every decade of the 1950s, 60s, and 70s, while the surrounding suburbs mushroomed in size. SF did not bounce back to its previous peak 1950 population until the year 2000.





Eye on the State: This Year Was All about Housing

9 10 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.

Read the rest of the “Eye on the State” series:

By Peter Cohen and Fernando Martí

Photo credit: Gary Coronado, LA Times/TNS.

To great fanfare, Gov. Jerry Brown last Friday finally signed a “package” of housing measures. The political logjam that had stymied affordable housing bills finally broke, with more than a dozen housing bills making it through this year.

The last decade has been a triple nightmare for housing in California: the 2008 Wall Street crash that decimated single-family house construction that once provided the bulk of middle-class starter homes; the governor’s dissolution of redevelopment funding that eliminated more than a billion dollars annually for housing; and the attack by the real estate industry that took away cities’ ability to require affordable “inclusionary” housing. California’s deficit of affordable homes grew to 1.5 million in the last few years, even as the state cut funding for affordable housing by 79 percent.

The SB2 and SB3 funding bills are a helpful shot in the arm — not nearly enough to make up for lost funding, but a good start. SB2 establishes a new document recording fee, which should net San Francisco $5 million to $10 million per year. The SB3 “Veterans and Affordable Housing Bond” will now be on the November 2018 statewide ballot. Helpful as these measures are, their limitations point to the continued need for real, permanent sources of dedicated funding at the local level to meet the scale of The City’s need.

Our local San Francisco nonprofit organizations have produced more than 30,000 permanently affordable housing units, and The City adds more affordable units annually than any other community in California. Clearly, we know how to put resources into brick-and-mortar results on the ground.

Another positive was Brown’s signature on AB 1505. The inclusionary housing bill, originally sponsored in 2011 by then-Sen. Mark Leno, had been previously vetoed by the governor after the real estate industry blocked it. AB 1505 will ensure that communities can once again require a minimum contribution to affordable housing needs by private, profit-driven developers within “financial feasibility.”

Other bright spots less talked about are AB 291, which strengthened nondiscrimination protections for immigrant tenants, and SB 166, which ensures cities actually provide sufficient sites for affordable housing.

We should remember that many of these affordable housing bills have been attempted multiple times in the last half decade — and this year finally broke through, thanks to the urgency of the crisis and the persistence of advocates. Credit should go to Western Center on Law and Poverty, Housing California and Public Advocates in particular, which worked the “inside” of Sacramento but also stayed connected with organizers on the ground and, as best as possible, steered the bills away from deals that would undermine tenants and low-income residents. There was tremendous grassroots advocacy from the statewide Residents United Network and the HousingNow! coalition with in-district visits, capitol visits, lobby days and letter-writing and social media campaigns.

But we can’t ignore that this was more of a “housing tradeoff” than a “housing package.”

The big quid pro quo was the governor’s support for the funding bills in exchange for votes for SB 35 to streamline market-rate development approvals. It includes streamlining for affordable housing, too, which was widely supported by many advocates, and it might help address opposition to low- and moderate-income housing, particularly in suburban cities. The bill’s real controversy was about the state requiring cities to approve market-rate projects “by-right,” without regard to potential impact of development on at-risk communities facing gentrification and displacement. Many organizations across the state called for amendments so that streamlining would not result in harm for vulnerable communities or create new secondary markets for speculating in “approvals” rather than producing actual built housing. These amendments were rejected, as the governor had made clear that any funding bills were dependent on his streamlining priority.

Sacramento’s focus on housing is nonetheless a welcome turn, after the governor’s long reticence to supporting affordable housing. Of course, the framing of the crisis in the Capitol has been totally focused on the decline in production relative to population and job growth. Yet for everyday working people and people on limited incomes, the crisis is also one of precarious tenure, evictions, soaring rents, unlivable commutes, rampant real-estate speculation and the loss of ethnic communities.

Now that the legislature has finally begun to tackle housing production — however imperfectly, including some actual resources to jump-start affordable housing — next year’s legislative session should start to tackle the gentrification and displacement crisis head-on, focusing on the lives of the millions of Californians who are most at risk.

 





The Missing Piece in the Housing Crisis: The Fall in Single-Family Homes

9 10 2017

Our latest piece on Medium.  Read the original post here.

Credit: La Citta Vita, [CC BY-SA 2.0 (https://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

On Sunday Aug 20th, 2017, the San Francisco Chronicle posted a two-page editorial “On Housing” which included a very telling graph that, unfortunately, was glossed over in the editors’ simple narrative of deregulation and “build, build, build.”

The data, from the State’s Department of Finance, shows two things: 1) the Wall Street meltdown of 2008 nearly ground housing production in California to a halt, and 2) single-family construction has dramatically diminished and is clearly not coming back.

This second point — the stunning sea-change in development patterns just within the past decade — has been largely overlooked (if not intentionally ignored) in discussions of what has caused the state’s housing crisis. But understanding this extreme, recent change in the landscape of home construction is critical to finding a pathway to a more affordable California.

The Era of the Suburbs

For decades, single-family homes dominated residential construction in California and the Bay Area. Go to any suburb east of Oakland and it’s plain and clear for as far as the eye can see — single-family suburbia was what made up the bulk of the housing industry. The real estate market responded to middle-class consumer demand by building inexpensive starter homes on farm fields and orchards, expanding our state’s wide-ranging suburbs. Built on cheap, undeveloped tracts and with fairly low construction costs, these homes provided the “natural” affordability that many middle-class Californians have recently watched disappear.

That housing supply tracked with population demand, both in the Bay Area as a region and in California as a whole: for every decade since the 1960s, developers built an average of .4 units for every new person added to the state, which at an average 2.5 persons per household is essentially one new home developed for every new California household decade over decade.[1]

The Crash of Single-Family Development

Since the 2008 Wall Street crash, though, we are living in a completely new era of housing, turned upside down in terms of housing production and preferences.

As the Chronicle’s graph above shows, home production crashed overall since about 2006, while population continued to soar. Compared to the historic average of .4 units for every new person, developers have only built .09 units per new person since 2010.

But what’s most striking about the graph is not only the overall drop in production, but the shift in housing types being built. With the market crash, single-family home production crashed and has never recovered. In 2005, over 150,000 single-family homes were built in California, providing the bulk of housing that we needed. Just last year, when multi-family home construction had essentially returned to pre-crash levels, single-family home production was still at less than 50,000 units — a THIRD of what it was before the crash. Multi-family homes (apartments and condos) now make up nearly 60% of all housing being built. This is a stunning change from past decades, when by contrast single-family homes made up 70–80% of all new construction.[2] The Chronicle editorial totally missed that key revelation in the data.

The takeaway? The single-family suburbs are out, and denser, “transit-oriented,” “urban infill” is now the focus of the residential development market.

We believe that this shift to a more urban housing market is — and should be — permanent. This drop in single-family construction is at least partly a response to a positive cultural change that’s been taking place over the last generation: middle-class and younger folks are increasingly seeing more urban living as both socially valuable and ecologically important. This is a good thing from an environmental standpoint, even a necessary thing as we turn away from sprawl development and reconfigure our metropolitan regions to deal with climate change and vehicle emissions.

A quick aside: as exciting as this new urbanism is, the narrative often ignores the reality that preferring to live in cities is not new for everyone. Talk to any of the working class communities, communities of color, and immigrant communities that remained in California core cities during the decades of white flight, redlining, disinvestment, poor schools, toxic dumps, and urban renewal, and who are now living with the effects of evictions, gentrification, and economic displacement as the middle-class “return-to-the-city” increases. For people who have been there all along, urban living has not just been the only option, but has provided the critical social networks and public transport that allowed these communities to thrive despite the disinvestment and racial and economic segregation they endured while middle-class suburbs thrived and developers happily built hundreds of thousands of single-family homes decade after decade.

But back to the point. Acknowledging this dramatic change in single-family housing production and the generational shift in housing desires is an essential piece to understanding the origins of the current housing crisis. Pair this new middle-class attention on cities and the sustained (never-to-rebound) crash in single-family housing production with the inherently higher costs of building high-density infill on expensive land, add in growing income inequality and relatively weak protections for urban tenants and low-income homeowners, and you have the recipe for the housing affordability and displacement crisis we all know too well.

A New Economic Reality

To move forward out of the affordability crisis, we need to understand the history of how and where homes got produced in California in the past and what has changed. What the Chronicle’s graph makes clear is that the story that “we chronically under-produced housing for decades and are now paying the price” (a mantra of the Bay Area Council, SPUR and other real estate lobbyists, and the “YIMBY” crowd) is simply revisionist history with little connection to reality.

Until very recently, developers were building enough homes to match population growth in California — it’s just that most of it was in the form of single-family homes. The past 10 years of the real estate market tells a story of drastic change — of suburban abandonment, hyperfocus on urban “hot markets”, and resulting gentrification and displacement.

Acknowledging that our reality has changed, we can evaluate what the new role of the Bay Area and California suburbs should be in returning the state to healthy housing production levels and meeting the growing desire for denser, more interconnected, and sustainable living.

Stay tuned for Part Two for our thoughts on rethinking the role of the suburbs.

 

 

[1] Comparison of average annual housing starts by decade from Construction Industry Research Board data compared to annualized population based on decennial census and 2015 ACS estimate, varies from 0.27 to 0.57, with an average of 0.41 units per new person.

[2] Construction Industry Research Board data.





Santa is Back for the Developers

12 09 2017

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

Buildings on The Embarcadero. Credit: Sarahbeth Maney, S.F. Examiner.

Last December, we wrote about the gift that Santa Claus brought to real estate developers in San Francisco: the ability to use recent changes in state density bonus law to increase heights and densities 35 percent above the existing zoning, with no additional public benefit.

To end this loophole, Assemblymember Phil Ting authored AB 915, which simply required The City’s “inclusionary housing” percentage to apply to projects that take advantage of the density bonus. It was a simple question of fairness. The San Francisco pro-housing community — from all 11 supervisors and the mayor to our community-based affordable housing, tenant and smart growth advocates, from Tenants Together to Livable City — came together to support this measure.

AB 915 passed in the state Assembly, thanks to Assemblymember David Chiu shepherding it through the Housing and Community Development Committee and thanks to the mayor and supervisors putting on the push for the Assembly floor vote. But in the final weeks for state legislation to pass, the real estate industry forced amendments to the bill in the Senate Housing Committee, by adding a gatekeeper role for the state’s housing agency to decide on an annual basis whether The City gets to implement AB 915.

That effectively killed the measure.

So what’s at stake? If you happen to be a developer in San Francisco, Santa brought you a 35 percent bonus on your profit. If you happen to own land you’re looking to sell, Santa handed you a 35 percent increase on the price of your land.

As we wrote last December when this giveaway was first exposed, it’s an unintended loophole in the State Density Bonus law that allows increased densities, heights and other economic incentives (reductions in open space or setbacks) in exchange for additional affordable housing. But San Francisco, due to the extraordinary profits to be made from housing here, already requires developers to provide a minimum of 18 percent affordable units for projects that comply with existing zoning. So, AB 915 was designed to fix that loophole specific to San Francisco, still encouraging increased density, but allowing The City to recoup part of the added value in increased affordability. Now, with the bill’s demise, developers will be able to upzone their land through the state density bonus with no additional requirements, effectively reducing their total affordable housing contribution to only 13 percent. What investor wouldn’t be slapping Santa’s back for that? And, in fact, over this past year, developers have already started taking advantage of this loophole.

What does this loophole actually mean in monetary terms? In a page straight out of “The Art of the Deal,” the first project to take advantage of this loophole, in South of Market, effectively created net “value” to the investor to the tune of about $3.8 million. After the hearing, Planning 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.”

Increasing density or heights is not the issue — what is at issue is upholding the spirit of the state law, which was that builders could be allowed to exceed local zoning rules to get more profit, only in exchange for giving back more. That is the win-win that ensures “pro-housing” really leads to more affordable housing.

What’s surprising about this sudden turn for Ting’s measure is that housing organizations across the state, many of which last year worked to strengthen the state’s density bonus law, had no problem with this San Francisco-specific bill, from Housing California to the Western Center on Law and Poverty to the California Rural Legal Assistance Foundation: in short, all the respected statewide pro-housing organizations.

Groups in opposition to AB 915 read like a laundry list of the state and local real estate lobby: the California Association of Realtors, the California Apartment Association and the California Building Industry Association, as well as locally the S.F. Housing Action Coalition, BARF and YIMBY Action. This constellation of players are also the most ardent supporters of SB 35, a bill that would streamline approvals for market-rate development in gentrifying communities throughout the state. All of which begs the question: Is the goal of these groups to support greater housing affordability in our densifying urban areas, as they often contend, or is it simply to support real estate profits at whatever cost to the public good?

AB 915 could return next year. But in the meantime, the fight to protect San Francisco’s landmark inclusionary housing policy continues.





Eye on the State: Leaders Must Find Political Will to Fund Housing, Fight Displacement

12 09 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.

Read the rest of the “Eye on the State” series:

 

By Dean Preston and Sam Tepperman-Gelfant

From left: Senate President pro Tempore Kevin DeLeon, Governor Jerry Brown, and Assembly Speaker Anthony Rendon. (SF Examiner, Courtesy photos)

State leaders have finally woken up to the affordable housing crisis raging throughout California. A slew of housing bills were introduced this year with different approaches to the problem. The governor and real estate companies sought deregulation of high-priced housing construction, while affordable housing and community advocates pushed for what families being priced out of neighborhoods need most urgently: funds to build more homes that low-income people can afford and removal of state constraints on local affordable housing and anti-displacement policies.

Back in July, Gov. Jerry Brown, Senate President pro Tempore Kevin DeLeón and Assembly Speaker Anthony Rendon pledged “their shared commitment and effort to address California’s housing needs.” With the legislature returning from a month-long recess this week, and a Sept. 15 deadline to send bills to the governor, it remains unclear whether they can convert this rhetoric into action.

The governor has signaled that deregulating housing construction — including market-rate housing — is his priority. Since he took office, he has slashed funding for affordable housing, vetoed inclusionary housing laws and refused to lead on even the most basic anti-displacement policies.

That’s where our legislative leaders come in. Leadership must force the issue with the governor, making clear that his deregulation agenda will not advance without his commitment to sign key tenant protection and affordable housing bills.

Right now, some of the most important bills remain in jeopardy. None should be controversial for anyone who cares about addressing the housing crisis.

Assembly Bill 1505 (Bloom, Chiu and Gloria) would overturn a misguided 2009 court decision that restricted local “inclusionary zoning” policies. Inclusionary zoning promotes mixed-income neighborhoods by ensuring that new housing developments contain a minimum percentage of affordable units. This creates affordable housing across the state at no cost to the government. Brown vetoed a similar bill in 2013 despite widespread support from business, labor, environmental, housing and equity groups. This year, legislative leaders must flex their political muscle to convince the governor to sign AB 1505.

A bill that would protect immigrant tenants from abuse by unscrupulous landlords, Assembly Bill 291 (Chiu), faces similar uncertainty. Brown has been quick to call out the Trump administration for anti-immigrant rhetoric, and needs to back this up with action. Yet the governor is reported to be on the fence about this bill. It is again up to legislative leaders to go to the mat to make sure that immigrant families have security in calling California home.

Another dire need is substantial ongoing funding to build more homes for lower-income families, seniors and people with disabilities. Over the last eight years, statewide affordable housing funding has been slashed by two-thirds — largely due to the dissolution of local redevelopment agencies by the state in 2012, which cut $1 billion per year in affordable housing funds.

Senate Bill 2 (Atkins) would generate hundreds of millions per year for affordable housing by imposing a modest recording fee on some real estate transactions. Its fate in the Assembly remains uncertain, however, since it requires a two-thirds majority.

Senate Bill 3 (Beall) would send a housing bond to the statewide ballot in 2018 — but at just $3 billion, it would not make enough of a dent in the affordable housing deficit. Voters would likely support double or triple that amount; lawmakers and the governor should ask them to.

Unfortunately, the bill most likely to become part of any housing package is unlikely to help low-income households and could silence the voices of low-income communities of color struggling to combat gentrification and displacement. Senate Bill 35 (Wiener) would prohibit local approval and environmental review processes for many housing developments. While touted as a panacea to the state’s housing crisis, the bill is in fact a giveaway to market-rate developers. A bill that streamlined only affordable housing could be helpful, but in its current form, SB 35 would largely result in fast-tracking high-priced condos in low-income neighborhoods.

Whatever housing bills pass this year, the affordable housing crisis will rage on. The legislature must step up efforts to combat the crisis now and when it reconvenes in January. Already on that docket are bills to repeal state restrictions on local rent-control policies, and to strengthen housing civil rights protections.

Whether there is political will to enact essential housing bills this year remains uncertain. Senate and Assembly leadership must fight for real housing solutions as if their constituents’ lives depend on them. Because, in fact, they do.

Dean Preston is executive director of Tenants Together. Sam Tepperman-Gelfant is deputy managing attorney of Public Advocates Inc.





Magical Thinking “By Right”

11 09 2017

or: Why deregulation will do little to increase housing supply for those who need it…





Say Yes to Housing at Pier 70

5 09 2017

Our latest op-ed in the San Francisco Examiner.  Read the original posting here.

Photo of Pier 70. Credit: SF Examiner, Courtesy of Port of San Francisco.

More housing! The Planning Commission has the opportunity today to either push for the housing we need, or continue to promote projects that exacerbate our jobs-housing imbalance.

Commissioners will hear two proposals for the 35-acre Pier 70 project along Third Street near Dogpatch and the Bayview. One scenario emphasizes commercial development, with comparatively little residential development to house the new workers, while the other scenario gets closer to proposing enough housing to meet the demand created by new jobs. The Planning Commission will be asked by the project sponsor to approve both — giving the developer certainty on their approvals for the huge Pier 70 site, but also giving the developer lots of flexibility on what they actually build.

We think this is the time for the Planning Commission to actually walk their talk about the need for housing to meet job growth, and demand that these big master-planned developments build enough housing for their workers.

This should be a no-brainer. The project’s own Environmental Impact Report notes that the “Maximum Commercial Scenario” will only meet 30 percent of the demand created by the project’s jobs, while the “Maximum Residential Scenario” will meet 94 percent of the housing demand. It’s a clear choice — the Planning Commission should approve the project on the condition that only the maximum residential scenario be allowed to move forward.

Pier 70 is a perfect site for new mixed-use development and we look forward to seeing the project move forward. Our affordable housing coalition, CCHO, along with several neighborhood associations adjacent to the project, supported the Proposition F ballot measure in 2014 that increased heights and densities on the parcels. But these large master-planned projects should no longer be allowed to just focus on profitable commercial development, while leaving other places to take care of the housing need they’ve helped create. This is the same scenario that has contributed to our housing crisis, with cities allowing companies like Google and Apple to build campuses in the South Bay without adequate housing for their workforce. San Francisco should not make the same mistake.

Getting to a real jobs-housing-fit
This debate points to an underlying issue with how The City plans its future (and by extension, to the absence of any regional planning that can rationally and equitably plan the region’s growth).

While large developments like this are required to do environmental impact reports, there’s no requirement to hold them accountable to their housing impacts, or to even understand what kind of housing the workers in these new jobs will be able to afford. The Planning Department needs to evolve and actually analyze the housing impacts, by wage level, for every major master-planned project and area plan (and cumulatively for the sum of all projects in The City). It’s called a Jobs-Housing Fit analysis, and it should be a prerequisite for Planning Commission discussions on development approvals.

This isn’t rocket science. Last June, we analyzed the Brisbane Baylands project, and this month we’re providing the Commission with our analysis of the Pier 70 project.

A Jobs-Housing Fit analysis shows that even the “Maximum Residential Scenario” doesn’t adequately meet the housing needs for Pier 70. The EIR’s estimate assumes that over a quarter of all new workers will be housed elsewhere in the region, and that other jurisdictions will take the responsibility of housing those workers. That’s like Brisbane or Cupertino or Mountain View saying San Francisco can house the majority of their new workers because that’s how it has been. It’s time for jurisdictions to start internalizing responsibility for the housing needed to support the new workforce their policies promote. When we take the full workforce into account, even the “Maximum Residential Scenario” would only account for 65 percent of the actual need.

When we delve deeper into worker incomes, the lack of adequate housing in the Pier 70 plan is even clearer. The project will have a mix of commercial office (presumably largely tech jobs), restaurant, retail, and arts/light industrial uses. This means Pier 70 will create low-, moderate-, and high-wage jobs, and needs to plan for housing at a range of income levels. Based on a Jobs-Housing Fit analysis, a whopping 47 percent of all housing would need to be affordable for Pier 70’s low- and moderate/middle-income workers (all those restaurant, retail, grounds, arts, light industrial and office support workers). The project will be providing 30 percent affordable units, which is still impressive and a plan that San Francisco’s Council of Community Housing Organizations supported in the Prop. F proposal.

That means that the “Maximum Residential Scenario” will provide enough housing for most of the new tech and office jobs, but a significant portion of the low- and moderate-income support workers will be forced to look for housing in cheaper outer suburbs with long commute times, and put additional housing pressure on other cities. This kind of inequality is not how we should be planning our cities or region, and San Francisco can and should do better.

At the very least, the Planning Commission should only allow the Maximum Residential Scenario to move forward. And from here on out, the Planning Department should commit to real planning for The City’s future by ensuring that commercial development in The City is planned with sufficient housing and at the appropriate affordability levels for a true Jobs-Housing Fit.

Otherwise, we aren’t solving our housing crisis — we are just making it worse. Say yes to housing at Pier 70.





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.