“The Real Facts about the Affordable Housing Debate”

48 Hills, March 23, 2017

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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