“Will San Francisco Renege on Middle-Income Housing for Van Ness-Market Hub?”
SF Examiner, February 6, 2016
For the last few years, The City has made big strides in recognizing the critical need for housing affordable to middle-income residents, as the affordability crisis has intensified and broadened to include more and more San Franciscans shut out of the private real estate development market. Mayor Ed Lee made middle-income housing a cornerstone of his housing plan, enshrined in Proposition K, the 2014 Housing Balance measure, which set a goal for The City to build 30,000 units by 2020, with at least one-third affordable to low- and moderate-income San Franciscans (defined as folks at all income levels up to 120 percent of the median, which equates to a family of four earning up to $120,000).
Voters have consistently supported both revenue measures and tighter affordable housing requirements to support homes for the broad population of San Francisco, without leaving behind the working class and those on fixed incomes. As importantly, San Franciscans have rejected attempts, such as last year’s Proposition U, placed by the Realtors, that proposed taking away homes from those earning less than The City’s median income in order to help those earning slightly above the median.
In November 2015, voters passed Proposition K, the Public Lands measure requiring The City to maintain “public lands in public hands,” particularly affordable housing, and that in the event that no public use was feasible, those sites could only be sold for development with a minimum requirement of 33 percent affordability for low- and moderate-income San Franciscans. Prop. K passed with an overwhelming 75 percent voter approval, setting San Francisco as a leader in the state for local public lands policy. Voters also approved a huge upzoning for the Giants’ Mission Rock projects, with a promise that the site would include 40 percent affordable units, from low-income all the way up to upper-middle-income. In November 2015, voters supported a $310 million bond with a portion of the funding dedicated to middle-income homes. And just last June, voters overwhelmingly passed Proposition C, with 68 percent support, expanding The City’s inclusionary housing by expanding requirements on market-rate developers to provide an additional 10 percent middle-income units and restoring the 15 percent low-income units The City had required until the Great Recession hit.
But when city departments own property they can speculate on to pay for other capital needs, the tune often changes.
Two years ago, the Department of Real Estate tried to sell off a five-story office building at 30 Van Ness Ave., which the Planning Department had recently rezoned for 400-foot heights (40 stories) and has a buildout capacity of 500 to 600 residential units. Real Estate tried to bypass an existing surplus properties ordinance by claiming that, because The City would still be renting office space in the building at the time of the sale, the property was never going to become “surplus.” But in early 2016, the Board of Supervisors sent the proposed sale back to the drawing board.
Now, the Department of Real Estate is back, this time trying to find a way around Proposition K, the voter-approved Public Lands measure. That measure mandated a minimum of 33 percent affordable housing on any city-owned land sold on the open market. Real Estate is now seeking another loophole, by asking for a waiver from Prop. K based on The City’s interest in using the proceeds to pay for “infrastructure” — in this case, a new office building for The City built in partnership with another private developer.
Their proposal for a waiver would build only 25 percent inclusionary, no different from what The City currently requires of private developers, rather than the 33 percent called for in Prop. K, and perhaps get some “fee-out” payments from the 30 Van Ness developer instead of actual onsite units. The difference is worth about another 45 on-site inclusionary affordable housing units, most of them designated for middle-income San Franciscans. In other words, the Department of Real Estate proposes to treat 30 Van Ness as just another private development opportunity rather than as a publicly owned asset that should command a higher public benefit. Why would they undercut desperately needed affordable homes to cover the costs of office space?
And on top of that, there is talk of rezoning the site yet again, for an even higher building, which would make the land even more valuable (but with no added public benefit). The Lumina project completed last year in Rincon Hill gives you an idea of the kind of prices a developer can expect for units in a 400-foot luxury tower: According to the Planning Department, initial sales prices for units ranged from $1.35 million to $49 million. That would seem like plenty of profit for 30 Van Ness to deliver the minimum 33 percent affordable requirements the voters asked for.
We know The City can — and should — do better. San Franciscans have continuously expressed at the voting booth a solid commitment to creating affordable housing opportunities and to building new units for both low-income and middle-income folks. Now is not the time to play procedural workarounds on a popular voter measure and squander away precious public resources.
It’s a sad day when a private development like the Giants’ proposal at Mission Rock can deliver more affordability than The City can on its own publicly owned property. It’s time to step up to the challenge and make the 30 Van Ness public site deliver affordable housing to its fullest.
Fernando Marti and Peter Cohen are co-directors of San Francisco’s Council of Community Housing Organizations.