“Is Mayor Lee’s Housing Bond Enough to Crack This S.F. Crisis?”

SF Chronicle, October 2, 2015

The number 31 changed everything for Jessica Pascasio and her fiance, Julian Aleman.

The couple had been staying with family for months, bouncing from place to place with their son, Joshua, 2, and baby daughter Jaylah. They scoured Craigslist for studio apartments — too expensive. They considered moving to Miami — too far. And then the letter came: No. 31.

“We had applied for the affordable housing lottery, thinking it would take five years to get a place in the city somewhere,” Pascasio said. “Then we got it. I called Julian and we were both screaming we were so excited.”

They now rent an eighth-floor apartment in a nondescript building off Beale Street near Rincon Hill, an affordable housing development run by Mercy Housing California. Their two-bedroom unit costs $1,073 each month, and a one-bedroom goes for $964. As with most units in the city, the demand was much higher than the supply. More than 5,000 people applied for the 70 units in the building, which opened in July.

Under Proposition A on the November ballot, more affordable housing could be created in San Francisco. The $310 million affordable housing bond is the linchpin in Mayor Ed Lee’s effort to address the housing crisis, which includes the creation of 30,000 new and rehabbed units by 2020. Prop. A won’t pay for all of the units, but it will contribute toward a significant portion of them.

Nearly half of the bond — $150 million — will go toward the development of new, permanently affordable homes, with the rest split between rehabilitating existing public housing, expanding middle-income housing and first-time home-buyer programs. Lee called the investment “historic,” saying it was “one of the greatest single steps” the city could take.

Little public opposition

But critics, led by Supervisor John Avalos, initially complained it wasn’t enough, arguing the bond should be closer to $500 million. The mayor then tacked on an additional $60 million to his original $250 million bond, with the new money earmarked for the Mission District. It was the most that could be added without upping property taxes to pay off the debt, Lee said.

Although the proposition heads to the ballot with little public opposition, it still needs to pass with a two-thirds supermajority vote because of the future possibility of a tax increase. A low turnout and more conservative voter base this year could make that difficult. The San Francisco Apartment Association, a landlords group, is against the measure and declined to comment.

The last city housing bond to pass was for $100 million in 1996. Similar measures asking for $250 million and $200 million respectively were defeated in 2002 and 2004. Both called for property tax increases.

“Under normal circumstances, a year like this isn’t a year you would float a bond,” political analyst David Latterman said. “But what’s changed is now the entire city understands that housing is a problem. This is a hot topic. I think it will pass, but it will be close and just barely manage to squeak by.”

Piece of larger puzzle

A key reason for that, Latterman said, is because the proposition probably won’t increase property taxes, which will appeal to the fiscally conservative. The measure does allow for a property tax increase increase if needed, with landlords allowed to pass up to 50 percent through to tenants. But the city doesn’t expect that to happen.

“It’s very thoughtfully established in terms of the value of the bonds,” said Kate Hartley, deputy director of the Mayor’s Office of Housing and Community Development. “It will create a great impact without overburdening property tax payers.”

The bond is expected to affect about 1,500 households, Hartley added. And, because the housing will be permanently affordable, it will serve multiple generations.

“The bond is only a piece of a much larger puzzle to alleviate the housing crisis,” she said. “We are seeing tremendous need across all levels. We need to bring on housing faster and apply it to a broad swath of the city’s population.”

But that money will be thinly spread to maximize impact to people of different socioeconomic groups, said Peter Cohen, co-director of the Council of Community Housing Organizations.

“You have a fairly finite amount of money to work with, but an ever increasing set of mouths to feed, metaphorically speaking, because the market isn’t working for so many more people,” he said. “We have a robust market-rate development production. But we have a widening array of residents who simply cannot even afford to get into that housing. There’s a mismatch.”

Critics of the bond have wondered whether it will do enough. For example, only a small portion of the bond will create new units. That’s because construction costs and buying land on some of the most expensive real estate in the country ups the price tag. Hartley estimates that the cost of building a new unit is $250,000, and the bond would create approximately 800 to 900 new units, some of which will be replacement housing.

Updating older units is a more efficient way of planning housing, said Gabe Metcalf, president of SPUR— a nonprofit think tank focused on planning and governance issues — and principle officer of SF Housing Now, Yes on A. The bond will funnel about $80 million to update and create 1,600 units at Potrero and 1,400 to 1,600 units at Sunnydale — public housing projects — he said.

“Housing costs the same to build, whether it’s market-rate or affordable,” he said. “We need a whole combination of measures to solve the housing crisis. Pursuing below market-rate housing in a straightforward way, like renovation, is a key way to do it.”

The topic is more relevant now than ever, Aleman said, which is why he hopes Prop. A will pass, noting that it would give more families the opportunity to live in the city and stay in their neighborhoods.

“If you could smush ‘blessed’ and ‘lucky’ into one word, that’s how we feel,” Aleman said. “To have a home is to have a sense of peace. Especially when we look out our bedroom window and see the apartment across the street going for $6,000 a month. I can’t imagine being permanently forced out because of sky-high rent.”

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Elections 2015Noa Chupkov