"As Housing Fights Continue, S.F. Realtors Propose Two Ballot Measures"

SF Business Times, April 21, 2016

The powerful San Francisco Association of Realtors has proposed two November ballot measures.

The two proposals are the latest salvo in a housing ballot war that is as much about gathering political support as developing housing policy. Previous proposals include last year's failed moratorium on market-rate development in the Mission and an upcoming June measure that would double the affordable housing requirement for new projects.

The Realtors' " Middle Income Inclusionary Rental Housing Eligibility Ordinance" would double the maximum income levels for tenants seeking to rent subsidized units, from 55 percent of the area median income, or $41,450 in annual salary for a single person, to 110 percent, or $82,950 for one person. Rent on those units would be restricted to no more than 30 percent of the tenant's income.

The new rules would only apply to on-site affordable units within market-rate projects that reserve 12 percent of units as below-market-rate. Developers can alternatively build 20 percent of units off-site or pay a fee, and new housing from those sources wouldn't be subject to the new rules.

The measure would give more access to affordable housing for moderate-income renters who are too rich to qualify for most subsidized housing but struggle to afford soaring market-rate prices, said Nathan Ballard, a Democratic strategist advising the ballot measure campaign.

"The point of it is to expand the pool of housing options available to San Franciscans," said Ballard. "The goal of this ballot measure was to target a very specific, modest number of units and open them up for middle-class housing."

Separately, the " Competitive Bid Process for Publicly Funded Housing Ordinance" would require the Mayor's Office of Housing and Community Development to accept at least three developer bids for proposals to build new affordable housing projects. The proposal calls for the lowest cost bid to be selected, although the Mayor's Office of Housing can select a different bid if it explains its reasoning publicly.

"Transparent and fair bidding should be required of developers and builders who bid on affordable housing projects which receive city funds," the proposal states. Ballard confirmed that the Association of Realtors was behind both proposals.

The Mayor's Office of Housing is currently issuing requests for affordable housing proposals for the Balboa Park Upper Yard, followed by a public site at 490 South Van Ness in the Mission later this year. The agency declined to comment on the ballot measures because they aren't finalized.

If passed, both ordinances would go into effect 10 days after the vote.

Peter Cohen, co-director of the Council of Community Housing Organizations, whose members include non-profit developers, strongly opposes both of the November measures. "Both of these measures are political sound bites masquerading as policy solutions," said Cohen.

By increasing eligibility without increasing the supply of below-market-rate units, the measures would increase competition and provide fewer options for lower-income tenants. Each affordable new unit already draws hundreds of applications, underscoring the imbalance between demand and supply.

"It pits San Franciscans against each other," said Cohen. "It doesn't expand the pie. It just forces everyone to fight for the same slice of pie."

Increasing the income levels would also be a "sweetheart deal" for market-rate developers by providing them with higher rents without greater concessions, said Cohen. Instead, he supports Prop. C, the June ballot measure to double the on-site affordable housing requirements to 25 percent of units, because it would increase the amount of affordable housing required in new projects.

Developers have said Prop. C will kill some projects and result in less housing and therefore higher costs.

The Realtors and housing activists have previously battled over housing proposals, including the failed Prop. G in 2014, which would have taxed short-term "flips" in real estate sales. At the state levels, the Realtors have twice defeated changes to the Ellis Act, a controversial law that allows landlords to evict tenants to change the usage of a building.

Regarding the affordable developer selection changes that are proposed, Cohen said that seeking the lowest costs was misguided, because that could promote shoddy construction. Developers are now subject to a points-based system that takes into account cost as well as design and resident services, said Cohen.

The two proposals have early support from Supervisor Mark Farrell, who represents District 2. He said that increasing access for moderate-income tenants would be an important step for preserving the culture of the city.

"Our affordable housing program should address all income levels," said Farrell. "Both low and middle incomes."

Farrell also supports changes to the city's developer selection process and emphasis on lowering costs. "Competition when it comes to scarce city financial resources only benefits the public," said Farrell. "It is our obligation to protect our budget."

Sonja Trauss, founder of the pro-development San Francisco Bay Area Renters Federation, also supports both measures, but said that they were modest solutions compared to increasing the production of housing, which she said will benefit tenants of all income levels.

"If you're subsidizing housing for people who work full-time, either your minimum wage is too low, or you have restrictive building," said Trauss. "This is a duct tape and string solution."

Trauss said that doubling the income levels for on-site affordable units could also make projects more economically feasible for market-rate developers, especially if Prop. C passes. That proposal sets 10 percent of on-site units as middle income and 15 percent as low income. If the November proposal passes, the entire 25 percent requirement would be open to renters making up to 110 percent of area median income, which could potential increase developers' rent rolls and make more projects economically feasible.

An aide for Supervisor Jane Kim, who is sponsoring the June proposal, said she hadn't taken a position on the two November ballot measures.

The two ballot measures are some of the first items of debate in what will likely be a busy fall in local politics. There will also be elections for six of the 11 seats on the Board of Supervisors. On Thursday, protesters marched outside the Realtors' local office at 301 Grove St. in opposition to its influence on state lawmakers. More rallies will likely follow.

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