Mayor Ed Lee recently announced his plans to introduce a charter amendment next November that will change the terms of Prop C, the Affordable Housing Trust Fund that the City’s voters adopted in 2012. Specifically, he wants to increase the Inclusionary Housing Ordinance (IHO) requirements on market-rate development that were written into it.
Jeff Buckley, his senior advisor on housing, visited SFHAC’s Regulatory Committee last Friday to give indications where this discussion is headed.
Mr. Buckley gave a brief history lesson on why Prop C was written and the various ways it will deliver $1.5 billion in funding to support affordable housing over the next two decades. What has changed since 2012 is that the very hot building cycle we’ve experienced has led to a growing perception that new market-rate housing is not doing enough to pay for and deliver affordable housing. More alarmingly, there are some members of the SF Board of Supervisors (BOS) who believe that most recent housing construction is simply making our housing crisis worse. Their solution would be to sharply increase the IHO costs imposed on housing development.
Mr. Buckley said there are three factors that drive this belief: First, the calculation of the IHO in lieu fee, for technical reasons, has not kept up with housing price increases and is perceived by some groups as far too low. This was illustrated by the recent BOS approval of the SFHAC-endorsed 75 Howard Street project. At the 11th hour, the developer “voluntarily” increased the in lieu fee payment significantly above the required threshold.
The second resulted when the sale of the City-owned 30 Van Ness site was revoked by the BOS because the price offered by the buyer was lower than an earlier appraisal. Given its prime location, some SF Supervisors believe any new building there should accommodate dramatically higher amounts of subsidized housing.
The third was the recent BOS approvals of the Giants’ Mission Rock and Forest City’s 5M projects. Because of their large size and unique economies of scale, they were able to make 40 percent of their unit count affordable. Some housing advocates believe that these levels are easily achievable by smaller projects in spite of their not enjoying the special large project advantages of Mission Rock and 5M.
It’s in this climate that Mayor Lee will convene a big tent meeting on December 15th that brings together representatives of all City stakeholder groups to suggest how to increase the amount of on-site housing required by the IHO. Prop C reduced on-site Inclusionary rate from 15 percent to the current 12 percent. Some local groups are saying that it should be at least double that amount.
SFHAC staff will be following these discussions closely and keeping you informed about the direction and ballot measuring timing. Stay tuned!