April 10, 2017 Rob Poole

SFHAC Takes Position on Competing Inclusionary Housing Measures

The San Francisco Housing Action Coalition (SFHAC) officially supports the inclusionary housing measure introduced by Supervisors Safai, Breed and Tang, with two caveats. Furthermore, SFHAC opposes the legislation introduced by Supervisors Kim and Peskin. These positions were thoroughly vetted by our Legislative Committee and endorsed by our Executive Committee. Our official letter can be found here.

Some History
If you’re new to the inclusionary housing conversation or not living and breathing this every day, this news may be confusing. Here’s the background. San Francisco’s inclusionary ordinance sets forth the percentage of subsidized affordable housing that must be included in new market-rate housing projects, either within in the building, off-site as a separate project or in the form of an “in-lieu” fee paid to the Mayor’s Office of Housing and Community Development (MOHCD). It’s become an increasingly common tool adopted by cities to address their affordable housing needs, especially in the wake of decreased funding from the state and federal government. San Francisco adopted its first mandatory inclusionary housing program in 2002 and has amended the program several times since. However, the law has been in flux for the past year.

In June 2016, the voters passed Proposition C, which doubled the inclusionary housing requirements. This changed the on-site percentage from 12 percent for low-income residents to 25 percent, broken up for low- and moderate-income individuals. The off-site and fee requirements were increased to 33 percent, up from 20 percent. No study was done to confirm whether these were viable proposals. Read this post for more details. As part of the measure, the City would be required to conduct an economic feasibility analysis to determine what the actual percentage should be. The Board of Supervisors would then use this data to adopt new legislation that sets the official requirements.

Over the course of several months, a Technical Advisory Committee (TAC) made up of market-rate and non-profit housing developers formed recommendations. Here’s the full report. To sum it up, the TAC recommended rental projects should be subject to a 14-18 percent on-site requirement and for-sale projects would be 17-20 percent. Two other key recommendations included incrementally increasing the percentages annually by half-a-percent and subjecting the homes added to a project via the state density bonus to an “impact fee.”

It’s simple, right?

The Competing Proposals
With the study complete, the Supervisors began working on their respective legislation. Fully summing up the two proposals that are up for consideration would take up far too much space for this one blog and, frankly, be mind-boggling confusing. However, land-use attorney firm Coblentz, Patch, Duffy and Bass LLP wrote up an impressive piece and chart that explains the measures. Here’s a very short summation.

The proposal introduced by Supervisors Kim and Peskin recommends setting the percentages at 24-percent on-site for rentals and 27-percent for for-sale projects, inconsistent with the TAC report. It also recommends an annual increase of 0.75 percent, but is not clear on how to treat new homes added through the state density bonus. Here’s the measure. SFHAC cannot support this. All data indicates such requirements would significantly slow down new home creation, thereby exacerbating the housing shortage and worsening the affordability crisis in the long run. In fact, new applications for projects have already dropped noticeably since the passage of Prop C.

The measure introduced by Supervisors Safai, Breed and Tang, while not perfect, is more in line with the TAC’s recommendations. The Safai, Breed, Tang legislation requires 18-percent inclusionary units on-site, split in thirds between low, low-moderate and moderate income levels. Here’s the legislation. The annual percentage increase and impact fee for density bonus units remain consistent with the TAC report. SFHAC supports this measure, with two recommended amendments.

Our Recommendations
Housing policy should be based on data. That’s the primary reason SFHAC supports the measure introduced by Supervisors Safai, Breed and Tang. Of the two proposals, it’s most closely related to an actual economic study. However, we cannot support the impact fee on the density bonus units, as that would likely be a huge disincentive for home creation. We also cannot support the annual half-a-percentage increase until the City adopts metrics that can be used to determine whether or not our housing policies are actually successful. One metric may be tracking new Environmental Applications on a quarterly basis to ensure new housing proposals are still being pursued. We look forward to working with City and Supervisors on this plan.

How You Can Take Action
These policies do not become reality without the voices of San Franciscans being heard at City Hall. Use our website’s directory of local elected officials to call or email your Supervisor so you can let them know you support a sensible, data-driven housing policy.

Image: Sergio Ruiz

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Rob Poole

Rob is the former Development and Communications Manager at SFHAC.

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