The real facts about the affordable housing debate

A pile of misinformation skews debate about how much below-market housing developers should have to provide

 

A heated debate has raged around City Hall since last June, when voters raised the affordable housing requirements on private developers to 25 percent. There are now two competing measures to update the ordinance, and good critiques to be made of various aspects of either proposal. But healthy public dialogue is not served when incorrect assertions creep into the debate.

First a few facts: With last June’s Prop C, voters expanded the city’s inclusionary housing requirement, by restoring the 15 percent “low and moderate-income” requirement to what it had been before 2012, and adding a new 10 percent “middle-income” requirement.

There's a big difference between what Peskin and Kim want and what Breed and Safai want
There’s a big difference between what Peskin and Kim want and what Breed and Safai want

What do those income levels mean? For rentals, the “lower income” units are affordable to households earning between $34,000 and $60,000 a year (minimum wage families and above), and for condos, to households earning between $60,000 and $107,000 a year. And the new “middle-income” category is affordable to households earning between $68,000 and $108,000 a year for rental units, and up to $140,000 a year for condos. That is the law today.

Prop C also tasked the city controller to conduct a technical study to determine the final total percentage based on project feasibility. This study has been completed, assuming the same split of lower and middle-income as approved by the voters (67 percent of them).

Now two separate measures about how best to implement the controller’s recommendations are being debated by the Board of Supervisors. There are a lot of nuances to the two proposals, but what has gained most of the political attention is the different emphasis on income levels served.

One measure, sponsored by Supervisors Jane Kim and Aaron Peskin, proposes keeping the 15 percent lower income units as currently exists, and growing the new tier of “middle-income” housing affordable to teachers, up to the maximum feasible amount analyzed by the controller. It’s designed to assume developers will continue to take advantage of the state density bonus, similar to the approach taken by cities like Santa Monica and West Hollywood.

To reach a broader range of incomes, the Kim-Peskin proposal would also make the income levels an average, so units would be provided at affordability levels below and above those low-income and middle-income targets. The proposal also requires that the affordable units be 60 percent family-sized units, including both two- and three-bedroom units.

The other measure, sponsored by Supervisors Ahsha Safai, London Breed, and Katy Tang, proposes reducing the lower income category from 15 percent to 6 percent, adding a new moderate category at 6 percent, and finally an upper middle-income category at another 6 percent, for a total of 18 percent. It assumes that developers who take advantage of the state density bonus could have their inclusionary percentage lowered to as little as 13 percent, but would “make up” the difference in fees. It too calls for family units, at 25 percent of units as two-bedrooms.

Unfortunately, significant misstatements of important facts were included in a recent post on BeyondChron. Here are several such excerpts from that blog, followed by the accurate information:

Mistake #1: “Every UESF teacher in a single household is barred from the city’s current inclusionary housing program.” INCORRECT. Currently, developers of rentals are required to build 10 percent of their units as middle-income, which serves many teacher households, and 15 percent of the units affordable as lower income, which serves paraprofessionals and other educators. The city’s entire inclusionary program for condos is priced to be affordable to teachers.

Mistake #2: “The vast majority of families whose students attend San Francisco schools earn too little to now qualify for inclusionary housing.” INCORRECT. The current inclusionary lower-income rental units are meant to serve minimum-wage families on up. The Kim-Peskin proposal actually expands the range of school families served. The Safai-Breed-Tang proposal lowers the percentage of units serving these families to only 6 percent.

Mistake #3: “The vast majority of San Francisco’s affordable nonprofit housing budget also goes to low-income families.” That’s true – but only because of limits imposed by external sources, which provide the lion’s share of funding. Most nonprofit affordable housing caps out at serving people up to 50 percent of median income, and much of it is meant to serve families at much lower incomes. Not only are there hundreds of applicants for every opening in a nonprofit building, but there is a critical unmet need for all the families from 50 percent of median and above.

Mistake #4: “The proposed law [Safai-Breed-Tang]… expands housing opportunities for both.” INCORRECT. Only the Kim-Peskin proposal expands housing opportunities for both categories, rather than reducing one in order to expand the other.

Mistake #5: “The city’s inclusionary law… fails to provide incentives for the two and three bedroom units that families with kids need. That’s another weakness with current law that the Safai-Breed-Tang proposal addresses.” FACT: Both proposals require some amount of family units: The Kim-Peskin proposal requires 60 percent family units, with a minimum 20 percent three-bedroom units, while the Safai-Breed-Tang proposal requires only 25 percent two-bedroom units.

Mistake #6: “The actual number of units involved in this debate is small.” INCORRECT: In the first 15 years of inclusionary housing, the program produced more than 2,000 units of permanently affordable housing, both rentals and condos. By doubling the inclusionary percentage, the next 15 years should produce another 4,000 desperately needed affordable units.

Finally, the post does not mention this, but by raising the average income targets from what was analyzed in the controller’s feasibility study, a significant financial benefit is bestowed to developers, in the millions of dollars for a typical project.

The post is correct in saying that “the two sides have far more in common than the rhetoric indicates.” There is certainly room for both sides to work on a solution that addresses many of the outstanding questions. Safai has expressed that he wants to get to an agreement that all 11 supervisors can sign on to, and both Supervisors Kim and Peskin have expressed a willingness to work toward a common solution that does indeed expand housing opportunities for all without reducing anyone else’s opportunities.

  • Heart

    On December 4, 2015, our own D5 Supervisor London Breed held a press conference in front of the old Harding Theatre on the very same block as the 650 Divisadero project. She announced proposed legislation to increase the percentage of required affordable housing in new private developments along stretches of Divisadero and Fillmore. She stated quote”Most of all it will be the highest affordable housing requirement ever–EVER– in the city and county of San Francisco.” close quotes. Today, that same legislation sits in limbo while Breed continues to make speeches about creating truly affordable housing for her constituents.

  • Heart

    London Breed ran on and won on the campaign promise to build more truly affordable housing for people making $100K or less. It is time hold the supervisor accountable for her speeches and promises to D5 constituents and the good people of San Francisco.

  • Heart

    The primary slogan of London Breed’s second campaign for D5 supervisor was “I’m a reneter just like you.” She won with this campaign promise to build more truly affordable housing for people making $100K or less. It is time hold the supervisor accountable for her speeches and promises to D5 constituents and the good people of San Francisco.

  • Don Sebastopol

    In either case the inclusionary requirement will slow development, which may be good thing. It would also seem that there is an economy of scale so that mostly larger projects will be built. That should mean hardly any development with inclusionary units out in west where I live. Also, a good thing.

  • Don Sebastopol

    From what I can determine, inclusionary condos are purchased by young professionals early in their careers; including tech workers. Most would be making too much money to qualify in a few years. Becoming owners at an earlier age may be a good thing, but it is not clear how society benefits. There are a lot of claims who will benefit, teachers, etc. I would be easy enough for the City to do a study of the approved applications to see the occupations and industries of residents; how may are teachers, nurses, blue collar workers, etc.

    • Don Sebastopol

      And also, how many work in SF?

  • Heart

    Here’s a Hoodline article on the subject of Supervisor Breed’s campaign promise to double the requirement for affordable housing in new developments along Fillmore and Divisadero.
    http://hoodline.com/2015/12/breed-proposes-doubling-affordable-housing-divis-fillmore

  • 4th Gen SF

    Additionally to Don S’s comment is the fact that less and less public school teachers are needed. There’s only 55k as of 2015 because they added pre-K (2k+). So that is 53k students. 2015 says there are 95k school aged students in SFUSD. Unless the SFUSD allows more charter schools public schools will continue to shrink.

    • Heart

      And you are perfectly fine with that? Just lie down and let the free market decide? Where did you go to school 4th Gen SF?

      • 4th Gen SF

        I am advocating for more charter schools in SF. There’s only 53K & falling public school students. The SFUSD is not attracting the middle classes because when the middle classes apply for the schools they like they still are not getting the schools they want. I do not know what to do except have more charters which will appeal to the middle classes. And as a reminder, all charter schools come under SFUSD.

        • Government Shrinkage

          Where (and when) I went to school, smart kids went to selective public schools, average kids went to regular public schools in their neighborhoods and remedial students who could afford it went to private school. It worked great.

          I will never send my kids to SFUSD schools as they stand. The only places where I’d send my kids to public school in this area is a narrow slice of Oakland, Burlingame and Hillsborough. That’s it. The reason I am for charter and vouchers is that I want to give the government a choice: create competitive, attractive schools or die the death you so amply deserve.

          As it is, all the people who stand up for our public school system are condemning generations of kids from less-educated or less affluent families to a lesser life because of a lesser education. Let that sink in.

          • 4th Gen SF

            SFUSD is bad. Rooftop has gone downhill, it used to be one of the best in the nation. Now it’s just average. Everyone loves Clarendon still, so it’s still up there. And I’ve heard Gratton is coming along…

      • 4th Gen SF

        Heart, just read on SFG about the fact there are hardly any children in SF. Now according to SFUSD as of 2015, as usual they haven’t updated to 2016 when it’s 2017 right now but I digress. Incompetency at SFUSD from the higher ups is par for the course.

        Again, as of 2015 – 53k in public schools per SFUSD’s outdated stats, and 2k in pre-K. There are 95k (2015) school age children in SF. What is happening is that without these better charter schools we will lose the middle class as it is, in SF. Just read on SFG where people did not get their choices – they MOVED to the E Bay. SFUSD needs to attract more families by having charters that work.

        My idea German language & German curriculum schools, several of them as those are actually super popular in private schools and growing. Also, French. Again, those 2 private schools (the French & German ones) are super popular. Why not OFFER THAT to the middle classes that are unable to afford that to ATTRACT more middle class people into the schools? And I mean as a charter, because SFUSD is pretty incompetent. Charters are much better scholatstically.

    • Don Sebastopol

      If SFUSD changes its policy to give more weight to neighborhood schools the middle-class will return and enrollment will increase.

      • 4th Gen SF

        That and imho, more charter schools that appeal to the middle classes.

    • Don Sebastopol

      SFUSD has said on more than one occasion that 70% of teachers live in SF. For the average SF worker 38% live in SF. That means teachers commute less than average. Of course many of them may have an employed spouse or partner. But it is also true that higher wage workers are more likely to commute than lower wage workers. The majority who have been “priced out” of the City are comparatively well off. They can’t afford someplace “desirable,” “suitable,” or “acceptable.” They can get a lot more for their money by leaving the City.

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  • neighbor

    Wow that’s rich – writing a whole article under the premise of getting facts right and then actually being dishonest in the article – as well as in all of your public mis-information campaigns. Can we all just stop letting these blowhards weigh in on housing policy.

    “Currently, developers of rentals are required to build 10 percent of their units as middle-income, which serves many teacher households, and 15 percent of the units affordable as lower income” – exactly zero have been produced through the current program. Suggesting that the existing law serves anyone is cardstacking BS logic.

    Mistake #3: “The vast majority of San Francisco’s affordable nonprofit housing budget also goes to low-income families.” That’s true – but only because of limits imposed by external sources
    – I can’t even on this one. This mistake is not a mistake, but because it comes through federal and state mandates it doesn’t matter.

    Mistake #4: “The proposed law [Safai-Breed-Tang]… expands housing opportunities for both.” INCORRECT. Only the Kim-Peskin proposal expands housing opportunities for both categories, rather than reducing one in order to expand the other.
    – FIRST: Reducing from the fiction existing law that has produced zero units? thank you for sharing your view from delusional fantasy land. But over here in reality world – 18 or 20 is above the percentage of inclusionary units ACTUALLY produced in REAL projects rather than written in some bogus development stalling political disaster piece of legislation.
    – SECOND – then why did you fight so hard against HOME SF which proposes to add more affordable units to the existing program? Oh, because it would actually produce housing and isn’t some delusional fantasy land requirement that will produce no housing, right you are the housing advocates that hate housing.

    Mistake #5: “The city’s inclusionary law… fails to provide incentives for the two and three bedroom units that families with kids need. That’s another weakness with current law that the Safai-Breed-Tang proposal addresses.” FACT: Both proposals require some amount of family units: The Kim-Peskin proposal requires 60 percent family units, with a minimum 20 percent three-bedroom units, while the Safai-Breed-Tang proposal requires only 25 percent two-bedroom units.
    _ DEAR CHCO – a REQUIREMENT is NOT an INCENTIVE.

    Mistake #6: “The actual number of units involved in this debate is small.” INCORRECT: In the first 15 years of inclusionary housing, the program produced more than 2,000 units of permanently affordable housing, both rentals and condos. By doubling the inclusionary percentage, the next 15 years should produce another 4,000 desperately needed affordable units.
    – FIRST – or the number of inclusionary units it would produce is less than the first 15 years of the program because it stalls development. Or it requires way more households to need subsidy because market rate housing prices only work at the top of the market.
    _SECOND – since you believe we so desperately need affordable housing why did you oppose HOME SF which would increase affordable housing potential from 1,000 to 5,000 units? I guess you are only desperate to see ideas that you generate move forward.

    Finally, the post does not mention this, but by raising the average income targets from what was analyzed in the controller’s feasibility study, a significant financial benefit is bestowed to developers, in the millions of dollars for a typical project.
    _ WHY START BELIEVING in FEASIBILITY NOW?

    Just stop trying to frame your ideas in facts – just rant – you are more compelling that way.

  • neighbor

    CCHO operates in a land of delusion. I wrote a long comment debunking their debunking and it seems to have been deleted by the editor. Interesting.
    Mistake 3 – not a mistake but we don’t like your framing.
    Mistake 4 – Not true, both increase the requirement above any rate that has been applied to an ACTUAL project. Using the 25% prop C as a baseline is a BS premise. Sure the law says 25% but NOT ONE SINGLE project has been entitled or built under that law – why? because it doesn’t work. Also HOME SF expands the # of units for all – well actually more than doubles it, so I assume CCHO will support HOME SF, right?

  • neighbor

    Mistake 5 – A REQUIREMENT is not an INCENTIVE.
    Mistake 6 – 1. feasibility – if fewer buildings are built, fewer affordable units will be built. 2. Safai/Breed/Tang indexes the inclusionary – so the delta of inclusionary rates between the two proposals closes in just a few short years. 3. Actually when you take out DAs, pipeline projects (that are grandfathered), most of the outlying neighborhoods (because 12% doesn’t work there, and 20 or 27 sure won’t), sites under 25 units, then you are left with soft sites on the eastern side of the city – so yeah, a few hundred units.
    But I understand you prefer to keep the math simple 2,000 times 2 is in fact 4,000. That does not relate to actual projects or actual housing production. But CCHO likes to use math to make a point, not to make good policy. I understand.

  • neighbor

    For example: “Finally, the post does not mention this, but by raising the average income targets from what was analyzed in the controller’s feasibility study, a significant financial benefit is bestowed to developers, in the millions of dollars for a typical project.”
    Right because if you change the sales price by $75K, then for every 10 inclusionary units there is about $750K less subsidy. By that logic an average 100 unit building could add one more inclusionary unit, except wait – it costs the developer 750K to build the unit, but the profits from that one unit are necessary to offset other costs, so actually it’s more like for every 150 or 200 units, we could ask from 1 more inclusionary unit – but actually its like you can’t do simple algebra on the outputs of a complex model, so yeah math to make a point, but not math to make good policy.

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  • neighbor

    48 Hills – why do you keep deleting my comments? Because they blow holes in this thin excuse for journalism?

    my comments in short – the above piece is full of misconstrued information.

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