The mayor’s latest housing plan won’t work

HOME SF is great for developers, but not for the rest of us

Mayor Lee and Supervisor Tang are at it again: They’ve proposed a density bonus plan for the second most dense city in the nation. This time it’s called HOMESF and its being sold as “family” housing with “30% affordability” requirements, qualities that are, in fact, missing in any close reading of the proposal.

What HOMESF will produce is even more market-rate housing, too small to house families and too expensive for most current residents, especially families. We now produce for than 200% of the market rate housing we need. HOME SF will simply enable even more small, expensive “homes” basically aimed at young tech workers able to pay market rate for the honor of living here.  

Mayor Lee wants to give developers more density -- but that won't help families looking for housing
Mayor Lee wants to give developers more density — but that won’t help families looking for housing

This time the program will displace local neighborhood businesses, not long time residents. In the bruising 2016 fight, community, neighborhood, tenant, and affordable housing advocates prevailed in defeating the “Affordable Housing Density Program.” The mayor’s staff learned a lesson: This time, no residential use, rent controlled or not, can be subject to the new program. 

Instead, the program is aimed squarely at every neighborhood shopping street in San Francisco. The mayor’s bulls eye has been moved from the chest of residents to the heads of small-scale businesses that residents depend upon. Single-floor businesses, especially small-scale ones that tend to employ San Franciscans and sale retail goods needed by residents, are named as the sole target of the plan (see page 11 of the proposed legislation).

HOME SF shows why land-use issues in San Francisco are so contentious and lie at the very heart of the politics of the city. Development issues are a zero sum game in the City of St. Francis: There are real winners and real losers. The winners make a lot of money and the losers, well, they leave. This is so for the simple reason that there is only 47 square miles to play with and of that only about 23 square miles are able to be developed, with less and less each year as the Bay waters rise. San Francisco is a 19th Century city, and there is little vacant land. To build something new generally means something has to be torn down. And somebody either lives or works there.

It’s a hard sell to convince folks that they will somehow benefit from new development if they can no longer live or work here because that new development took their home or business. So “programs” and “plans” are devised by developers that reduce or sometimes even deny public participation in the approval process.  These developers contribute large sums to ensure that elected officials are open to these “innovative” programs that facilitate the “market.”

HOMESF allows two helpings of bonuses to developers: First, a massive change in the zoning of nearly every neighborhood in the city, and, second, a menu of specific density options able to be selected by the developer and planning staff with no public comment allowed. 

The combination of the two will virtually guarantee “micro units” for tech workers while being sold as “family housing.”

HOMESF establishes “form based density” in virtually all zoning districts, which ends the existing requirement for minimum unit size. The current “lot sized” zoning system expresses building density — how much of the lot can be covered by a building, what size its yards must be, how far back it must be set from the street — as a ratio of lot size. Form-based density simply ends that relationship between building and lot size (that is “place” or ” neighborhood.”)  It also ends the minimum size of the units, which means dramatically smaller homes and apartments. 

First allowed in the Eastern Neighborhoods, form based density basically allows a developer to privately negotiate with planning staff, without public oversight, the density of the project. What that means is simply more, smaller units.  Below is a comparison done by the Planning Department of new development unit size.  “Existing” is the old system of “lot sized” density and “new” is under the form based density system.  Note the dramatic increase of studio units and the nearly equally dramatic decrease of three-bedroom units.  And remember, the prices for these new units continued to increase as their size decreased. A recent report of the Planning Department showed that during this same period the numbers of workers per household actually increased .

48hillshousingchart

 

But, wait, there’s more.  HOMESF also grants an additional menu of bonuses available to the developer.  First, up to a total of 25 feet of additional height, and then a choice of three of either a 15-foot reduction of a rear yard size, no off-street loading space for any new commercial uses, up to a 75% reduction of both residential AND commercial parking requirements, a 5% reduction in common open space, or counting a space with 25-foot-high walls “in every horizontal dimension” as “inner court as open space.” All are fine choices for “family friendly housing!”

Family unfriendly “family” units

The use of “form based density” formula is wonkish enough that people desperate for family housing may overlook its implication. They may be persuaded by the HOMESF requirement that 40% of all units must be two bedrooms “or larger” and adjacent to “open spaces and play yards” and that “family friendly amenities” of “bathtubs, …cargo bicycle parking, …stroller storage, open space and yards designed for children.”

But as we have seen, these very yards and open spaces are allowed to be reduced in size, and form based density does away with minimum units size no matter how many “bedroom” (or, more accurately, “sleeping closets”) are required. When it is additionally realized that BMR units can be 90% of the size of the market rate units the cramped nature of these “family friendly” units are made clear. The heartless hype of these micro sized “density bonus” units on sites with tiny backyards and light wells being counted as “inner court yards” as “family friendly” may set a new low of “private-public partnership” in hoodwinking the public.

Unaffordable affordable units

What developers give to get these additional bonuses is to “provide an additional percentage of affordable units …such that the total percentage of Inclusionary Units and HOMESF Units equals 30%.” Thus, the HOMESF “get” is dependent on the outcome of the inclusionary battle, which is still being fought.

If the Peskin/Kim version wins, which requires 24% if the project is a rental development and 27% if condos, the HOME SF huge density bonus would be given for an additional 3% to 6% BMR units. If the Safai/Breed measure prevails,  which calls for 18% BMR’s in a  rental and 20% for  condo,  the bonus would be an additional 10% to 12% BMR units. 

 Each inclusionary measure has differing number of low income/middle income BMR requirements. The Kim/Peskin measure requires that 15% of all BMR’s be affordable to low income residents, while the Safai/Breed measure requires only 6% of the BMR’s to be affordable to lower income folks.

Since all HOMESF  “bonus BMR’s” are  a new “middle income” level  (120% to 140% AMI)  defined as “market rate” by ABAG and every other jurisdiction in the world, should the Safai/Breed measure pass, the HOME SF program would produce not one new condo units able to be afforded by anyone earning less than 90% AMI ($83,000 for an average sized  household). Indeed, two-thirds of the units produced would be affordable to households earning between $110,000 and $130,000. In many cases these prices for such BMR’s would be actually higher than the market rate rents in many neighborhoods in the city.

The concern that these units might well be unaffordable in many neighborhoods led the drafters to include a provision that allows (but weakly worded as “may” and not “shall”) these un-affordable BMR’s to be priced at “no more than 20% less” than  market rate rents in a “specified neighborhood.”

 

Amending the hell out of HOMESF

As drafted HOME-SF works great for developers: It gives them huge profits with minimal costs. It reduces their costs of development by allowing more units per sqaure foot of lot area. But reducing a developers’ cost does not automatically reduce the price of the finished product. For this program to work — for affordability and families — there needs to be major amendments, requirements that cost reduction results in price reduction.

The first might be called the “Randy Shaw Amendment.” Shaw, who runs the Tenderloin Housing Clinic and BeyondChron, has been attacking folks for opposing various density bonus programs for the last year.  But what he never mentions is that in both density bonus proposals of last year and this year, Shaw has gotten an exemption for the Tenderloin. Last year he got a straight up exemption.  This year he got an exemption for the Tenderloin based upon the completion of a “Affordable Housing Incentive Study” done for the Tenderloin.  The study is supposed to show ways to “incentivize increased affordable housing production levels at deeper and wider ranges of AMI and larger units size” before the HOMESF can be allowed to be applied to the Tenderloin — if it can be applied at all.

Shaw has it right: HOMESF does not make enough affordable units available at unit sizes needed for most of San Francisco.  But why stop at the Tenderloin, Randy? Why not join in amending the legislation to apply the same study to the Western Addition, Chinatown, Bayview, Excelsior, 24th Street in the Mission, and the Richmond?

The second amendment must stipulate not only a number of bedrooms for family units but also a minimum unit size and the removal of the 10% reduction in size for all HOMESF BMR’s. In a building with “family friendly” homes, no reduction in back yards and common open space should be allowed.

Third, real and meaningful protection must be offered to neighborhood-serving retail uses. If a HOMESF project displaces a neighborhood-serving retail use it must build space for a similar use (at similar rent) in the new project. Formula retail uses cannot be allowed to replace neighborhood-serving retail uses because of this program. Neighborhood retail uses not only provide critical goods and service to residents but also are a source of employment for San Franciscans.

Fourth, the language in the ordinance allowing the Mayor’s Office of Housing the ability to make sure that, on a neighborhood basis, a “below market rent” home is, in fact, below market rent in that neighborhood must be made mandatory.  The “may” needs to become “shall.”

Finally, if increased density is granted, which includes a reduction in parking, then the developer must pay an additional transit fee to Muni to offset the increased impact on transit of the carless market-rate development.

There is an old saying that zoning an area for gold mines does not make gold mines. So simply saying that HOMESF is “family friendly” and will provide “affordable housing” without actually requiring either in the ordinance will produce neither. HOME-SF needs major work. Let’s get it done.

 

 

 

 

 

  • FunnyBecauseItsTrue

    I for one believe that we should stop building market rate developments so landlords like Calvin can continue to reap outsized returns on their investments!

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      • chris12bb

        Possibly the best comment possible

  • chris12bb

    First line starts with a lie San Francisco is not the second most dense city, its not in the top 10

    The ” 200% of the market rate housing we need” this also is not true as all the properties sell they must therefore be needed. But I guess that 200% number is determined on who considers what housing is needed so you could say 500% or 1% it has no meaning.

    I gave up reading past these inacuracies as the article seemed a pointless waist

    • Don Sebastopol

      Maybe in the top 10 of US cities with at least 100K population?

    • curiousKulak

      I’ll grant his the “2nd more dense” (major) city.

      What I’d like to see is his data for the “200% market rate housing” having been built. According to the Regional Housing Needs Assessment, SF has built 120% for the market-rate market.

      Calvin is pretty good at ‘horror-hype’ (“developer profits”), but he never takes on the Controller’s study: http://sfcontroller.org/sites/default/files/Preliminary%20Report%20September%202016.pdf

      “Developers and their equity investors, therefore, do not ultimately pay the higher costs themselves. In most cases, increased costs for development (such as a higher inclusionary requirement) will either be passed on to land owners by developers, or result in reductions in the extent of residential development.
      Guess he’s hoping that all the investor capital goes away so he can ply the electorate to subsidize his efforts to the tune of several hundred thousand dollars per unit of “affordable” housing.

  • No_Diggity

    Is anyone surprised? Lee doesn’t give a hoot about the people.

    • SF Sunset Guy

      who would? You want Avalos as the mayor?

  • Yonathan Randolph

    As usual, Calvin Welch gets the big picture wrong, as well as a lot of details. He somehow manages to write almost 2000 words about the HOME-SF bill without ever mentioning the State Density Bonus, which is an option to developers regardless of whether HOME-SF passes. If HOME-SF were too restrictive as Mr. Welch demands, then developers would not choose it and would just opt to use the State Density Bonus. The question should be whether HOME-SF is better for San Francisco than existing State Density Bonus law, not whether it fits Calvin Welch’s ideas which ignore existing laws.

    Many of Calvin Welch’s assertions are false. No, development issues are not a “zero-sum game.” It creates more housing units and more moderate-income housing units, which is positive. No, it is not “heartless” to allow smaller units, given that large units in San Francisco are often split among non-family roommates anyway. No, the ABAG does not “define” middle-income as market-rate, and especially for San Francisco anybody who is paying attention knows that middle-income families struggle to afford market-rate housing. No, the BMR units would not be more expensive than market rate and this is not “weakly worded”; the specific language in the bill is “All HOME-SF Units must be marketed at a price that is at least 20% less than the current market rate for that unit size and neighborhood.” The bill already contains a retail replacement clause. No, California cities are not allowed to impose commercial rent control (Civ. Code 1954.25).

    Ironically, Calvin Welch’s parting quote is actually quite relevant to his own recommendations: “zoning an area for gold mines does not make gold mines.” Amending the law with Mr. Welch’s ideas that ignore market conditions and ignore state laws does not make housing affordable. Creating a very restrictive and unprofitable affordable housing option would not make any affordable housing; it would only encourage developers to use the State Density Bonus instead.

  • Heart

    Ed Lee has gutted San Francisco. The supervisors who seek to tout and enact terrible legislation (like this latest giveaway to speculators and developers) are complicit in the selling off of our beloved city.

    • FunnyBecauseItsTrue

      Yes! I agree! We need to make sure the current landed class can continue to extract more money from labor as rent!

    • SF Sunset Guy

      so he’s different from Greasy Gavin and Slick Willie how?

      You think they mismanage this City and County with us in mind?

  • No_Diggity

    second most dense city in the US? Um….. try TWENTY FIRST most dense city in the US. Man….. you are so far off it is laughable.

    • alisonsfca
      • playland

        Apparently it is the 2nd most dense of cities over a certain geographical size in the United States.

        But so what…let’s see what else that same article says:

        And it turns out that density is apparently a very good thing…when a city is more densely stacked with people and buildings, its residents have increased health and safety, better chances of upward economic mobility and lower transportation costs.

        • Don Sebastopol

          It depends on the study. I have seen data that density equals less heath and safety. I suspect a good economy causes more density not the other way around.

          • playland

            Yeah…when you go searching for wildlife in Africa you start with the places that have water and a good food supply. I guess human economies are the equivalent of food supply.

            But the main reason I think that SF’s density numbers are bogus is because SF is the Manhattan of the Bay Area. The overall density of New York City is about 27K per mile. But Brooklyn and Manhattan combined are twice the geography of SF and their combined density is about 46K.

          • Don Sebastopol

            It is a matter of scale. I see downtown as Manhattan and the sunset as Queens.

          • No_Diggity

            Exactly. Tainted data.

        • No_Diggity

          “… better chances of upward economic mobility…”

          NOPE.

          • playland

            Good point.

            It should probably say “better chances of upward economic mobility for those who choose to see such opportunities”.

        • Don Sebastopol

          Both London and Paris also have lower density neighborhoods. SF has high density and lower density neighborhoods. There is diversity in all cities. Looking at the average can be misleading.

      • No_Diggity

        Relying upon SFgate for your data is not the smartest move if you want real information. Their study was skewed by factors other then people per square mile. If you actually read the article you will see that they mention those other factors.

    • Don Sebastopol

      Major city?

  • Don Sebastopol

    Building more smaller units for young tech workers may have the positive effect of taking pressure off family housing now occupied by young tech workers, making more housing available for families. It is not clear that building larger condos will attract that many more families with school age children. They tend to prefer lower density single family homes.

    How will this effect “neighborhood-serving” retail? Formula retail can be neighborhood-serving
    and non-formula may not be neighborhood serving. Why not allow formula retail uses? What evidence is there that non-formula provides more employment for San Franciscans than formula?

    • curiousKulak

      Hayes Valley is the essence of ‘non-formula’ retail. Yet I dare anyone to show me residents that actually shop there. Unless, that is, you want designer boutique, hand made $200 shirts, and $6 one-scoop ice cream. Finding lunch for <$10 is a chore and leaves you hungry if you are successful.

  • neversummer

    Prices on rental housing in many of the city’s neighborhoods dropped up to 20% over the last year, largely due to the many new condos and apartments that have been built. While we still needs lots more housing to be built, over the next 2 years prices will continue to cool as current projects in the construction pipeline becomes available. I’m all for having reasonable restrictions on development, but why do so many critics of new housing development insist on ignoring/denying the simple fact that increasing supply does actually reduce prices?

    • Don Sebastopol

      Which neighborhoods? I suppose increasing the supply could slow or reduce the price but still not affordable. Too much supply may harm our quality of life.

      • Watson Ladd

        You want to live in the suburbs? The Central Valley is calling your name. But don’t expect us to pay for your parking, views, and public transit the way we have.

    • Ragazzu

      20%? Citation, please.

      • neversummer

        that number was from a TRI Commercial Real Estate report from Q4 2016
        Neighborhoods with significant rent decreases for 1 bedroom apts include
        Downtown/Civic/VanNess -22%
        Nob HIll -20%
        Mission -17%
        USF/Panhandle -7%

        I’m a rental agent in SF and have many properties that have rented for $1000-$500 less than just a year ago. If you don’t care to take my word for it, call any rental agency in SF and ask them. Prices are coming down significantly and the #1 reason is the number of new properties available.

        • Ragazzu

          Thanks, maybe you can leave a link. As for claiming that new properties are the top reason, I’m still not sold. There’s been a cooling in tech jobs, as well as uncertainty about the economy, healthcare, tourism, etc., under the new administration in DC.

          • neversummer

            I agree that the cooling in the tech industry has been a big factor, but
            that’s the demand side of the equation, and what were talking about is supply policy. I’m incredulous that so many people believe this line of thinking that says building more housing wont effect the market in a meaningful way.

            This is a city with a serious housing crisis and supposedly progressive activists are the largest hurdle to more affordable housing getting built. That’s a sad sad irony.

          • Ragazzu

            Sorry, man, I’m just not convinced of the facile supply-and-demand argument, especially since we’ve seen mostly market-rate/luxury housing built.

          • SF Sunset Guy

            The city can’t build a single unit for less than about a million, so I’m not sure how that’s not a luxury either. This while half of its public housing is uninhabitable…

          • neversummer

            Well, there you have it. You’re exactly the type of person that is so confounding. As you build more market rate housing, the market rate for housing declines. That’s how a market works. Why is that something people are trying to dispute?

            I haven’t heard one argument that has even come close to convincing me that SF is some outlier immune to the principles of supply and demand. I’m well aware that we’re heavily impacted by rent control and very tight development controls but that doesn’t throw out the principle that the more you have available the less it costs and the slower it increases. That’s how it works. You show me something to prove otherwise.

          • Ragazzu

            I’m afraid the burden of proof is on you, as I haven’t made any sweeping claims. I do know that many economists have argued that the free-market philosophy is a fundamentalist faith.

            My skepticism is strengthened by reading endless comments on this blog by property owners, real-estate trolls, and others who have something to sell. They always strikes me as disingenuous in their claiming to be supportive of current tenants and nameless future tenants, while in other comments bashing same. (I’m not accusing you of this.)

            You’re welcome to the last word. I’m moving on.

  • Tony

    Just say NO to 1 Million Residents of San Francisco.. More crowding, traffic and congestion, more money for foreign investor/developers, less livable city for everyone else.

    • FunnyBecauseItsTrue

      Just say yes to 1 million residents of San Francisco! Less money for landlords, and a more egalitarian future for the city!

  • Government Shrinkage

    Amongst the many inaccuracies in this article, one of the most blatant is that San Francisco is the second densest city in the U.S. It is not in the top 20. It’s 21st, in fact. https://en.wikipedia.org/wiki/List_of_United_States_cities_by_population_density. And that’s just in the first paragraph, which a cursory Google search would uncover.

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  • Heart

    Poor Katy Tang, Asha Safai and London Breed: they don’t know what they don’t know. Yet they continue to put bandaids on and amend Mayor Lee’s disasterous and confusing Affordable Denisity Bogus Plan. There are so many loopholes and workarounds for developers/speculators in HOMESF in its current form that it looks like swiss cheese; somehow I don’t think that’s an accident (with all the developer and real estate $$$ Breed, Safai, Tang, Farrell and Yee have received). In its current form (heard at yesterday’s Land Use hearing) HOMESF upzones much of the rest of the city and removes height controls. Isn’t the whole point of crafting good legislation (which is a primary function of the BofS) to be specific?) HOMESF Aka ADBP2 is a HUGE developer giveaway at the expense of San Francisco’s families and people making between $30K and $100K a year. Crumbs for us. Bonus for speculators.

  • Watson Ladd

    Minimum unit sizes increase costs. Why on earth would you call for that while claiming to want reduced prices?

  • neighbor

    I for one support Calvin Welch. We should not let anyone profit from the City’s land and we should make sure that family size housing is available to families. That’s why I look forward to the sale of his SF homes to the SF land trust as perm. affordable housing. I assume he would sell them for the purchase price plus a modest interest rate. We can filter through his public comments to see what he thinks developers should make and cut that in half or into a quarter (since he did nothing but sit on the land). Thanks Calvin – now that your kids are grown, make room for new families. Maybe you can spend your retirement in one of these HOME SF units – perfect for seniors!