What the city’s new housing policy will mean

    It's way better than the original plan. But community groups are still going to demand more from developers

    San Francisco wound up with a sweeping new affordable housing policy this week, one that will encourage the demolition of some existing low-rise commercial buildings housing neighborhood businesses, increase density in many parts of town, and set affordability levels lower than what the voters approved last year but higher than what some supervisors wanted.

    It’s a compromise that is going to shape housing policy for the immediate future – and is aimed overall at encouraging somewhere around 30,000 new housing units without any discussion of how the city will pay for the infrastructure to support them.

    The new housing deal won't end opposition to the Monster in the Mission
    The new housing deal won’t end opposition to the Monster in the Mission

    In many ways, it was a victory for housing activists, who several months ago were looking at some very problematic legislation. People close to the talks told me that the fact that the community and progressive labor were able to come together and fight back — and get some victories — was a very big deal.

    And it’s not likely to stop community groups in places like the Mission from demanding more from individual project developers.

    The good news in the Grand Housing Compromise is that some of the worst provisions of Sup. Katy Tang’s HOME-SF bill – provisions that would have undermined the city’s affordable-housing goals – were amended out.

    The final deal reflects much of what community activists wanted, an indication that even with this more conservative board, organizing makes a difference.

    Of course, it also allowed all of the supes, including new appointee Jeff Sheehy, to avoid taking a tough vote on an issue that would have gone 6-5.

     

    Tang wanted to turn HOME-SF – a voluntary program that gives developers an extra two stories in height and more density in exchange for building more affordable housing – into what could have been a replacement for the carefully crafted rules on inclusionary housing.

    Her plan would have allowed developers to make more money by providing lower subsidies for housing.

    But at the last minute, Tang backed down, and changed her affordability mix to more closely resemble what Sups. Jane Kim, Aaron Peskin, London Breed, and Ahsha Safai had ageed on for the city’s mandatory inclusionary program.

    The community groups that came together to put pressure on all the supes had a significant impact.

    Here are a couple of key elements that the activists got included, according to the Council of Community Housing Organizations:

    If a court strikes down city’s density bonus fee scheme, Inclusionary reverts to 24% rental and 27% ownership requirements

    If more than 50% of total projects receive a density bonus, Inclusionary reverts to 24% rental and 27% ownership requirements.

    The final bill mandates that all “affordable” housing be priced at least 20 percent below the market rate for that neighborhood — also a big victory for housing advocates who argued that in some parts of town, the new “affordable” units would sell or rent for about the same price as market-rate units.

    Tang agreed to exempt the Mission from the new rules once the city starts on an area plan for the neighborhood. But she refused to accept an amendment from Sup. Norman Yee that would have removed part of Ocean Ave, saying she didn’t want any more carve-outs.

    She also refused to accept a proposal by Sup. Hillary Ronen to exempt buildings where legacy businesses are situated. That’s critical if you want to protect some neighborhood merchants, because the whole point of HOME-SF is to encourage developers to buy low-rise buildings, demolish them, and put up dense housing.

    Ronen mentioned the Good Life Grocery in Bernal Heights, which occupies a single-story structure on Cortland. That site would be a prime target for housing under Tang’s plan – it’s on a transit corridor, it’s big enough to allow a fairly substantial project, and demolition would not involve removing any existing housing units.

    But it would be the end for a community institution that is an anchor of the Cortland commercial district. That’s because the rent a developer would charge for ground-floor space in a fancy new project would be far more than what Good Life could pay – even if the space was suitable.

    Ronen said she had identified 11 business that have the city’s official legacy status that could be at risk if their buildings are demolished for new housing.

    But Tang insisted that there were already too many rules and limits in the measure, and that one more might make it less appealing to builders.

    That amendment failed, with only Sandra Lee Fewer, Norman Yee, and Jane Kim joining Ronen.

     

    The discussion, of course, was about “feasibility” and what would “pencil out” – that is, what level of city mandate would be low enough – and profits high enough — that speculative investors would continue to finance residential development in San Francisco.

    Safai insisted, as he has repeatedly during this debate, that the only way we are going to see more housing built in the city is if we keep affordability requirements below 25 percent, the level that voters approved with Prop. C.

    In fact, at developers of at least two Mission projects, and several others around the city, have already agreed to provide 25 percent of their units at below-market prices. And unlike the people who apply to live in affordable housing, who have to prove their income, developers never open their books.

    So, as Jennifer Fieber of the Tenants Union noted at one hearing, we are simply taking them at their word.

     

    The inclusionary housing deal doesn’t quite get to what the voters clearly wanted, but it’s a big step forward from what was proposed. Safai and Breed wanted to cap the requirements at 18 percent, but pressure from housing activists led to a deal that will raise the rate to 22 percent by 2019.

    And the levels of affordability, initially set to favor higher-income people, are now back to essentially where they were with the passage of Prop. C last year.

    I continue to wonder if this whole “inclusionary” system is going to work in the long term. If the city’s own studies are accurate, every time you build 100 units of market-rate housing, you create a demand for between 20 and 43 affordable units – just to stay even and not make things worse. The idea that allowing the private market to solve a problem that I don’t think the private market can ever solve is a bit sketchy anyway.

    Then there’s HOME-SF. That’s an alternative to following the city’s inclusionary program. If developers want to use the alternative, they get two extra stories in height above what local zoning would allow and more density – and in exchange, have to build 30 percent affordable units.

    The challenge was defining “affordable.”

    Tang’s first version would have set aside two thirds of the condo units (there are different rules for rentals, but most of what gets built these days is condo projects) for people with incomes of more than $90,000. The final skews that down a bit. (the higher the income level that counts as “affordable,” the less the developer has to subsidize and thus the more money they make.)

    The original version of HOME-SF could have created widespread demolition of existing housing. The final version exempts sites with housing already on them. So the targets for developers will be so-called “soft sites” (like old gas stations or parking lots) that can easily be turned into housing with little or no demolition) and places where there are single-story commercial buildings.

    Tang predicted that the policy will lead to the construction of 5,000 affordable units in the next 20 years (which would mean more than 20,000 units overall). I don’t think there are enough “soft sites” to accommodate all of that growth so, as is almost always the case in a crowded city, some existing buildings and businesses will have to go to make room for new housing.

    Landlords who own low-rise commercial buildings just saw the value of their property rise: Places (like the site of Good Life Grocery) that in the past probably wouldn’t be demolished for new housing are now on the block.

    Safai was at least honest about this: He said that there are tradeoffs, which he called “tough decisions.” In other words, we are going to have to lose some of what we have to make room for what we want.

    (I have to go back to the demand side for a moment: If the mayor had put the Twitter tax break on the ballot, and asked if San Franciscans wanted to be the tech hub of the nation – with the consequent evictions, displacement of local artists and musicians and writers and small businesses, and the traffic problems and everything else that has come with this vision – would the majority have voted yes? Or might we have decided to grow a little more slowly, and let the boom happen somewhere else?

    And if we did that, would most of the city’s residents — and the immigrants who came here not for high-paying jobs but for sanctuary from oppression and the freedom to be themselves — be better off? It’s at least worth asking this question, since it’s at the heart of the entire debate.)

     

    HOME-SF is in part about increased density in parts of town that have always resisted it. Observers have often quipped that San Francisco is indeed a city and county – everything east of 19th Avenue is the “city,” and the west side is the “county.”

    I don’t know anyone in progressive politics who seriously believes that all the new housing growth should take place on the east side of town, that the west should be exempt from all new density.

    The reality is that this particular program won’t radically change that. It only applies to sites where there is no existing housing, so you won’t see six-story buildings replacing single-family homes in St. Francis Wood. There may be some bigger buildings along transit corridors where there are “soft sites,” and you may see single-story commercial buildings torn down to make room for more housing. I worry that in neighborhood commercial corridors, community-serving merchants will be gone. New developments will charge higher rents, and that could be devastating to places like Clement St.

    But the “suburban” neighborhoods that the people pushing for more density decry aren’t going to be impacted all that much. Legalizing second units across the city would probably do more to create denser housing on the West side.

     

    I spoke to Sup. Hillary Ronen, who represents D9, which includes the Mission, where some of the fiercest housing battles have taken place (and more are on the way.) She said the compromise, while it’s as good as progressives could get with this board, won’t be the end of the story.

    “Development in the Mission, in sensitive areas, will continue to be controversial and there will continue to be negotiations on individual projects,” she said.

    The compromise doesn’t guarantee that all work on projects will be 100 percent union. It doesn’t address the loss of artistic and performance space or the ongoing attack on production, distribution, and repair space.

    There’s also the displacement issue: A lot of Mission activists fear, which good reason, that a project like the one proposed for 16th and Mission will drive up surrounding property values and lead to the displacement of more low-income people than the new affordable housing included with the project will be able to house.

     

    The new legislation will exempt some “area plans” (and there will be one in the Mission fairly soon). When the Planning Commission and the supes agree to rezone broad parts of the city, new rules go into effect – and HOME-SF wouldn’t always apply. Area plans are great for builders – the city does one environmental study of, say, the Eastern Neighborhoods, then authorizes anything that meets pre-set zoning rules. But those zoning rules take forever to create and are set in time and neighborhoods change, fast: The Eastern Neighborhoods Plan was approved before the tech boom, before the Google Buses, before Uber … and yet, projects are still subject to its outdated rules.

    And through it all, the city has taken the position that the best way to build affordable housing it to build more market-rate housing and make the developers set some aside for people who aren’t rich.

     Tom Radulovich, director of Livable City, has a very simple slogan: “Growth should pay for growth.” It often doesn’t.

    I’m not opposed to increased density, but I am opposed to the city getting a bad deal. And it’s never been clear who would pay for all the new Muni service, the schools, the police and fire and all the other city services that will be needed when another 30,000 housing units, and the 60,000 or so people who will fill them, arrive in the city.

    That issue never came up in the great housing debates of the past several weeks.

    Neither, really, did the issue of the city’s workforce: If we create a housing plan that sets aside less than a quarter of the new housing for workers who make up far more than half of the workforce, are we really getting anywhere?

    The largest employers in San Francisco are government, health care, and hospitality. Their workers, by and large, are unable to afford what will be around 80 percent of the new housing. Does that make any sense?

    Does any of this?