Saturday, October 24, 2020
News + Politics Housing Now it's the mayor attacking the supes

Now it’s the mayor attacking the supes

Breed tells business group that the progressive majority is against housing -- but the evidence shows otherwise.

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Mayor London Breed Friday followed in the steps of her ally, state Senator Scott Wiener, in attacking the Board of Supervisors – making clear that the moderates have developed this as a political stance for the fall election.

In a virtual talk sponsored by the San Francisco Business Times, Breed said that one reason homelessness continues to be such a challenge is that the supervisors refused to pass a Charter Amendment she had proposed in 2019.

Breed sought to gather signatures to put it on the ballot this fall, but COVID made that impossible, she said.

“I wanted a Charter amendment to make 100 percent affordable housing ‘as of right,’” Breed said. “It would be easy to do if you had the Board of Supervisors supporting it.”

She also talked about cutting fees on market-rate housing projects, saying that some supervisors are “voting against housing policies.”

She vowed to promote “housing by any means necessary.”

Breed also came close to opposing all of the tax measures on the fall ballot, including the tax on companies with excessive CEO pay and the tax on very-high-end real-estate sales.

“It’s clear that some people don’t care that we are in a pandemic,” and that businesses need a break, she said.

All of this came in the context of a new report by the Rand Corporation that shows how the very rich – which includes most of the big developers in the city, the people who sell property for more than $10 million, and the CEOs whose companies would be liable for taxes on excessive pay – have in effect stolen $50 trillion from the working people of this country since 1975.

That’s happened largely through tax breaks, labor laws, and other policies that Breed never mentioned.

Nobody at the event mentioned the Rand study, although it’s the most important political story of the year.

Breed complained about the cost of building new housing units, which runs between $550,00 and $750,000 a unit. She didn’t mention that the tech-growth policies of the past ten years, which she has largely supported, drove up the price of land. The price of building materials has also soared, as has the price of labor, because the tech boom has made it impossible for construction workers to live in the city without livable wages.

“Red tape” and “obstruction” are a far more limited factor in the cost of affordable housing.

Breed said that for years, “we weren’t building any housing.” True: But that’s not because the same advocates she trashes today weren’t trying. All through the 1980s, activists were calling on office developers to build housing, and nobody was blocking housing – but the returns on capital investment were higher in offices, so that’s what got built.

So let’s take a look for a moment on this 2019 measure to “remove obstacles” to affordable housing. Breed made a big point of saying that this was an example of how the supes were preventing new housing.

The measure would have given “affordable” housing a by-right, or “ministerial,” approval process. That means that a developer who showed up the Planning Department with blueprints and a check would automatically receive a permit. No public review of any sort; no appeals to the Board of Supes.

Okay, let’s say we want to cut through the “red tape.” Fair enough.

But her measure would also have redefined “affordable housing” as housing that someone earning 140 percent of Area Median Income could pay for. That would mean developers could build for people with incomes of $165,000 (for a family of four). That means the rent the developers could charge for an “affordable” housing unit (based on 30 percent of income) would be about $4,100 a month.

I agree that in San Francisco, even people who would be upper-middle-class families in other cities can’t afford housing, and I agree that some of the housing the city supports should be affordable to teachers, union workers, etc.

But the higher the definition of “affordable” the less the developers have to pay to subsidize the unit. A developer who builds 100 units of luxury housing and sets aside 20 as “affordable” has to cut the rent or purchase price on those units; the lower the income levels, the deeper the subsidy.

More: the mayor’s plan would have set the average affordable unit at 120 percent of AMI – which means half of the units built under her proposal would be affordable only to people making more than $100,000 a year. Lower-income people would get fewer affordable units.

Developers would make more money.

The measure also had an alarming element that said that any market-rate developer who added 3 percent additional affordability could also apply for “by-right” status. That would mean a developer of a 50-unit luxury complex in a neighborhood threatened with displacement could avoid any hearings or appeals at all if they just added about two units affordable to people making $165,000 a year.

Why wouldn’t every developer do that?

So the mayor’s plan could have ended any community oversight over market-rate housing development – which, of course, is what the Yimbys want.

More: the measure the mayor wanted to put on the ballot would have allowed the supes, by six votes, to apply the by-right designation to “additional forms of housing.” You get a pro-Yimby board for one term and all housing in the city could be built without a single Planning Commission hearing.

That’s why the progressive supervisors were against it. Instead, they promoted Proposition E on the November, 2019 ballot, which made it easier to build 100 percent affordable housing on public land. It passed overwhelmingly.

Tim Redmond
Tim Redmond has been a political and investigative reporter in San Francisco for more than 30 years. He spent much of that time as executive editor of the Bay Guardian. He is the founder of 48hills.

7 COMMENTS

  1. Tim,

    And, campers.

    Missed y’all.

    Luke Thomas of Fog City Journal fame just got me back logged-in after few weeks.

    You lose a stride or two per block as the years go by.

    He’s helping me put more grab bars around my place now as my balance is giving way to time and tequila.

    Go Giants!

    h.

  2. yo: That 20% ain’t impressing me. It’s 20% “below median market rents or sales prices ***for the neighborhood in which the 100% Affordable Housing Project is located*** “. Suppose you got your eyes set on a property in a gentrified neighborhood, catering to people earning 175% the ***area median income***. 0.8 the going rate for housing will cater to people earning 140% the area median income. So in an area built of housing for upper-level managers of tech companies, if you generously develop housing for middle-level managers at tech companies, you’ll be exempt from project review.

    How is this good for people who work at restaurants?

  3. Re: y, who said “Or rather, that he doesn’t agree with you that new market-rate housing will push down rents. I don’t either.”

    You don’t even have to accept the premise that economics is real. The charter amendment would have applied only to “100% Affordable Housing Project”s and “Teacher Housing Project”s rented at “20% below median market rents or sales prices for the neighborhood” (except for “prior tenants”). The charter amendment would NOT have applied to market-rate projects, contrary to y and Tim Redmond’s strawman. It explicitly would only apply to projects that pushed down rents.

  4. “When the Mayor says she wants more housing that pushes down rents for a range of income and one of Tim Redmond’s main complaints is that it might be profitable, it is clear that Tim Redmond does not actually want new housing that pushes down rents.”

    Or rather, that he doesn’t agree with you that new market-rate housing will push down rents. I don’t either.

  5. Good job analyzing the current checks and balances along with the underlying forces.

    Although I have a hard time with the concept that construction costs are so high in the city because the construction workers can’t live in the the 49 square miles of San Francisco.

  6. There are a number of inaccuracies in this reporting on the Mayor’s 2019 charter amendment (https://sfgov.legistar.com/LegislationDetail.aspx?ID=3929687&GUID=01381811-ADD9-47B5-B1E8-F1DFD2E60167).

    Tim says “But her measure would also have redefined “affordable housing” as housing that someone earning 140 percent of Area Median Income could pay for.” No, it would not have “redefined” the term “affordable housing” as it is used in any other law such as Planning Code’s inclusionary housing program. Every law defines the terms used in that law, and the charter amendment’s definition would have applied to the streamlining only. Anyway, HUD’s definition of affordable housing is a function of household income; according to HUD, for an 140% of AMI household, there is an affordable rent just as there is an affordable rent for an 80% of AMI household.

    Tim says “That means the rent the developers could charge for an “affordable” housing unit (based on 30 percent of income) would be about $4,100 a month.” Not necessarily. The thing that Tim Redmond omits is that the by-right charter amendment would have required rents to be “no higher than 20% below median market rents” no matter what income level the unit was originally targeted for (similar to the Balboa Reservoir development agreement).

    Tim says “But the higher the definition of “affordable” the less the developers have to pay to subsidize the unit.” And this is a bad thing because…? When a neighborhood is in need of a grocery store and someone comes along to complain “But they might make a profit!”, it is clear that that individual does not actually want a grocery store. When the Mayor says she wants more housing that pushes down rents for a range of income and one of Tim Redmond’s main complaints is that it might be profitable, it is clear that Tim Redmond does not actually want new housing that pushes down rents.

    Tim says “More: the mayor’s plan would have set the average affordable unit at 120 percent of AMI.” Now he’s conflating the Mayor’s by-right charter amendment last year with the Mayor’s upzoning and streamlining initiative ordinance last year (https://sfgov.legistar.com/LegislationDetail.aspx?ID=3992165&GUID=BFD42D52-978B-47A7-AB3F-5FA5A2E06D11) which she withdrew in a compromise with the BoS to put Proposition E on the ballot.

    Tim says “The measure also had an alarming element that said that any market-rate developer who added 3 percent additional affordability could also apply for “by-right” status.” This is an incorrect statement about the upzoning initiative ordinance that the Mayor withdrew. 100% of the residential units (or 66% for teacher housing), not “3 percent additional affordability” would have had to be affordable under the definition in the initiative ordinance. The correct statement of the flaw is that a nonresidential project in a mixed-use zone could add 3 deed-restricted housing units and qualify for streamlining and upzoning under the initiative ordinance. This contrasts with the charter amendment, which did not have the same flaw since it would have required “two-thirds of the gross building square footage designated for residential use”.

    Tim says “So the mayor’s plan could have ended any community oversight over market-rate housing development.” Again, this is not true; the proposed charter amendment’s units would be deed-restricted and the rents would be capped to at most 80% of market rent.

    “More: the measure the mayor wanted to put on the ballot would have allowed the supes, by six votes, to apply the by-right designation to “additional forms of housing.”” I think this is the only fair criticism (and the only direct quote) of the charter amendment as initially proposed from the point of view of opposing factions. The BoS could have taken this provision out instead of killing the entire streamlining charter amendment. Note that Proposition E (and the mayor’s streamlining and upzoning initiative ordinance) are not substitutes for the charter amendment, since they do not eliminate discretionary approvals.

  7. Great article Tim – especially going into the specific ways that Mayor Breed’s proposals would favor developers over middle income and lower income home buyers. One big typo of note however. The RAND Corporation study on how income has been distributed upward since 1975 came in with a figure a bit higher than the 50 million quoted in your article. The actual figure is close to 50 TRILLION. 47 trillion is the number cited. This is one of the primary reasons America is wack.

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