{"id":27376,"date":"2023-07-15T11:17:49","date_gmt":"2023-07-15T18:17:49","guid":{"rendered":"https:\/\/occupysf.net\/?p=27376"},"modified":"2023-07-15T11:17:50","modified_gmt":"2023-07-15T18:17:50","slug":"will-letting-developers-build-less-affordable-housing-jumpstart-thousands-of-stalled-units","status":"publish","type":"post","link":"https:\/\/occupysf.net\/index.php\/2023\/07\/15\/will-letting-developers-build-less-affordable-housing-jumpstart-thousands-of-stalled-units\/","title":{"rendered":"Will letting developers build less affordable housing jumpstart thousands of stalled units?"},"content":{"rendered":"\n

\"\" by\u00a0ANNIKA HOM<\/a><\/strong> JULY 14, 2023 (MissionLocal.org)<\/p>\n\n\n\n

\"\"\/<\/figure>\n\n\n\n

Despite misgivings, the Planning Commission approved a controversial ordinance that temporarily allows developers to rework stalled projects to include significantly less affordable units than they originally committed to. <\/p>\n\n\n\n

The ordinance proposed by Supervisors Aaron Peskin and Ahsha Safa\u00ed, now goes to the Board of Supervisors for final approval. <\/p>\n\n\n\n

Peskin and Safa\u00ed called it a necessary move to jumpstart some thousands of units stuck in the project pipeline. Builders, facing high labor, construction, and land costs haven\u2019t and won\u2019t break ground until a project is financially feasible, they argued. Removing affordable housing requirements, or inclusionary housing, may help. <\/p>\n\n\n\n

While macro-economic conditions are out of local officials\u2019 hands, there are \u201clevers that we can control in terms of incentivizing people to build,\u201d Safa\u00ed said. \u201cThis is one of the ways we can do that.\u201d<\/p>\n\n\n\n

If passed, any project in the city\u2019s pipeline with 25 or more units approved before November 2023 and hasn\u2019t secured construction documents can rework their projects. It\u2019s a stark difference in some cases: For example, the ordinance allows developers to make just 12 percent of their units on-site affordable. At present, the requirement is 22 percent. <\/p>\n\n\n\n

According to the planning department, some 7,800 in the pipeline now could be eligible. <\/p>\n\n\n\n

The ordinance also carves out a discount for new projects approved between November 2023 and November 2026, as long as they acquire construction documents within 2-and-half years. The Planning Department estimates 91 projects under review could qualify by 2026, meaning some 10,411 units could receive discounted rates.<\/p>\n\n\n\n

But Thursday\u2019s commission meeting reiterated it\u2019s unlikely that slashing the inclusionary requirement alone is enticing enough to immediately get the 69 projects stuck in the pipeline up and running again. A report released earlier this year by the City Controller and a technical committee modeled different housing types and showed under these economic conditions, no rental housing made a profit \u2014 not even a 100 percent market-rate building, or no affordable units at all.<\/p>\n\n\n\n

\u201cEssentially you can dial that [inclusionary] requirement all the way down to zero and still not have feasibility,\u201d chief economist Ted Egan said at Thursday\u2019s meeting. <\/p>\n\n\n\n

So what housing types would financially benefit if the ordinance\u2019s lower inclusionary rates were adopted? Egan pointed to a chart that showed feasible projects in green: Just low- to mid-rise condominiums, or ownership buildings. <\/p>\n\n\n\n

Given San Francisco is a majority renter town, and the city needs big projects like high-rises to chip away at a state-mandated 82,000 housing goal, this raised eyebrows for some commissioners. <\/p>\n\n\n\n

\u201cIt makes me uncomfortable that what we\u2019re doing will help ownership units, but not necessarily rental units,\u201d said Commissioner Sue Diamond, who, ultimately voted in favor of the legislation. \u201cI\u2019m worried it\u2019s not going to produce what we need\u2026 we\u2019re going to a lot of trouble for very little green.\u201d <\/p>\n\n\n\n

This isn\u2019t surprising to developers. One builder Mission Local interviewed in March argued cutting the inclusionary fee isn\u2019t nearly enough; all extra costs like development impact fees should be completely eliminated, and transfer taxes like should be reduced, they said.<\/p>\n\n\n\n

But commissioners acknowledged a concept floated repeatedly in these discussions: 20 percent of zero is zero. Citing that the impact is greater when there\u2019s \u201cno production,\u201d Commissioner Gabriella Ruiz ultimately supported the ordinance.<\/p>\n\n\n\n

Impacts on affordable housing?<\/strong><\/p>\n\n\n\n

Thursday\u2019s ordinance called into question whether San Francisco risked further debilitating its affordable housing tools as the state demands more than 46,000 affordable units be built by 2031. <\/p>\n\n\n\n

While inclusionary housing is far from the only affordable housing tool at the city\u2019s disposal, it has, if in smaller batches, reliably added to the overall affordable housing stock on the private market\u2019s dime, and usually much quicker than larger 100-percent affordable housing. It\u2019s common that developers opt to pay an in-lieu fee to fulfill that requirement instead, which has amounted to millions of dollars that help pay for 100-percent affordable housing. <\/p>\n\n\n\n

\u201cI\u2019m not in favor of further reducing\u201d the inclusionary, said Commissioner Derek Braun. He didn\u2019t want the rates to \u201cgo too low\u201d in case economic conditions approved within the next three years, but acknowledged the dozens of stalled projects. He called it \u201ctricky.\u201d<\/p>\n\n\n\n

The ordinance could translate to a big loss of affordable units. Presently, a 100-unit building needs to include 22 affordable units, build 30 units off-site or pay a fee equal to 30 percent of the project to go into an affordable housing pot. Under the ordinance, a 100-unit building can include just 12 units, build 17 off-site units, or pay a fee equal to 16.4 percent of the project. <\/p>\n\n\n\n

That\u2019s ten less affordable on-site units than required presently, and almost half of the fee. <\/p>\n\n\n\n

Similarly, for projects submitted between 2023 and 2026, a 100-unit building developers need to include 15 affordable units, 21 units off-site or pay a fee equal to 20.5 percent of the project. That\u2019s seven less on-site units than required presently, and two-thirds of the fee. <\/p>\n\n\n\n

That\u2019s the point \u2014 today\u2019s standards don\u2019t pencil, Peskin and Safa\u00ed emphasized. \u201cIn the right market we want to be as aggressive as we can, and build as much affordable housing as the market can allow,\u201d Safa\u00ed said. But \u201cyou can\u2019t get any units at all if no one is building.\u201d <\/p>\n\n\n\n

Resolution: Inclusionary Housing and Development Fee Reduction<\/p>\n\n\n\n

The Vote: 5 to 1<\/p>\n\n\n\n

For: Commissioner Derek Braun, Commissioner Sue Diamond, Commissioner Joel Koppel, Commissioner Gabriella Ruiz, Commission President Rachael Tanner<\/p>\n\n\n\n

Against: Commissioner Theresa Imperial<\/p>\n\n\n\n

It\u2019s been done before. In 2016, Peskin said he and Jane Kim just as controversially passed a law that raised the inclusionary rates, when the economy was better. \u201cWe were losing hundreds if not thousands of affordable housing units\u201d with a lower rate, Peskin said. \u201cThe inclusionary deserved to be increased.\u201d<\/p>\n\n\n\n

Peskin and Kim also passed a charter amendment enabling city leaders to adjust the rates, and established a technical committee tasked to monitor the economic effects every three years. The latest report, reviewed again Thursday, suggested dialing down inclusionary rates. <\/p>\n\n\n\n

Meanwhile, city leaders are pursuing an affordable housing bond next March to better fund 100 percent affordable housing buildings. Because those buildings are larger, those projects tend to deliver hundreds more affordable units than inclusionary. <\/p>\n\n\n\n

\u201cWe acknowledge that [lowering inclusionary] is going to build less affordable housing, but the real solution is 100-percent affordable housing construction,\u201d Peskin said. \u201cThe inclusionary housing program, while it\u2019s been good and important, it\u2019s not going to be the be-all-and-end-all.\u201d\u00a0\u00a0<\/a><\/p>\n\n\n\n

ANNIKA HOM<\/a><\/h2>\n\n\n\n

annika.hom@missionlocal.com<\/a><\/a><\/p>\n\n\n\n

REPORTER. Annika Hom is our inequality reporter through our partnership with Report for America. Annika was born and raised in the Bay Area. She previously interned at SF Weekly and the Boston Globe where she focused on local news and immigration. She is a proud Chinese and Filipina American. She has a twin brother that (contrary to soap opera tropes) is not evil.<\/p>\n\n\n\n

Follow her on Twitter at @AnnikaHom.<\/p>\n","protected":false},"excerpt":{"rendered":"

by\u00a0ANNIKA HOM JULY 14, 2023 (MissionLocal.org) Despite misgivings, the Planning Commission approved a controversial ordinance that temporarily allows developers to rework stalled projects to include significantly less affordable units than they originally committed to.  The ordinance proposed by Supervisors Aaron Peskin and Ahsha Safa\u00ed, now goes to the Board of… Continue reading → <\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[659],"_links":{"self":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts\/27376"}],"collection":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/comments?post=27376"}],"version-history":[{"count":1,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts\/27376\/revisions"}],"predecessor-version":[{"id":27377,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts\/27376\/revisions\/27377"}],"wp:attachment":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/media?parent=27376"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/categories?post=27376"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/tags?post=27376"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}