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Friday, June 21, 2013

Enforcing the law on housing

Spoke to my good friends at the Bernal Heights Democratic Club last night. The opening act was former mayor Art Agnos, who made the case (effectively) against the Warriors stadium, hotel, and shopping mall complex. I talked about housing and the ABAG plan for San Francisco.

And when we got to the discussion, a fascinating idea came up: Why not give the city's General Plan the force of law?

Yeah, wonky stuff. But here's how it works and why it would matter.

Under state law, every city has to put together a general plan for growth and development and update it every ten years. The plan looks at Commerce and Industry, Transportation, Housing, etc.

The Housing Element of SF's General Plan is actually interesting. It states that, in order to accommodate projected growth and maintain a proper mix of jobs and housing, more than 60 percent all of new housing should be "affordable," that is, below (way below) current market rates.

That's right: Sixty percent of the new housing the gets built is, according to the city's own plan, supposed to be sold or rented for far less than what developers are charging today.

Yes, developers pay for some affordable housing. If the city gets a really, really good deal, 15-18 percent of the units are below market. (Although developers never build affordable units on site; they put that money aside into a fund that gets used to build housing somewhere else.)

But overall, the city violates its own General Plan every time it approves a new housing development.

So what if we did a ballot initiative that mandated every new project actually conform the the General Plan? That is: No new market-rate housing development unless 60 percent is affordable. No new construction until the city catches up with its below-market-rate needs.

Oh, and by the way: No new construction of any sort until the developer pays enough fees, up front, to cover the costs of new Muni service, police and fire, schools, open space etc. that the people living there will need.

Developers, who are making a vast fortune on market-rate housing projects right now, would go crazy. And maybe they'd come to the table and say: How do we make a deal?


  1. Fascinating.... What we probably share is deep dismay at the eye-popping rise in SF's housing prices and the implications it has for a healthy, diverse, inclusive city. What's tough to grasp is that your solutions seem to come from some strange, parallel economic universe. If I understand correctly, you're saying, "I'm aghast at the price of housing! My solution is to sharply restrict its supply!" Economics teachers routinely assign these types of problems to undergraduates.

    Your solution would be logical and appropriate if we were living in 1970s Poland or Bulgaria. Yes, the Ministry of Housing would mandate 60 percent affordability and that would be that. Alas, for better or worse (and often for worse), we live in a market economy with its well-established rules. How would your solution, restricting supply, not sharply raise housing prices?

    But you seem to have missed the main point: What is the source of funding for this affordable housing of yours? The money comes from somewhere. Affordable housing costs as much to build as market-rate. As we watch federal and state support for housing affordability collapse, can you suggest where we might find funding of this scale? Saying we'll charge developers is semantically dishonest. They don't pay for inclusionary; new residents do. The subsidy gets added to the price of the new market-rate housing. It's not a small amount. We charge the same inclusionary fees for glass and steel towers with concierges and fitness rooms that we do for modest, stick-over-podium, affordable-by-design, low-parking homes out on Valencia. If new residents should bear this affordability cost, it doesn't seem logical to complain that they tend to be wealthy. Do you not sense a problem here?

    NIMBYism is a widely and passionately held cultural value in this town, running from the progressives to the privileged enclaves on the west side. It's a shame because SF used to produce vastly more housing than it has in the last 3-4 decades. Not coincidentally, it was much more a working-class town then.

    SF is, or has, become an innovation hub and 1,000s of hi-skill, well-compensated workers are arriving to bid up the price of our chronically inadequate existing stock. They've figured out SF is a VERY desirable place to be. This trend is accelerating. Can you explain again how you'll solve this by mandating 60 percent affordability?

    I think your fundamental mistake is confusing our agreed wish to preserve SF's cultural, social and economic demographics we value with preventing any change to our built environment. You cannot have both; you have to pick one.

  2. The Planning Code, which does carry the force of law, is supposed to, under state law, be in conformance with the General Plan. But in cases where there is a conflict, the Planning Code controls.

    Developers are salivating at the potential profits in San Francisco housing. The appropriate government response to a bubble is counter cyclical policies. Raising the inclusionary take to 60% across a range of incomes from very low to $100K would leverage developer greed for community need.

    Prop C should have raised the off site inclusionary contribution instead of lowering the on site contribution to encourage on site. CCHO is completely bankrupt and corrupt for siding with developers to shift the burden of funding affordable housing from profitable developers into the backs of property and sales taxpayers.

    So long as CCHO is in the pockets of developers and is happy to operate within their neoliberal constraints, the challenge to make such good policies as Tim recommends real is greater, as that will take breaking from those constraints and contesting neoliberal corruption in land use and contracting in a way that would threaten CCHO's public funding.

    The interests of liberal and progressive San Franciscans are not coincident with those of developers, either for- or non-profit.

    Now you're moderating comments? Seriously, Tim, that's fucking rich.

  3. I am not moderating anything, Marcos. At this point it's an open system. Post away.

  4. Another approach would be to double down on TOD and put a moratorium on market rate housing with < 50% inclusionary until the all parcels within 1/2 mile of any BART and CalTrain station was zoned for the San Francisco 45' and more than 50% of those stations had obtained permits for a 50% build out.

    There is also the Glendale CA approach, which treats this as the campaign finance corruption problem that it is, passed within the past five years.

    This will all require the kind of electoral organizing that Tim Colen's people pay Peter Cohen's people to scuttle. But it is interesting.

    1.10 Local Election Campaign Regulations
    1.10.060 Contribution prohibition—Contractors or subcontractors doing business with the city or applicants seeking entitlement; prohibition on voting.

    No applicant seeking entitlement, contractor of an applicant seeking entitlement or a subcontractor of an applicant seeking entitlement shall make a contribution to a council member while such application is pending before the council, redevelopment agency, or housing authority and for a period of twelve (12) months after the last and final approval by the council, redevelopment agency, or housing authority has been granted.

    No member of the council, redevelopment agency or housing authority who has received a campaign contribution for a city council election from any person who is a party to a city contract, as defined in subsection A., subcontractor under a city contract, applicant seeking entitlement, contractor of applicant seeking entitlement or subcontractor of applicant seeking entitlement shall - within a period of twelve (12) months prior to consideration of the following: (i) approval of a city contract, as defined in subsection A.; (ii) award of a proposal in response to a request for proposals; (iii) conditional use permit; (iv) variance; (v) approval of architectural or design review (at any stage); (vi) award of a franchise; (vii) administrative exception; (viii) parking reduction; (ix) approval of a development agreement; (x) approval of a disposition and development agreement; (xi) approval of an exclusive negotiation agreement; (xii) approval of owner participation agreement; (xiii) approval of an affordable housing agreement; (xiv) financial assistance for a proposed project; (xv) or any other land use entitlement - vote on such a matter, and shall be considered disqualified from participating. In addition, the member shall not be considered toward reaching a quorum. In the event that a quorum or more are disqualified from voting on a matter covered herein, members will be selected by random draw until there are the minimum number of members of the relevant body to render a lawful decision (e.g. in most cases, a quorum).

  5. Tim, where on earth did you come up with the statement that "developers never build affordable units on site"??? That's not remotely true!! A simple call to the Planning Department would verify that. In about two-thirds to three-quarters of the projects we see, they're built on site. If you're gonna propose solutions to our housing crisis, isn't there an obligation to offer a factual basis for your position?

    This also neglects to consider that the in lieu inclusionary payments to MOH get leveraged by a factor of 2-3 to build low-income housing. You might wanna ask MOH if they object to receiving this revenue stream.

  6. Tim Colen needs to be put out of business.

  7. Actually, affordable housing ends up costing more to build than market-rate housing. Just ask MOH.

    If we increas BMR requirements, new residential development will stop for all but the most luxurious units. The constraint on housing supply will mean more middle-class households will be priced out of SF and the pressure to convert rent-controlled apartments will increase even more.

    I run cash flows for new residential development projects all the time. It's about math, not about greed. What bank will give out construction loans if the project can't show a profit? None.

    Now, if someone can figure out how to reduce construction costs, then maybe we can increase BMR housing supply.

  8. Cool, glad to have someone here who runs cash flows for residential development. (My brother does that, too -- he builds houses in upstate New York. Got a cool app for residential construction cost estimating. He gets it wrong he goes out of business, since he's a pretty small operation. But that's obviously not San Francisco.)

    Can you run the numbers for us all and tell us how much Simon Snellgrove is going to make at 8 Washington?

    I agree that affordable housing is expensive. But I also believe that in this superheated market, housing developers are not just making modest profits, they're making large profits.

    My first choice: The federal government decides once again to fund urban housing, and San Francisco gets about $10 billion (nothing, by current federal standards of spending) to build massive amounts of affordable housing (and better, to buy up existing vulnerable rental housing, create land trusts, and take it out of the private market forever).

    With that not happening, and the free market unable or unwilling to provide even middle-class housing in SF, we have to work on local measures that force the wealthiest to pay.

    There is no way that market-based construction in this city will bring down prices. What's your alternative?