May 12, 2016 2 Comments in Affordable Housing, Inclusionary Housing, Land Use, Prop C 2016 by
SFHAC Position on Prop C – “Affordable Housing Requirements”

After extensive review of both the charter amendment’s ballot language and its accompanying trailing legislation, the San Francisco Housing Action Coalition’s (SFHAC’s) membership could not reach a consensus and agreed to take a NEUTRAL POSITION on Prop C, “Affordable Housing Requirements”. This measure proposes to double the amount of on-site affordable housing required of market-rate projects from 12 to 25 percent. The pressing need for increased production of affordable housing is undeniable; however, there remain large uncertainties as to whether Prop C will deliver what it promises.

Inclusionary housing is a useful tool for creating mixed-income communities and increasing the supply of affordable housing. But, in order for this kind of policy to work properly and not backfire, it needs to be:

  • Based on careful economic analysis, and set at a level that is high enough to maximize public benefit, but not so high that new development is infeasible.
  • Updated regularly to reflect changing market conditions, but, with fair warning to developers, so that investment decisions can be made with full knowledge of the rules; and
  • Implemented fairly, so that new housing developments that were underwritten using adopted City regulations are not halted by sudden, unanticipated changes.

ARGUMENTS IN FAVOR OF PROP C:

  • SFHAC supports the increased production of affordable housing as called for in Prop C. The need could not be more urgent.
  • Removing the Inclusionary requirements from the City charter and determining them legislatively is good government practice.
  • Prop C requires conducting a detailed economic feasibility analysis of housing production overseen by a panel of technical experts.
  • Prop C acknowledges the imperative to begin building middle-income housing.

ARGUMENTS AGAINST PROP C:

  • The 25% on-site affordability requirement in Prop C was chosen arbitrarily and without a prior financial feasibility analysis. There’s a danger that, if Inclusionary rates are raised too high, this could cause a de facto housing moratorium.
  • Prop C could threaten housing production by making alternative land uses, such as existing small businesses or parking lots, comparatively more attractive financially. If this results in an overall reduction of housing production, we will produce fewer affordable homes.
  • It’s likely that the requirements in Prop C are temporary and will later be changed. But, what those future changes will be remains unknown. This makes it difficult for housing builders to acquire land, develop project plans, or obtain financing to build them. Adding uncertainty to an already long, complex, expensive endeavor threatens housing production at precisely the moment when San Francisco needs it most.
  • There is no guarantee that the Board of Supervisors will follow the conclusions or recommendations of the economic feasibility analysis reached by the City’s technical advisory committee.

Voters are being asked to take a leap of faith and support Prop C, which would be the highest affordable housing requirement in any city in America, including New York. Its effect on housing production here is still unknown. While trailing legislation was recently adopted that helped mitigate many of the negative impacts of Prop C, there is still much uncertainty on when the new rules will take effect or when they’d be changed again. This could increase the perceived risk for investment in housing at a time when we need to dramatically grow our housing supply. Increased housing production is the best way to address our affordability and displacement crises.

Read more on our position on Prop C:
Is San Franciso’s Ballot Measure for Inclusionary Housing Too Extreme? – CityLab
The Good and Bad of San Francisco’s Really Big Housing Experiment – Next City Op-Ed
San Francisco’s Prop C Would Require More Affordable Housing – KQED Forum

About the Author

Tim Colen

Tim is a Senior Advisor to SFHAC and the former Executive Director. His passions, in no particular order, include urban environmental issues, politics and baseball. A really cool future job would be comparative studies of cities around the world. He can be reached at tim@sfhac.org.

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