Proposition C on San Francisco’s June ballot would require that 25 percent of units in new large and medium-sized residential buildings be offered at below market rates. If passed, the measure would make San Francisco the city with the most stringent affordable housing mandate in the nation. But some housing advocates say that with the high cost of construction and real estate prices, the measure could deter investors and actually stymy housing growth.

Guests:

Stephanie Martin Taylor, KQED anchor and housing reporter

Jane Kim, San Francisco Supervisor for District 6

Sonja Trauss, founder of the San Francisco Bay Area Renter’s Federation.

Tim Colen, Executive Director of San Francisco Housing Action Coalition

Peter Cohen, Co-director of the Council of Community Housing Organizations

San Francisco’s Prop. C Would Require More Affordable Housing 17 May,2016Michael Krasny

Guests:
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  • Sanfordia113

    Be honest. The purpose of this measure is to enable supervisors to extract hundreds of millions of dollars in bribes from developers.

    Instead, a 25% tax should be imposed on developer’s sale of new market-rate units. Use those funds to subsidize purchase of homes by income-qualified individuals (both new market rate condos and 60 year old fixer-uppers in the Sunset).

    I live in an off-site BMR unit and can state unequivocally that BMR units are built to significantly inferior standards. Within 15 years, it is forecasted that our building will require $500,000 in unfunded repair costs due in part to the shoddy construction (as per reserve study). If the building were built as a market-rate development, the quality would be higher (ceiling heights would be higher that 7′, it would include wiring for high-speed internet, etc.)

  • William – SF

    Has an analysis been done on the causes of the increase in housing prices in San Francisco, say in the last 20 years?

    • Sanfordia113

      There is a 100% correlation between housing costs, supply, labor compensation rates, labor pool, and Fed interest rates. Jane Kim’s proposal to incentivize office construction will increase the labor demand (lower rents for businesses, therefor incentive to relocate to SF) without substantially increasing housing supply, thus actually worsening the affordability crisis in SF, not solving it. Especially when compounded with an environment with sustained rising interest rates that we will face over the coming decades.

    • Sar Wash

      The improving housing market and home values are caused mostly by positive factors (improved amenities, jobs, and quality of life). Hopefully, we have another 100% increase in our home values before the market levels out. Higher home values mean more dollars for schools and services, better neighborhoods and amenities, and lower crime. Any skewed or undesirable increases are caused by rent control, other anti-homeowner laws, and by affordable housing mandates.

      • Another Mike

        Supply and demand alone are causing prices to rise.

      • Inkspots

        Go away. Like to Stockton. Or Antioch. You’re too square to live in San Francisco.

  • Skip Conrad

    What is the impact of Sanctuary Laws (and the proposed Due Process for All Ordinance #160022) on housing demand?

  • David

    rather than subsidize corporate payrolls through legislation such as this, provide tax incentives to share the wealth. in other words, stop subsidizing low income and instead, end it.

  • Kurt thialfad

    Why not give SF residents preference in housing?

    • Another Mike

      As soon as some one moves in, s/he becomes an SF resident.

  • Dawn Matheson

    What happens when someone in affordable housing starts earning too much to qualify for affordable housing? This was a real problem with rent control in NY as people would sublet or “will to the next generation” the rent controlled apartment. Why wouldn’t they, it’s free money. But it also made affordable housing scare for those people who needed it. How is that handled when someone moves into affordable housing in SF?

    • Sar Wash

      No one should ever be allowed to stay in an affordable housing unit for more than a maximum of 24 months. Then, the rent should automatically increase to fair market rate or they should be automatically evicted and new owners or renters found at market rate.

  • Chuck

    How is the “afforable” price calculated?
    How will it vary in the future? How permanent is it?

  • jurgispilis

    if we build more housing, where will the water come from? And it has to be potable water – no lead, no uranium, no pharmaceuticals, etc.

    • Another Mike

      Hetch Hetchy contains enough water to supply many suburban communities. I presume if San Franciscans require more water, the other customers will lose out.

  • Another Mike

    I would like to correct a misconception uttered by, I think, Supervisor Kim. What’s driving the influx of young people to SF is the availability of other young single people of the appropriate sex to socialize with, as well as such amenities as bars, clubs, and restaurants, not the availability of housing. Palo Alto and Mountain View are suburban neighborhoods best suited to people who have already paired off, and who are likely raising their families. To my knowledge, Palo Alto has at most three bars for young people to dance and socialize in.
    Mountain View in particular is building huge amounts of high density housing. In fact, housing density near the Caltrain station is much higher than housing density near SF’s Mission District BART stations.

  • concrete17

    @ Jane Kim…….A contractor from Berkeley called in and asked about the city red tape and lengthy procedures necessary to actually obtain the permits to do construction. He cited a 13 month period just to get approval for a simple foundation replacement on a bungalow.
    Supervisor Kim completely ignored any part of the caller’s question and went off on a different direction about how new housing is a problem all over the Bay Area…..True BUT come on Kim stay on point and answer the questions directly…!! What is SF doing to stream line the permitting process and reduce the time in order to help reduce initial building costs?

    • Chuck

      Politicians seldom if ever answer questions they do not want to answer.

      • trite

        The moderator should force the pol to answer, as do BBC moderators.

      • concrete17

        Please add: ………or incapable of answering…….

    • Jon

      That question about inefficiency of the planning and permitting departments of the city sounds completely off-topic to the discussion of housing. I’m not surprise it was ignored by Jane Kim and the rest of the panel.

  • Peter Swain

    Removing the 12% minimum from charter doubles the political pressure on the issue – there’s now an opportunity to replace supervisors to rush projects through at a 0% affordable ceiling. Better to keep it in place, with “a rate as determined by supervisors, not less than 12%”

  • Bernardo

    Correct me if I am wrong, but with building affordable housing or including affordable units in a development, the developer gets substantial tax breaks. If this is the case, it is not necessarily a losing proposition for the developer. The tax breaks associated are an important if not crucial part of the equitation that is missing in this discussion.

  • Another Mike

    Somebody’s calling from the largely rural Marin County complaining about unused land in SF? He must not do irony.

  • Mark Sidmore

    @ Jane Kim…….no disagrees that rent control is necessary, but SF style rent control has clearly made the problem worse except for a very few. Why isnt anyone talking about going to a ‘means testing’ style rent control like the national model of the Section 8 housing program?

    • De Blo

      Rent control is not necessary. Rent control caused the problem. Compare costs in cities with rent control, like SF, and cities without rent control, like Houston, and you will see what I mean. However, you are completely right that at a minimum there needs to be means testing for rent control eligibility. Rent control is pushing the costs away from the renters to the homeowner and to the community.

  • Carlos

    I’m a Bay Area native and long-time SF resident. We have chronically underbuilt housing in SF and the Bay Area more broadly for decades (hopefully the merger of ABAG’s planning function, which has consistently promoted underbuilding and low density, and the MTC). Discussions on housing and higher density development (in appropriate central and transit rich areas), which is an economically and environmentally more rational form of urban planning (as well as an increasingly socially desirable for an increasingly number of people, particularly younger generations) have been largely hijacked by small but vocal NIMBY groups that are primarily driven by narrow/selfishly interests (don’t want change, hostile to newcomers, want to protect their views) that abuse (will-intended) CEQA rules (which need to be reformed to reflect what is true environment impacts, such as the significant environmental/economic/taxpayer-funded infrastructure costs of low density) to oppose much needed and rational housing development. Higher density can be achieved without compromising “character”, which is an undefined and abused rationale used by such groups to promote their (selfish) agendas. Furthermore, higher density enables the (public) business case for better/more robust public transit systems. It’s ironic to me that such grounds and the supervisors that support them consider themselves to be “progressive”. In reality, they are doing a great injustice to SF’s tradition of being truly forward-looking, innovative, and actually progressive as well as exacerbating a manufactured housing crisis that is accelerating San Francisco’s evolution towards an increasingly skewed, third-world country-like income distribution and dependency pattern. This combination of restricting housing development (far below the number of new residents and jobs) and promoting/requiring a increasing percentage of subsidized BMR housing (without bonus density zoning) is resulting in a world in which people are either made dependent on subsidized housing (public housing, BMR, rent control – a situation seemingly advocated by some Supervisors to ensure captive constituencies) or people (particularly younger native generation or newcomers) need to be able to afford stratospheric housing costs (few can), which will become even more expensive with increasing BMR requirements (assuming no up-zoning to allow for higher density/more supply). There is truly a missing middle in San Francisco that will continue to disappear, leaving only the subsidized/policy-dependent and the very wealthy. As a native, it’s extremely discouraging to see my home area destroyed by such NIMBY-istic/selfish policies and even more discouraging that the promoters of such policies don’t realize that they have created and continuing to perpetuate the very issues that (at least some of them) may think that they are helping to solve.

  • James

    BMR caps the sale prices of units in which the sale price of the remaining units must carry the cost not paid for by the sale of the BMR units.

    Here is the Math using the sample pricing provided by the information at sfmohcd ( Link at End):

    – Costs $860,000 to build an 1100sf 1 bedroom unit

    – Max sale price @ 90% of Area Median Income can only be sold for $266,493

    – $860,000-$266,493 leaves $593,507 of costs.

    The remaining costs must get picked up by the balance of the units.

    Current rule – 12 BMR units per 100

    – So $593,507 multiplied by 12 = $7,122,084 total costs the must be added to the remaining units just to pay for their construction.

    In this case each of the remaining units will have $80,932.77 added to it price before any Overhead or profit is added.
    So in short each home buyer will need to pay an extra 9.41% to pay for the BMR units.

    Go to the link and look for “SALES PRICE”.

    Here is the link: http://sfmohcd.org/inclusionary-housing-bmr-ownership-program-overview

    • Another Mike

      “Costs $860,000 to build an 1100sf 1 bedroom unit”
      And where do these cost numbers come from?
      Currently I am living in an 1100sf 3 bedroom unit, with attached two-car garage, on 6000sf of God’s green earth. Which cost nothing like $860K to build, even in today’s dollars.

    • Reid

      Thanks. It’s so silly for ‘affordable housing’ advocates to stick their heads in the sand and say “developers are making MILLIONS, they can afford it!”
      When they do so, they completely destroy their own credibility by acting as if they’re unaware that these costs get passed on to others. It needs to be discussed. It’s a complicated economic equation; I’m sure not all of the costs are borne by the buyers of the other units, but it’s not like the only harm here is that the developers get one less golden handrail on their yachts.
      The costs are more apparent when talking about rental units. The housing advocate said “costs are borne by the developer in perpetuity” which is clearly not true. I’m sure their profit margin is hurt somewhat, and to an extent, “market rate” on the other units goes up to subsidize the affordable units, which pushes incrementally more people towards being qualified for “affordable housing” as now the market price has gone up. Maintenance suffers, etc etc etc. The costs are spread around, and it’s silly to suggest that they don’t exist because “millionaire property developers pay it, and nobody gets hurt!”

  • Sar Wash

    Affordable housing mandates cause overly excessive prices, skew the market, and create housing shortages. When these arbitrary mandates exist, then new development becomes too expensive and a housing shortage results. When a high percentage of affordable housing is locked in for the poor, builders need to INCREASE their prices on all of the units that are at fair market rate. E.g., assume 10 housing units are built for a combined cost of $20 million and the builder needs to make a minimum of $22 million and there is an affordable housing law mandating 10% affordability where affordable is defined as $1.00 per unit. Without the affordable housing mandate, the fair market rate cost of each unit is $2.2 million. With the affordable housing law (Prop C-type), the cost of each unit is $2.44 million. So, the affordable housing has INCREASED the cost for all middle class and working class San Franciscans. NO on Prop C.

    • Another Mike

      Sure, if one assumes the last 10% of the sales price is the straw that finally collapses the camel’s back.
      I’m thinking that if one can buy a 2.2 million house, he is not stretched to the breaking point, and in no danger of having to furnish his home with alley castoffs and card tables.

  • Sar Wash

    This should be mandatory reading for all San Francisco voters (how affordable housing rules always make housing more expensive): http://www.latimes.com/opinion/op-ed/la-oe-0104-galles-affordable-housing-court-case-20160104-story.html

    • Another Mike

      Without the mandate to build affordable units, the burden of housing low wage workers falls on mom and pop landlords who own pre-1979 buildings. Who is better equipped to bear this burden? A giant, usually multistate, developer who can charge market rates for the vast majority of his units? Or an elderly couple, for whom their 3 or 6 flat is their only asset, whose rents lest approximated the market back in 1993?
      Or should San Francisco build more public housing units, perhaps in Hayes Valley? Taxes would have to be raised, to cover both construction and operating costs — including a surcharge for government inefficiency.

      • De Blo

        Every homeowner should be able to charge whatever he wants and can receive as a fair market rent. If the rent that a homeowner is asking is unaffordable, then, by definition, the homeowner will have to reduce the asking price in order to find a renter. Certainly rent control needs to be abolished in the City as it has skewed the market. Every economist and every study agrees that rent control skews the market and is the driver of affordability challenges. Low wage workers should live in Oakland, not in the City. No one has a right to live in the City unless he owns property here.

        • Another Mike

          In Chicago’s plush North Shore, it was incumbent on employers to provide onsite quarters for their servants. Surely the same principle applies to San Francisco — they cannot provide housing in Tracy for their workers.

          • De Blo

            No employer has any responsibility in any way for his employee’s housing. No city or jurisdiction has a responsibility to allow folks who cannot afford to live there to live there. No one has a right in any way, shape, or form to live in San Franciso unless he owns a home here. This is common sense and basic. Folks can only live where they can afford to live. If you cannot afford to live somewhere, then either work harder and improve your skills and income, or move to a region appropriate to your income. People who are lazy and refuse to move, work, or attend school should not be allowed to live somewhere just because they want to do so.

          • Another Mike

            San Franciscans benefit from having access to a wide variety of goods and services. Employers profit from supplying these needs. Thus employers presumably benefit from having employees, particularly employees not exhausted and stressed out from a ninety minute commute. Therefore it is in the interest of employers to provide housing for employees.
            In contrast,landlords do not benefit from having to rent apartments at rates far below market.

          • De Blo

            You are correct that no one benefits from below market rate rents. If employers want to pay for housing as a benefit of employment, then they are welcome to do so. However, taxpayers and homeowners should never have to subsidize this in any way and every landlord should be able to charge whatever fair market rate he can. Employees always choose where to live and they are free to trade off a longer commute for more space or vice versa. The main point is that there should never be government rent or other price controls and there should never by government-mandated ‘affordable’ housing below market rate inclusionary rules. No employer is ever responsible for an employee’s housing in any way shape or form. However, if it takes a higher salary or even a housing subsidy to attract an employee, then an employer certainly has the right to offer such an employment benefit. Vote No on Prop C to save San Francisco!

  • Chuck

    Do the subsidized units receive the same amenities, views and location as the market rate units?
    Does the market rate purchaser get a charitable deduction for the subsidy?
    The market rate for relatively new units in unsubsidized buildings should rise to comparable units in subsidized buildings providing a nice windfall for current owners and a higher price for prospective purchasers. There should also be a general trickle down effect on all existing housing so all valuations should rise.

  • Sar Wash

    “Affordable” housing is associated with crime, blight, poverty, and vacancy. I have friends who live near affordable housing in Hayes Valley. It dramatically reduces the quality of life in the neighborhood. The ideal approach would be to move affordable housing to less valuable and densely populated areas in Oakland, Antioch, or Stockton. It is ridiculous to put this housing, which encourages people not to work so that they do not make too much money for free taxpayer funded housing, in the City.

    • Another Mike

      By “affordable housing in Hayes Valley,” do you mean Mercy Housing’s supportive housing for the formerly homeless?
      If so, the belief that the homeless make more desirable neighbors when they are out on the street all day and sleeping in doorways during the nights, is certainly unique.

      • De Blo

        The problem is that by coddling the ‘homeless’, we are causing them to migrate into the City. We need a zero tolerance policy. If we do set up taxpayer funded housing for people, it should be on less valuable land in places like Fresno or Detroit, not in the City.

        • Another Mike

          Sorry, the Supreme Court has long held that the Privileges and Immunities Clause of the Constitution protects the right of anyone to move from one state to another. And, once in a state, the outsiders must be treated the same as any resident.

          • De Blo

            The problem is that San Francisco incentivizes criminals to move here and other cities do not. No one is suggesting legal restrictions on movement. We keep throwing taxpayer dollars and benefits have people who are committing crimes and so they keep moving here.

    • Inkspots

      You’re out of your tree. You are lumping all types of affordable housing together. Do you have any idea what tutors, journalists, community college teachers earn? Try not enough to pay the bills. They do not commit crimes or bring blight to their neighborhoods. And what on earth does Below Market Rate mean in a city where the market rate is $1 million? p.s. Your friends are nuts too.

  • Julia

    Please no more housing, have you not seen the traffic lately?

    • Inkspots

      Plus, the newcomers to the city are unbelievably square.

      • Another Mike

        When the googlebus protests started, I began work on the “Are you cool enough to live in SF?” test. But I can’t do a good enough job on my own — how can I group source this?

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Author

Michael Krasny

Michael Krasny, PhD, has been in broadcast journalism since 1983. He was with ABC in both radio and television and migrated to public broadcasting in 1993. He has been Professor of English at San Francisco State University and also taught at Stanford, the University of San Francisco and the University of California, as well as in the Fulbright International Institutes. A veteran interviewer for the nationally broadcast City Arts and Lectures, he is the author of a number of books, including “Off Mike: A Memoir of Talk Radio and Literary Life” (Stanford University Press) “Spiritual Envy” (New World); “Sound Ideas” (with M.E. Sokolik/ McGraw-Hill); “Let There Be Laughter” (Harper-Collins) as well as the twenty-four lecture series in DVD, audio and book, “Short Story Masterpieces” (The Teaching Company). He has interviewed many of the world’s leading political, cultural, literary, science and technology figures, as well as major figures from the world of entertainment. He is the recipient of many awards and honors including the S.Y. Agnon Medal for Intellectual Achievement; The Eugene Block Award for Human Rights Journalism; the James Madison Freedom of Information Award; the Excellence in Journalism Award from the National Lesbian and Gay Journalists Association; Career Achievement Award from the Society of Professional Journalists and an award from the Radio and Television News Directors Association. He holds a B.A. (cum laude) and M.A. from Ohio University and a PhD from the University of Wisconsin.

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