San Francisco Voters to Decide on New Public Housing – and Taxes to Pay for It

San Francisco voters will decide on two ballot measures next month that would authorize new public housing, as well as a tax to help pay for it all.

Supervisor Dean Preston introduced the measures and says the vision is to create stability for renters who are priced out of the city.

“The vision is that you can be a working class person who lives in San Francisco and pays a reasonable percentage of your income to rent,” he said, “and that you will never be forced out of that unit by an eviction, that you will never have sharp rent increases … and that you have security.”

Preston’s call for new government-owned housing comes amid a resurgence of national interest in public housing, as well as calls to build permanently affordable housing that’s financed by the government but managed by nonprofits, called “social housing.”

Prop K would authorize up to 10,000 units of new affordable housing that could be owned or operated by the city. The California Constitution requires voters to approve any new low-income housing that receives public funds.

To pay for this new housing, Prop I would double the transfer tax on buildings that sell for $10 million or more. The San Francisco Controller's Office estimates that if the tax had been in place between 2008 and 2019, it would have generated an average of $196 million per year.

But the actual amount would vary widely. According to the report, some years would have generated as little as $13 million or as much as $346 million, making it the “most volatile revenue source” in the city.

Randy Shaw, the executive director of the Tenderloin Housing Clinic, questioned whether new city-owned housing is necessary.

In 2012, voters approved 30,000 new units of affordable housing managed by nonprofits and community land trusts. Preston said a new vote is needed to allow the city itself to build and manage that housing.

“We have a structure in San Francisco of nonprofits and community land trust being the agent and the engine for affordable housing production,” Shaw said. “Why is that not adequate?”

Shaw said that if the city owns more housing, it would have to hire the staff to develop and manage it. That would cost money, he said, which instead could go to nonprofits and community land trusts — that already have staff in place — to actually build housing instead.

“What is the reason for a new model?” Shaw said. “I have yet to hear an explanation.”

With the housing crisis expected to get worse as a result of the pandemic, particularly for low-income people, Preston said the city should have every option on the table.

“We need all the tools at our disposal,” he said. “And that includes municipal housing as an option.”

Public housing in the United States was first created as a response to the Great Depression, intended to serve only the poorest families who couldn’t afford rents on the private market. But it faced chronic underfunding from the start. Today, the National Low Income Housing Coalition estimates the country’s existing public housing — a little more than 1 million units — is facing a $70 billion backlog in needed maintenance and repairs.

San Francisco was no exception. And beginning in 2014, it took advantage of a new federal program to rehab its public housing stock, turning over all of its federally-subsidized public housing to nonprofits.

“We had an existing structure where the government owned (public housing),” Shaw said. “And we had to then work out so that nonprofits could take over. And it's been a big success.”

Preston said that, ultimately, a new steering committee would decide who would own and operate any new housing authorized by Prop K.

But others are wondering if the city can afford a new and expensive housing program, particularly at a time when the economy is still struggling.

Gwen Kaplan, the CEO of Ace Mailing in San Francisco’s Mission neighborhood, says that ultimately, the new Prop I tax would get passed down to small businesses in the form of higher lease payments. She says those are small businesses that are already hurting as a result of the pandemic.

“All you need to do is drive down Castro, 24th Street, Fillmore, Union Street and see the effects of the pandemic,” she said. “And we were in difficult enough conditions before the pandemic.”

If Prop K passes but Prop I doesn’t, Preston says the city will have to find another pot of money for the new housing.