Three-and-a-half billion dollars.
At an average of $200,000 in city subsidies per affordable unit, this is how much money San Francisco will have to invest in the next decade to fund the 18,000 affordable homes needed to keep pace with the projected growth of low-income jobs.
In less than two weeks, San Franciscans will vote on Proposition A, authorizing The City to borrow $600 million for the construction of 2,800 new homes among other investments in affordable housing such as maintenance and acquisition.
Prop. A will be a critical litmus test for a city plagued by sky-high rents. Is San Francisco ready to put its money where its mouth is to help The City’s neediest?
But a bigger question remains: if Prop. A does pass, where then can The City look to raise the remaining $3 billion it needs?
Federal funding for affordable housing has fallen drastically over the past forty years, leaving cities short on funding. Today many affordable housing projects in San Francisco, including all of the ones that will be funded by Prop A, are “shovel-ready.” The entire permitting process has been completed, and The City is now waiting around for funds.
As cities have grappled with the fact that federal funding just isn’t coming, they’ve invented creative methods to fund affordable housing on their own.
Prop. A is an example of one of these methods—a general obligation bond. Bonds can be tricky to issue, as state law requires they be approved at the ballot by two-thirds of voters, but they’re a powerful tool for raising money quickly. Bonds are sold to investors, who loan cities large sums of money in exchange for repayment plus interest raised through revenue from property taxes.
Cities’ use of general obligation bonds to fund affordable housing is a fairly new phenomenon. San Francisco first took a general obligation bond for affordable housing to the ballot in 1996, when 68 percent of voters approved $100 million for affordable housing. If approved, Prop A will be the third and largest bond approved for the construction of affordable housing in San Francisco history.
Bond revenue is a promising way for San Francisco to continue to raise funds for affordable housing. The challenge in issuing a larger bond, however, is getting voters to approve higher tax rates. Prop. A was set at $600 million because $600 million dollars is an amount that can be repaid while keeping our current property tax rate stable.
Getting voters to approve higher taxes on property owners may be politically challenging, but issuing bonds in the billions for affordable housing isn’t unprecedented in California. In her 2018 campaign for mayor, former supervisor Jane Kim called for a $1 billion bond for affordable housing and cited the $950 million and $1.25 billion bonds Santa Clara County and Los Angeles passed in 2016, respectively, as precedent.
Where there’s a will, there’s a way, and I refuse to believe that for the majority of San Franciscans who are renters, keeping homeowners’ property taxes low is a greater priority than providing affordable rental housing.
Another critical factor for sustainably funding affordable housing long term will be moving past one-off ballot measures to add affordable housing to our regular capital schedule.
San Francisco continuously issues bonds for projects that have been pre-approved and included in the city’s 10-year capital plan. The projects that are added to our capital plan are ones deemed necessary to our city’s future, such as parks and hospitals.
As of yet, affordable housing projects have not been included in San Francisco’s long term capital planning. This is a grave oversight.
What good do the parks we include in our capital schedule do for low-income families forced out of our communities? And while we’re investing in hospitals, how do we reconcile with the fact that sleeping on the street aggravates every medical condition?
Affordable housing is critical infrastructure that must be included alongside these other priorities in long term capital planning.
A city’s budget is the most important indicator of its priorities. If the city is serious about prioritizing affordable housing, voters must get behind higher tax rates and funding must be included in San Francisco’s capital plan.
In the meantime, voting yes on Proposition A—which doesn’t raise tax rates—is quite literally the least San Franciscans can do.
Sasha Perigo is a data scientist and fair housing advocate writing about the San Francisco housing crisis. You can follow her on Twitter at @sashaperigo. She is a guest columnist and her point of view is not necessarily that of The Examiner.