It remains to be seen whether the passage of Proposition E will incentivize developers to produce more affordable housing, as its authors say they intended. (Kevin N. Hume/S.F. Examiner)

San Francisco debates when, where and how to build affordable housing

Prop. E aims to strike a balance by placing new limits on office projects

While San Franciscans tracked the results of the presidential primary on Tuesday, an affordable housing ballot measure passed largely under the radar.

San Francisco’s Proposition E — the Balanced Development Act —passed with 54% of the vote.

Don’t be fooled if you haven’t heard of it: like everything related to housing politics in San Francisco, the measure is highly controversial!

The Balanced Development Act was introduced by affordable housing developer TODCO and aims to balance out the construction of office space and affordable housing.

San Francisco’s office space and affordable housing development are clearly imbalanced.

San Francisco’s job growth far outpaces all housing construction. Between 2010 and 2015, The City added nearly seven jobs for every new home. More so than market rate housing, the largest deficit in construction is of subsidized, affordable housing within reach of people making less than The City’s median income.

Office construction isn’t the only factor in new job growth, but it’s definitely a factor. The Central SoMa development plan passed by Supervisor Jane Kim before she left office added 32,000 new jobs, but just 8,800 new homes, affordable or market rate.

Currently, “large” office construction in San Francisco is capped at 875,000 square feet per year.

(I had a hard time picturing this number, so I did some Googling. The Ferry Building is 267,117 square feet—75,486 square feet are retail and the other 192,531 are office. The Salesforce Tower totals 1.4 million square feet!)

The Balanced Development Act reduces the 875,000-square-foot cap based on The City’s progress towards state-mandated affordable housing goals. If San Francisco only builds half of its affordable housing goal in a year, the cap is cut in half.

Worth noting? San Francisco doesn’t meet its affordable housing goals. Over the past decade The City has built an average of 712 affordable homes each year, though our latest goals say we should be building 2,042.

But the end goal for proponents isn’t necessarily to hamstring office construction. They’re hoping that if restrictions are placed on office construction until affordable housing is built, it will be in the best interest of powerful people who want to see more office construction to prioritize getting more affordable housing built.

The Balanced Development Act also offers office developers an opportunity to get around these restrictions. If they themselves build 809 affordable homes for every 1 million square feet of office space, they can jump the line.

“I think the intention behind this … either we’re gonna build more affordable faster or we’re gonna build office slower,” TODCO’s Jon Jacobo told the San Francisco Public Press.

Opponents of the measure argue that it will have unintended consequences.

“Prop E’s passage is perhaps the worst institutional political failure I’ve seen in my 23 years in SF,” state Sen. Scott Wiener tweeted the day after its passage. “Prop E is a dumpster fire.”

A report from the non-partisan city economist calculated that Prop. E will hurt The City’s economic growth, causing us to lose out on fees and tax revenue that fund city services.

Another concern is that the Balanced Development Act could actually reduce the amount of money The City raises for affordable housing. One of the primary ways The City raises money for affordable housing is by levying fees on office construction. If we build less office space, we get less money for affordable housing.

The city economist report estimates this loss would be between $600 million to $900 million over the next 20 years. That sum could finance roughly 3,000 to 4,500 affordable homes.

TODCO isn’t convinced. Executive Director John Elberling points out that the city economists’ report doesn’t consider tradeoffs in terms of the human consequences of the housing crisis. Does it matter to the people who will be displaced this year if The City loses out on some money to provide city services?

These numbers also assume current rates of affordable housing construction, which TODCO wants to accelerate. If The City does, indeed, “build affordable faster” (the campaign’s slogan!) it will avoid these costs.

The last question critics have zeroed in on is interesting to me: Where should we prioritize the construction of affordable housing?

The Balanced Development Act says that developers building affordable housing as part of their office construction project can circumvent city limits if the housing is built either on-site or in a “community of concern.”

The authors told me that they included this clause specifically to help expedite the construction of affordable housing in communities that are demanding it.

San Francisco’s Mission District is one of these neighborhoods. In response to mass displacement of working class Latino residents, the Mission community has organized. The community has fought hard for the development of affordable housing in their district instead of market rate housing, and they’ve won. Their organizing against the “Beast on Bryant” resulted in 130 affordable homes. Protests of the “Titanic Mess on South Van Ness” saw the market rate construction converted entirely to affordable housing totaling 157 homes. Most recently, the market-rate “Monster in the Mission” project was shot down, and may be replaced instead with a 100% affordable project built by Mission Housing.

There’s huge demand for affordable housing in the Mission, but it’s not being built at the pace residents demand due to a lack of funds. It was Mission housing advocates who advocated for the inclusion of the “community of concern” clause in the Balanced Development Act in hopes of ushering more construction to their community.

But critics say that requiring affordable housing to be built in communities of concern keeps affordable housing out of wealthy communities, thus furthering segregation. Some have even questioned the clause’s legality.

One thing we all agree on is that there just isn’t enough money for affordable housing to go around.

It’s this austerity that put us in a situation where we have to choose between prioritizing the construction of affordable housing in low-income communities that are demanding it or wealthier communities where it’s missing entirely. The answers aren’t clear.

The Balanced Development Act passed on Tuesday.

Let’s hope it generates the political pressure its proponents intended to raise more funds and build affordable housing faster.

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.

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