Filling in the gaps: New proposals to address longstanding issues in The City’s housing market

San Francisco is moving closer to approving a proposal to squeeze new housing units into existing buildings by expanding the neighborhoods where landlords can add in-law units.
The move is part of an ongoing effort by The City to confront soaring rents.

Meanwhile, on another housing front, The City’s expected to close a loophole today that allowed group-housing developments to avoid complying with below-market-rate requirements.
Both proposals came before the Board of Supervisors Land Use and Economic Development Committee Monday, attracting the expected political controversy surrounding most housing issues amid a hot real estate market that shows no signs of cooling.

As developers look for ways to build in the hot market, group housing, which are smaller-sized units without kitchen facilities, has become increasingly popular.

But when supervisors John Avalos and Jane Kim realized The City wasn’t applying the 2002 inclusionary housing requirements, they jointly introduced legislation to close the loophole.

The inclusionary housing requirements mandate that 12 percent of the units built onsite be offered at below-market rents — or payment of in-lieu fees.

“The market is so hot now that even these micro units are suddenly financeable and are actually being produced. We have three [proposed projects] in the district that I represent,” said Kim, who represents the Tenderloin neighborhood. “We want to ensure that these developers are providing what every other developer in The City provides.”

Kim said although 12 percent of the units would now be affordable to a single person earning $40,000 a year, which is 55 percent of the area median income, that’s still out of reach of many who live in the neighborhood.

The committee approved the legislation Monday and the full board’s expected to vote on it today. The first case the requirement is expected to apply to is the Forge Land Company’s proposal to turn parking lots at 145 Leavenworth St. and 361 Turk St. into 238 units of group housing at about 250 square feet per unit. Market-rate units are expected to rent for $2,000.

Supervisor Scott Wiener faced backlash from tenant advocates by proposing to increase qualifying inclusionary units from 55 percent of area median income to up to 90 percent, which is $64,200 for one person, but abandoned the proposal.

Meanwhile, the committee signaled its support of legislation that would allow the creation of in-law units, otherwise called accessory dwelling units, in the entirety of District 8, which includes the Castro neighborhood where they are currently allowed as a pilot program.

The legislation would also allow the creation of in-laws for the entirety of District 3, which includes Chinatown, North Beach and Polk Street.

An in-law unit is a housing unit added to an existing residential building, typically smaller than the existing units.

Amendments were made by Kim to prohibit use of in-laws for short-term rentals and to disallow creation of in-laws 10 years after an Ellis Act eviction.

The committee is expected to vote on Monday to send the in-law legislation to the full board for a vote. The Planning Department’s analysis found that in District 3 there was potential for 3,116 of these units and 7,110 in District 8. The units are estimated to cost $150,000 to $200,000 to create, such as by converting basements and no longer needed boiler rooms, garages and storage space. In-laws in rent-controlled buildings would be rent controlled.

“Our housing crisis will require a number of different approaches to address it. I won’t go through the laundry list,” Wiener said. Those units, he said, are the “most affordable type of non-subsidized housing.”

Supervisor Julie Christensen, who proposed allowing new in-laws in District 3, faced some criticism for lack of outreach or concerns about the details of the proposal, like parking, conversion of commercial space and short-term rentals.

But much of that is attributed to her tight race this November against Aaron Peskin who held the District 3 seat in 2001-2009. However, Kim addressed some of the District 3 concerns in the amendments, which gained the support of Supervisor Malia Cohen, the chair of the three member committee.

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