San Francisco’s former redevelopment agency hopes to persuade state legislators to allow it to use property taxes to build thousands of affordable housing projects such as the Eddy and Taylor Family Housing project at 222 Taylor St. in the Tenderloin. (Kevin N. Hume/S.F. Examiner)

SF agency seeks state law change to fund nearly 6K affordable housing units

In the midst of an affordable housing crisis, San Francisco’s former redevelopment agency wants the state legislature to pass a law that would allow it to fund the construction of nearly 6,000 below-market rate units citywide, according to a summary of the proposal.

To put the potential funding boost into perspective, voters last November passed a $600 million affordable housing bond funded through property taxes to help construct or rehabilitate about 2,800 units within four years.

Some bond proponents had wanted The City to float a $1 billion bond, which they argued was needed to address the affordable housing need, but this new proposal presents a possible alternative way to provide the additional funding.

The Office of Community Infrastructure and Investment, the successor agency to the redevelopment agency, which the state dissolved in 2012, is proposing to use tax increment debt to construct 5,842 units of affordable housing across the city, according to a Dec.11 public document detailing the proposal.

OCII officials were unavailable to comment Thursday. The summary does not name which state legislator may introduce the bill.

An attempt to pass similar legislation was made in 2014 by former state Sen. Mark Leno, only to have then Gov. Jerry Brown veto it.

San Francisco’s now defunct Redevelopment Agency was established in 1948 under state law to use special powers to address what was then considered urban blight in poorer neighborhoods. Decades later, the urban renewal work would be criticized for destroying low income communities of color.

In the process of this “slum removal,” the agency demolished 14,207 housing units prior to 1976 and replaced them with only 7498 units, resulting in a net loss of 6,709 units.

Then, in the early 2000s the state legislature passed bills allowing the agency to incur debt to replace the lost affordable units. The agency completed 867 affordable replacement housing units before it was dissolved, leaving “5,842 units outstanding,” the summary said.

When the agency was dissolved, the successor agency, OCII, was not permitted to complete the replacement work, but only oversee the completion of four major redevelopment projects: Mission Bay North and South, Hunters Point Shipyard Phase 1, Candlestick Point-Hunters Point Shipyard, Phase 2, and Transbay.

“Each of these projects had their own affordable housing production obligations, but did not include any replacement of the units destroyed prior to 1976,” the summary said. “[The California Department of Finance] DOF did not allow the Successor Agency to continue its work on fulfilling the Replacement Housing Obligation.”

Specifically the bill’s intent would be to “allow San Francisco, through its redevelopment successor agency and with project-specific approval from the mayor, Board of Supervisors, oversight board, and the DOF, to issue bonds secured by property tax revenue for the purpose of constructing low- and moderate-income housing anywhere in the City.”

“The bill addresses the housing crisis and attempts to redress some of San Francisco’s early redevelopment activities that destroyed housing for lower income populations,” the summary said.

To pay the debt incurred to fund the construction of the affordable housing units, OCII would use the property tax increment in the areas it oversees.

“As bonds are issued and repayments made, a relatively small portion of property tax revenue that would have otherwise been allocated to the City and other tax entities (such as the school district, community college, BART) will be used to repay the debt,” the summary said.

The summary notes that “a fiscal impact on the State would only occur in the unlikely scenario where the property tax revenues available for the school district do not meet certain minimum levels and the State general fund would have to backfill the loss of those revenues.”

In fiscal year 2018-2019, developers completed building 4,000 housing units and had nearly 10,000 units under construction at the end of that fiscal year, according to the City Controller’s Comprehensive Annual Financial Report for the fiscal year that ended June 30, 2019, which was released Dec. 31.

The report notes that “the median home value in San Francisco rose to $1.4 million, an annual increase of 4.4 percent. The median market rent for apartments was $4,523 per month in fiscal year 2018-19.

“Over the last six years, The City has produced or preserved approximately 8,200 units of affordable housing,” the report said.

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