In a city where housing prices are out of the reach of many San Franciscans, “affordable housing” is a phrase constantly heard in public-policy debates. That was the case this week at City Hall, as two new pieces of legislation are moving forward that would change the laws regarding development of housing in San Francisco.
Currently, builders of new housing complexes in San Francisco must offer 10 percent of their units at “affordable” rates — which means the developer must sell those units for less than market value, essentially losing profits for the right to build in San Francisco.
One new proposal, sponsored by Supervisor Jake McGoldrick, would apply that requirement to buildings of five or more units, instead of 10 or more units as is the case now. A second proposal, by Supervisors Sophie Maxwell and Chris Daly, would require that 15 percent of units be made affordable, rather than 10 percent. The net effect of the two proposals, if enacted, would be an increase in the number of units available at below-market-rate.
At least, that is the idea. But as a city controller’s report points out, the laws could have damaging unintended consequences, including even increasing housing prices.
In penciling out the numbers, developers could decide that The City’s new regulations no longer make it worthwhile for them to build projects here, depressing the creation of new housing and hence making existing housing more expensive. Or the new laws could cause developers to raise prices on the non-“affordable” units to make up for the money they are losing on the “affordable” ones.
The early reports from some developers is that the new 15 percent proposal — which was scaled back from a previous, more onerous plan — is acceptable and would not cause mass abandonment of projects in San Francisco. But the rising percentages of developer-subsidized housing would come closer to the imaginary line by which that would become reailty, and it is hard to predict how changes in the economy or in the building industry would change the location of that line for developers.
It is not debatable that housing is expensive in San Francisco, and that real estate prices are making The City less livable for middle class families, let alone low-income individuals and families. But the debate over “affordable” housing in San Francisco rarely progresses from that common ground to a thorough analysis of what to do about it, in a public debate that considers — along with artifical restrictions on housing prices — zoning changes, an easing of building requirements and incentives for developers who have many options in a nation where housing prices have increased dramatically overall.
More housing is needed to bring down the prices, not less. The City may not be a perfect economic crucible, but a little dose of Economics 101 would be a welcome addition to the public debate.