A look at parts of the Haight, Golden Gate Park, the Inner Richmond and the Presidio from the Christmas Tree Point overlook at Twin Peaks on Tuesday, Jan. 22, 2019. (Kevin N. Hume/S.F. Examiner)

Housing production slows sharply despite growing backlog of approved projects

Housing production in San Francisco slowed across the board in 2018, with production levels dropping by nearly 41 percent from the previous year for market-rate and by 56 percent for affordable housing.

In total, more than 2,600 market-rate units and 645 affordable units were added to The City’s housing stock, according to the latest Housing Inventory report, which is expected to be presented to the San Francisco Planning Commission Thursday.

In the prior year, 4,500 new market-rate units and 1,460 affordable units were built or authorized. The report tracks changes in The City’s housing stock since 1967, including housing construction, demolition, and alterations.

Of the market-rate units, 2,309 represent new construction and the rest were added through the residential conversion of spaces permitted for other uses, or by expanding existing structures.

Current production levels for affordable housing fell below The City’s five-year average of 840 units annually, and accounted for almost a quarter of all new units added in 2018. Some 62 percent are considered to be affordable to low-income households and only 6 percent are affordable for very low-income households, per the report.

The City built 79 new accessory dwelling units, or in-law apartments, in 2018 and legalized 62 more, compared to 23 and 76 respectively, in 2017.

Following a sharp increase between 2015 and 2016, unit demolition rates remain on the decline, with 53 units lost through demolition in The City’s latest count. In addition, 31 illegal units were removed, five were lost to unit mergers and one to a conversion.

Taking into account the latest figures, an estimated 394,600 residential units were tallied throughout The City.

The San Francisco Examiner has previously reported that close to 45,000 potential new homes are currently approved in San Francisco — the highest number tracked by The City’s Planning Department to date — though many of these projects have yet to break ground.

“People aren’t taking risks right now,” said Jonathan Moftakhar, a realtor with Vanguard Properties, blaming in part “unpredictability in city policy that ultimately leads to the swings in production.”

While the City’s slow approvals process has been blamed for the backed up housing pipeline, rising construction costs and a growing trend of flipping entitlements have also been cited as sources for delays in actual housing production.

Mayor London Breed has set a goal of building 5,000 units each year. She announced in January that she plans to introduce a charter amendment for the November ballot that would take away the ability of residents to appeal affordable and teacher housing projects, and in February announced cuts to permitting fees for 100 percent affordable housing projects and for new ADUs.

Breed also hired a director of housing delivery to streamline the post-entitlement process for large and mid-sized residential developers.

While over 6,700 units were authorized for construction in 2017 (up 65 percent from 2016), just over 6,000 were authorized last year, per the report.

Affordable housing advocates with the Council of Community Housing Organizations agree that the slowing down of actual housing production over the past year speaks to a “rise in construction costs over the last two years,” but pointed out that at a 9 percent decrease, the rate of project entitlements in 2018 dipped only slightly compared to the previous years.

Some successes highlighted by the report include 1,167 units turned over to The City for rehabilitation through the Rental Assistance Demonstration public housing rehabilitation program in 2018.

“While there were more affordable projects completed in 2017, there were no RAD public housing units [rehabilitated] in 2017,” said Maya Chupkov, CCHO’s communications director.

Chupkov also pointed to a trend of a “slightly wider regional distribution of housing production.”

According to the report, Alameda, Santa Clara and San Francisco counties produced 66 percent of all of the Bay Area’s housing in 2018 — down from 82 percent in 2017.

lwaxmann@sfexaminer.com

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