A development on Valencia Street is finding some opposition.

Should affordable housing units be included within each new development, or should developers pay a fee to help finance affordable housing construction elsewhere? That’s the question the Planning Commission will consider today when it decides whether to allow the developer of a site at 19th and Valencia streets to pay a $1 million fee once the project is finished instead of making three of the planned 17 units affordable.

Attention has focused on the issue because of neighborhood opposition to the fee option, and because a recently released city audit concluded that a 2010 change to the option has led to fewer affordable units being built within new projects.

Six neighbors have filed letters with the Planning Department opposing the fee option.

“These property owners have, no doubt, worked very hard to own the property they own, and I know it takes years to put a project of this scope together,” Heidi-Jane Schwabe wrote to the Planning Commission. “Bluntly put, I don’t think having money should enable one to buy his or her way out of social responsibility toward the community he or she moves into.”

Currently, a city ordinance requires developers of new buildings to dedicate 15 percent of their projects to inclusionary housing or pay a 20 percent fee that, once the project is completed, will go toward financing affordable housing elsewhere.

The 19th and Valencia project’s developer, 3900-19th Street LLC, is not the only one to request the fee option. A performance audit of San Francisco’s affordable housing policies, released last month by the city’s budget analyst, found that developers are increasingly choosing to pay the fee. That trend takes away the benefits of having mixed-income units in new developments, could slow down the construction of new affordable housing, and may reduce the amount of interest the city receives, the audit found.

Neighbors who wrote to the Planning Commission said the affordable units at 19th and Valencia are important to maintaining the Mission’s diversity.

“Affordable housing enables diversity that makes the Mission one of the most soulful and bohemian neighborhoods in the world,” wrote nearby neighbor Jefferson McCarley. “Please help us in this small way.”

The city enacted the inclusionary housing program in 2002 to create affordable housing in new developments and allow low-income residents to remain in the city.

The city gave developers a choice to either build below-market-rate units within the development or pay a fee up front for those units to be built elsewhere. At first most developers chose to build the units within the project. That changed in 2010, when the city allowed developers to pay the fee later instead of up front, according to the audit, which was conducted at the request of the Board of Supervisors.

The audit found that 75 percent, or 113 of the projects approved by the city from 2002/2003 to 2009/2010, built inclusionary units; 25 percent — 27 projects — chose to pay the housing fee.

Of the 18 projects approved by the city after the law was amended in 2010, 55 percent paid the fee and 27 percent built affordable housing within the project. Three of those projects — about 17 percent — did a combination of the two.

Supervisor David Campos said he was surprised that the Planning Department does not keep track of progress toward affordable housing goals.

“If you look at the Planning Department, they are so focused on dealing with individual projects, there is no tracking on how we are doing on overall affordable housing goals,” he said. “What you see is a situation in which the department is voting based on the merits” of the individual project. “It’s not keeping track of [what] the specific project means in terms of where we are with affordable housing.”

The audit found that it is too soon to say conclusively say that the 2010 change has resulted in a trend of developers opting to pay the fees. It also found that the affordable housing that is built with the fees targets lower-income residents and specific populations.

In contrast, units that are included within the projects are more evenly distributed, because they follow the general development of market-rate housing. They also tend to be owner-occupied.

The problem of low-and middle income flight is one that is front and center on Mayor Lee’s agenda.  The San Francisco Chronicle writes today “Lee wants to tackle two housing problems at once: boosting the number of middle incomes homes while also sustaining efforts to create low-income housing…”

For their part, developers — including the one building the Valencia Street project — say that it is very difficult to secure financing with the mandate to build affordable housing within the projects.

The 2010 amendment to defer the fee until the project is completed was aimed at stimulating development at a time when projects were struggling to get off the ground.

The audit found that the deferment “could delay the City’s use of affordable housing fee revenues to finance affordable housing projects by an estimated 18 to 24 months.”

The audit also called into question the Planning Commission’s approval process for such projects.

The city should examine the impacts of the deferment option, the audit concluded, to decide whether it should be allowed to sunset in 2014, as it is currently scheduled to do.

Correction: an earlier version of this article stated that the developer had a choice to pay either $1 million fee or develop two affordable housing units within the site. It would actually be three affordable housing units. We regret the error.

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Rigoberto Hernandez

Rigoberto Hernandez is a journalism student at San Francisco State University. He has interned at The Oregonian and The Orange County Register, but prefers to report on the Mission District. In his spare time he can be found riding his bike around the city, going to Giants games and admiring the Stable building.

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  1. All these new Affordable housing developments coming into the mission are distroying the character of our neighborhood. And who can afford buying these condos. Not the people that have lived here all there lives. Someone has to make at least 60,0000 to 80.0000. And we have all these people coming in and trying to change the Mission. If they want to come and change where we live. Why didn’t they stay where they come from.

  2. There’s a lot of intelligent people, with respect to this issue, in San Francisco. Why does it seem like our voice is never heard? SF needs an accountable Board of Supervisors that is development friendly an not afraid of the ultra-left wingnuts. This City is full of cr@p (if you walk down Mid-Market you can smell it); its time for a change. Here’s an idea, if any of the Supes are afraid of losing their precious positions, approve better growth measures and let the construction unions go to town! They’ll make a bronze statue for each of you and throw money at all your future political endeavors!

  3. Valencia street has not been diverse or multicultural for some time now. Simply put, vacuous hipsters have completely and thoroughly colonized it. This once venderable street is now lined with crap boutiques selling hideous clothes, faux ethnic restaurants and countless tedious cafes and bars that seeming cater exclusively to zombie-like software techs and utterly talentless art students. Their herd mentality is astonishing for people who pride themselves on a [non-existent] individuality. They all dress identically(a horrifying mish-mash of the worst 70s/80s/90s styles), speak the same stupid, monosyllabic lingo (interspersing multiple “likes” and “ums” into each and ever phrase they utter, using upward inflections at the end of each sentance like they’re extras in a Pippi Longstocking movie) and driving any sane person within eyesight or earshot up the wall. They’re excrutiatingly tedious and I hope they’re all driven away when the economy invariably tanks again.

  4. It’s not clear that the law in question would accomplish “low-income” residents at all. Requiring two units to be sold “below market” could simply mean that a $650,000 one-bedroom condo would list at $600,000 instead, and no low-income people can afford that. Most middle-income workers would not be able to afford it. So you really need to know more about what the law requires in order to see if it accomplishes anything. Giving a slight break to a middle-income college-grad tech worker probably is not high on the city’s priorities.

    What would make sense is to simply cap the sales price of the initial units, cap any re-sale price for 10 years. For example, say that this property can be used for apartments or condos, but condos cannot be sold for more than $450,000, and cannot be resold for more than a certain percentage increase per year (so a speculator is not able to come in, buy the unit, turn around and re-sell and make a huge profit).

    Another thing they could do is apply rent control laws to the tenant-in-common conversions and new condo construction in the city. Set an affordable price to begin, and cap any increase. The fact is most modest or lower-income people rent, and if you want to help them with the cost of housing, the efforts should be aimed at the rental market.

    The fact is that if the city wants to help modest-income people, they should build and encourage building apartments, because most modest-income people cannot afford to buy in San Francisco. It’s just a fact. In today’s market, it’s not even economically a good idea to buy in many cases.

    1. Well-intended ideas, some of which are already in place as part of the city BMR program. But I don’t think this level of government price control and micro-management of specific housing units can ever help more than a small handful of people.

  5. Time to reassess the UC Extension 55 Laguna St. project. New developers made deal with City
    and affordable housing activists to defer affordable units to another place, didn’t they? And this on PUBLIC (state) land. Environmental impact of project was poorly assessed.

  6. Affordable housing for middle class residents is in HUGE need. 1 million doesn’t replace 3 families; however, I believe the city hall would prefer the money…. but, where has the money being going since 2010? What did that audit say?

  7. Great comments. It’s a lack of housing, not affordable housing, that’s the problem. The affordable part will happen if there’s enough supply. NIMBYs keep the amount of housing way under demand and may sure the exclusive quaint town remains. Density is green too – we should be asking why this empty lot on Valencia is supporting only 20 new units and not 30 or 40

    1. I agree. So-called affordable housing is a scam. Just another tax that reduces the housing supply in the city. Build more market-rate housing and prices will stabilize or go down.

    2. Uh, no. If you build million-dollar 1-2BR facebook hipster condo-lofts, you have done absolutely nothing to expand the stock of affordable housing.

  8. Does anyone get the irony that it’s exactly this type of nimby-ism that restricts the amount of housing, hence driving up the costs?

  9. hey, Bob, maybe market-rate, facebook condo-lofts are “much-needed” (although I would say they’re not), but there is a demonstrable, severe lack of affordable housing in the Mission, or elsewhere, for that matter.

  10. If you built 100,000 units, housing would be much more affordable. It’s a question of supply and demand, and unfortunately, the haves control the supply and inflate real estate prices. More housing, more density! This is not 1906 anymore.

    1. Exactly. The lower class is one thing. But we’ll never be able to support the middle class through subsidies. Lee’s middle class housing plan proves that. If we want to keep housing down, supply needs to go up. Until that happens, and it may never, the middle class will continue to shrink and it will be a city of really rich and really poor.

    2. I totally agree with this. Many people in SF are so concerned about keeping it cutesy and picturesque, that they ignore the huge economic ramifications of doing so.

      I’ve got a huge rant about SF’s identity crisis between being a rich man’s quaint town on the water and a world-class cultural center, but I won’t get into it here.

      1. I agree that more housing would be great, but I also think that there’s a huge problem with most new housing that’s going in now…namely that it all looks like cheap crap. I think it’s possible to have new buildings here without destroying the city’s character, but there needs to be some small amount of attention paid to aesthetics!

    3. In 1906 housing units were actually much smaller, so you could really fit in MORE housing than you can now, using their model. I live in a 2-bedroom apartment built in 1908. It’s about half the size of most 2-bedroom apartments I’ve seen that were built post-1970–but IMHO it still has plenty of room.

  11. Isn’t there enough in the way of housing projects, subsidised housing, and sketchy SROs in the Mission? If the law allows the developers to use the fee option, why should a handful of neighbors be able to stop this project that will add much-needed market rate housing? Seems very odd to me.

    1. SROs and projects are a completely different animal from affordable housing. There is housing in SF for the very poor and (SROs/projects) and there is plenty for the very rich (do you realize how ridiculous market-rate rent is here?), but there is very little for the middle class – far less than in other big cities. Affordable housing tries to keep at least SOME middle class people living in the city, so it’s important that we keep building it.

        1. Nonsense. If you think tacking on a few “affordable units” to every new development is the solution I have a bridge for sale. The City needs to allow more market rate development and stop all the mercy housing projects. Until they do, all we’ll ever see built are low-income and special needs housing (projects & elderly homes, etc.) and high-end condos. Suki (see above) has it right, three units in 5-6 new developments IS a pittance, so stop fighting for it. Ongoing development of new market rate housing will release some of the pressure currently keeping/scaring the middle class out of SF, we’re too far behind to try to make a change in a piecemeal way. The low-income housing dregs (not all are, but most) will thank you for fighting on their behalf while you pack your middle class furniture up and move to middle class San Bruno.

          1. @ Lynae

            I agree, but tossing a few scraps for us to fight over will not change the market rate. Putting a lot of units on the market will. Anyway, I would argue that there is a huge chunk of people that live in SF that probably shouldn’t. Two points:

            1. It’s evident that many live here at the expense of the middle class, and I’m not talking about the wealthy.
            2. No one should have to subsidize people that chose to live in an expensive city, and I do mean chose.

            Not every well-off yuppie is kicking grandma out on her ear, they’re just the ones we see because they can afford to take action. Not every Section 8 resident is just going through a rough patch; they don’t give a rip about you or your middle class life, as long as someone’s subsidizing theirs. I like where your head is at, but you may be looking in the wrong direction. Cheers.

      1. I must agree with Old Mission Neighbor, If we now build nothing but million dollar condos in the Mission, the neighborhood and the City will be the poorer. Save working class housing!