A city program meant to keep at-risk tenants in place and transform small buildings into permanently affordable housing may get a funding boost soon thanks to new legislation to be introduced today at the Board of Supervisors.
Supervisor David Campos and Mayor Ed Lee are introducing a measure on Tuesday that would allow private developers in San Francisco to contribute to the Small Sites Program, which purchases existing housing with low-income tenants and turns it into affordable housing.
That money would be reserved for buying buildings with two to 25 units within a mile radius of the proposed housing development. That will ensure that the housing will be reserved for the neighborhood where the project is located.
“Everyone thought it was kind of a no-brainer,” said Peter Cohen, the co-director of the Council of Community Housing Organizations, which was involved in pushing the measure.
Under current law, developers who build projects with more than 10 units must either build affordable housing on site, build affordable housing off-site, or pay an in-lieu fee that goes towards a general affordable housing fund.
The new law adds a fourth option to pay money into the Small Sites Program equivalent to the in-lieu fee — the cost of 20 percent of the total units. Unlike the in-lieu fees, however, the Small Sites fees would not go to a city-wide fund but would have to be spent locally.
The buildings purchased under the program must have average tenant incomes at 80 percent of area median income or below, which is $77,550 for a family of three. Additionally, the buildings must be rentals, vacant, co-ops, vacant, or homes that have been foreclosed upon.
If a building within a mile of the project cannot be found in two years, the fee paid would go into the city’s general Small Sites fund for purchase of buildings city-wide.
Jeff Buckley, a senior housing advisor to the mayor, described the measure as an anti-speculation tool. Older buildings with long-term tenants in poor conditions are ripe for real estate flippers. The new law, he said, would give neighborhoods like the Mission more funding to prevent displacement.
“This program is designed to take a building off the speculative market,” he said.
The program only applies to new construction with between 10–25 units, meaning that the majority of upcoming developments in the Mission District would be ineligible. Of the 2,544 units in the pipeline for the neighborhood, only 200 are in projects eligible for the program.
Still, that could generate millions of dollars for purchasing homes in the Mission District. The fee paid varies per unit size, but ranges from $150,000 for a single-room occupancy studio to $520,000 for a four-bedroom.
A hypothetical project with 20 one-bedroom units — which must pay $270,000 each — would pay a fee equivalent to four of those units — or $1,080,000.
Since buying Small Sites buildings comes in at between $250,000-$300,000 per unit, that single project could purchase three to four units and keep their tenants in place.
“When you start adding these all up, maybe a unit on site, maybe two units of as Small Sites payment, it starts having an aggregate impact,” Cohen said.
Luis Granados, the executive director of the Mission Economic Development Agency, which has a history of buying Small Sites buildings in the Mission District, was more skeptical. He said the Small Sites option was a good change to the fee structure, but that he would prefer to see the city increasing the amount of resources it gives towards affordable housing.
The proposed law, he said, would only shift resources developers are already required to pay, not increase the total amount of money available for affordable housing construction or purchase.
Campos agreed in part. He said the measure “doesn’t necessarily add new money” city-wide but does mean that neighborhoods like the Mission District will get funding that may have gone elsewhere before.
The measure will be introduced at the Board of Supervisors on Tuesday before it goes to committee. It will then go back before the board for an up-or-down vote and to the mayor’s desk to be signed into law.
Campos, for his part, was hopeful for its passage. He said the agreement between him and Mayor Lee on the measure would give it bipartisan support at the board.
“It’s fair to say that the mayor’s office and our office don’t always agree, so the fact that both of us are putting it forward together is a sign that this cuts across political lines,” he said.