If you think approving a project in San Francisco is difficult, try approving a plan encompassing 82,000 units. That’s how much the state is mandating San Francisco to build within eight years, and city planners are attempting to meet the 2031 goal while balancing the interests of marginalized communities. One major problem looms: Money.
“The resources aren’t there to get to what we are being asked to do by the state,” said Planning Director Rich Hillis at a Planning Commission meeting Thursday.
That’s a problem. Thanks to new laws, localities that fail to submit plans that meet the state’s requirements could lose local control on projects and affordable housing funding.
On Thursday, the Planning Department sent its most recent draft of the Housing Element to the Planning Commission for review. While commissioners appreciated the robust document full of “aspirational” ideas, they questioned how the city can achieve its low-income housing goals as the feds pull back from funding.
By 2031, San Francisco must create 32,000 very-low-income and low-income units, as well as 13,000 middle-income units.
“Affordable housing is going to be the big nut,” Planning Commissioner Frank Fung said. “The problem is the scale. It goes way beyond what we have attempted to do, either with the last bond issue or anything else.”
Not only is the current housing goal high, but the city failed to meet its previous low and middle-income production goals during the last Housing Element cycle that began in 2014. And demand is high. According to a 2019-’20 Mayor’s Office of Housing annual progress report, there were 120,000 applications; only 600 applicants were chosen.
After analyzing the state’s production goals, current construction costs, and funding sources, senior planner Kimia Haddadan estimates the city will fall short by $1.5 billion to $2 billion per year.
Part of the reason is that traditional affordable housing resources, like the federal low-income housing credit, are drying up. Director Eric Shaw of the Mayor’s Office of Housing and Community Development added that the “availability of state funding” will “be the bottleneck.” Shaw said they are advocating at both the state and federal level for more flexibility and more funds. Locally, San Franciscans can rely on the affordable housing fee, affordable housing bonds, and city tax initiatives like Proposition I to chip in. (The mayor has refused to spend millions of those funds so far.)
However, housing fees can be volatile, and even if voters approve a housing bond it won’t be enough. “We also need to explore and support new funding sources,” Haddadan said.
Commissioners agreed. “Whether the ability to create or leverage funding from a number of sources we’ll see,” Fung said. He recommended staff find multiple, flexible approaches to affordable development. “What happens if certain things don’t work? It’s really incumbent on other agencies about how we’re going to pay for this.”
Commissioner Sue Diamond concurred. “I am deeply concerned that this is deeply aspirational on the affordable housing side. She implored the Planning Department to make identifying funding a “top priority” for the next Housing Element draft.
Hillis said the Housing Element mentioned mayoral and the Board of Supervisors actions the city can control, like passing a vacancy tax that attempts to make the ballot this year. “We tried to lay out options, and we recognize not all will be embraced,” Hillis said, promising more details in their next session.
Thursday’s discussion also suggested mixed-income housing should be explored, to compensate for some affordable units. “We cannot rely only on 100-percent-affordable housing,” Haddadan said.
This has been a controversial concept for a long time. Pro-density advocates and developers argue that mixed-income housing offsets the expensive cost of building affordable housing, and others highlight how it can encourage social integration. But for certain marginalized communities, this can invite further gentrification and displacement.
Multiple commissioners and community members also said that preserving rent-controlled housing, exploring social housing, and facilitating the affordable housing enrollment process, could all help to prevent displacement.