More than 100 San Francisco mixed-income residential buildings are struggling to fill affordable units, according to a new report from the Board of Supervisors’ Budget and Legislative Analyst.
In total, 15 percent of the city’s below-market-rate apartments, 305 out of 1,961, were vacant as of April 4.
Some of the 305 units have sat empty for as long as three years, despite 21,000 applicants for the units.
Moreover, the report found, it might take a year to fill up a building that has more than 100 units. The Budget Analyst, in part, blamed the pandemic market, lengthy leasing times, and applicants who reject units.
The report also pointed to developers who “prioritize leasing market-rate units,” and some units, particularly small studios and Single Room Occupancy units, that are simply not attractive to applicants.
“There is not an incentive for developers to rent these units. They are more worried about the market-rate units, the people who pay $4,000 for a studio,” said Dairo Romero, the community planning manager at Mission Economic Development Agency, known as MEDA.
Of the 305 vacant units, roughly 44 percent are two-bedrooms, and 53 percent are one-bedrooms, studios and single-room occupancy units.
The majority of vacant units are reserved for the lowest-earning income brackets: Nearly 70 percent of the vacant units were reserved for those earning, at most, 55 percent of the area median income: $51,300 for a single person.
“It’s not a good look for the city. There’s no excuse for below-market-rate units not being filled,” said John Avalos, the executive director of the Council of Community Housing Organizations and a former San Francisco supervisor. “Why aren’t [tenants] able to get housed as quickly as they like?”
MEDA’s Romero was shocked, because most of his clients qualify for those units. Why some failed to get selected, he could not explain. “I’m surprised,” Romero said. “We should get more families in those units … and work with the city to make that happen.”
Red tape, however, means it takes months to lease a below-market-rate unit. Each time a unit is available, it gets advertised on the city’s affordable housing portal, DAHLIA, and prospective tenants apply.
From there, the application closes, and DAHLIA draws a tenant via lottery. A Mayor’s Office of Housing staff person calls the lottery winner and vets the tenant, who may reject the unit or be ineligible. If the unit is not leased, the office moves to the next lottery winner.
Eric Shaw, the director of the Mayor’s Office of Housing, also said developers may fill out their documents incorrectly, an issue that can take extra time to address. At times, developers have three or four missing documents, forcing the city to wait until they come in, Shaw said. But recently, it also takes longer to review and find the right lottery winner. The Mayor’s Office of Housing staff review a “current” average of 31 applications before a tenant is placed in a unit. Before the pandemic, it took only five applicants, or lottery winners, to fill a unit. The report attributes the change to more applicants rejecting units that they find too small or unsuitable in some other way.
This may have particularly impacted Single-Room Occupancy units. In the past year, Mission Housing has struggled to lease its SROs, which is a “newfound problem,” said executive director Sam Moss. “We’ve been asking potential tenants why. They say, ‘it’s a 90-square-foot room without my own bathroom and without my own kitchen.’”
In some cases, the lack of an adequate subsidy to maintain the units can lead to decrepit buildings and rooms that applicants do not want to rent. “It’s better than living off the street, but it’s not awesome,” Moss said.
Another solution is to bolster enforcement policies that would require developers to lease out below-market-rate units in a timely fashion.
Shaw did not offer new solutions to address the vacancies, but said the city should improve existing efforts and be proactive when communicating with developers about unit leasing, outreach and requirements. “The goal of everyone is to have these units leased up,” he said. “I think it’s about maintaining the education of leasing agents.”
Currently, developers who don’t comply in leasing their units after 60 days are sent a warning notice and given another 60 days to respond. If the issue remains, they receive a second notice and another 60-day response time, costing three months already. If these warnings fail, the project is referred to the Planning Department, which can charge a fine of $250 each day a unit stays vacant. Of the 305 currently vacant below-market-rate units in the report, 60 incited enforcement, the report said. The Planning Department intervened in 14 projects from 2019 to 2022, a spokesperson wrote in an email to Mission Local, and can take several months or a year to resolve.
Shaw said that according to his department’s data, more than half of the units are in an “active leasing” stage, a broad time-frame that includes the housing application process down to final checks before a tenant moves in. New buildings that just came online may also affect the statistics in this preliminary report.
The Budget Analyst’s report recommended a quarterly analysis of vacancies be sent to the Board of Supervisors, a new economic analysis on the market be executed, and it recommended strengthening enforcement by cutting out times in between enforcement warnings and ramping up fines.
Shaw and the Planning Department staff expressed reluctance to fine developers, stating the priority is on leasing units and not racking up fees. Instead, the agencies may explore new legislation that attempts to consolidate enforcement of vacancies.