A transfer tax enacted by voters in 2020 added some $85 million to a housing fund this year — but how should the money be spent?
Transfer taxes are paid to the city anytime a property changes owners. On Monday, an oversight board suggested putting it toward acquiring land and building housing for public-sector employees, among other options.
Top of mind is purchasing land while prices are relatively low, according to members of the Housing Stability Fund Oversight Board, a body that advises the mayor on how to spend the Housing Stability Fund money generated from Proposition I. The board recommended that the Mayor’s Office of Housing and Community Development spend some $30 million on buying land for affordable housing.
“We are trying to make the argument that [the funds] should be dedicated to acquiring land right now,” said Fernando Martí, an oversight board member. “Once we come out of the recession, that opportunity will be gone.”
But the recommendations are only recommendations. Ultimately, it’s up to the mayor to decide how much of the money to spend, when and for what.
In 2021, Mayor London Breed refused to spend some $64 million in Proposition I funds allocated for the Small Sites Program after citing program issues, and only recently started to release some of those funds. To date, more than $30 million of that pile remains unspent, said Supervisor Dean Preston, who spearheaded Prop. I. It wasn’t until this March the mayor released funds for site acquisition or educator housing recommended last year.
“They control the timing,” Preston said, adding that he would “really urge” the Mayor’s Office of Housing and Community Development “to work more collaboratively to get these funds out the door.”
That time might be now, Martí said. In January, the Office of the Controller found that, in 2020 to 2022, land without permits cost $58,037 per unit on average. From 2017 to 2019, that cost was $174,829 per unit.
Once the city acquires the land, it often taps nonprofits to create proposals for affordable housing on it.
A recent case is the 16th St. BART Station at 1979 Mission St., which would have become a market-rate building with only 46 affordable housing units without the city’s acquisition in 2021. Now, that parcel is primed for some 331 units of affordable housing.
Site acquisition was also recommended by the board last year, for $60 million; this January, the housing department released $40 million for affordable housing site acquisition, which will be rewarded to a developer. This year’s budget was far less than last’s, some $136 million, in part due to lower transfer tax revenue and a 10-percent budget cut to the city’s more than $728 million projected deficit, Martí said.
California is cracking down on cities and counties with plans that don’t zone for enough housing. Site acquisition is a key strategy to build the affordable units demanded by the state, planners said.
In recent years, the city has relied on revenue from market-rate project fees to pay for affordable housing projects. But in times of economic decline, affordable housing fees dry up, threatening or delaying projects and hundreds of units.
“There’s no other way we’re going to scale up to create 46,000 units of affordable housing, like we pledged to do, unless we get aggressive with site acquisition,” Preston said.
The mayor should also allocate some of the site acquisition and some of the $30 million allocation for capital improvements to fund public sector employee housing, oversight board secretary Gen Fujioka said. Historically, educators have been prioritized; the mayor’s office of housing released $32 million this year to fund teacher housing after last year’s oversight board recommendation.
Job losses in food, construction and other industries may cause “longer-term, structural labor supply challenges for the local industries that rely on them,” a recent city report stated; it also showed showed a strong decrease in essential workers in the pandemic. Affordable housing helps keep those workers here.
Brandon Dawkins, a city healthcare worker and the vice president of Local SEIU 1021, said of his 16,000 members in the workforce, about 8,500 live outside of San Francisco. He’s included. Though a Fillmore native, Dawkins said he can’t afford to live here, and commutes up to two hours from Antioch.
On average, Local SEIU 1021 members earn about $75,000 a year, he said, or roughly 80 percent of the area median income. Though workers qualify for affordable housing, lottery waitlists are too long. Unlike teacher housing, “we are basically told we need to be out there and compete with the general public,” Dawkins said.
Some peers commute from as far as Sacramento or Kern County, while others sleep in cars or couch-surf. “It has been taxing on the workforce,” Dawkins said. “Folks end up leaving the city to go work for some place that’s closer.”
As a San Francisco-born Black man, he said this increases displacement, and thus loss of Black voters. “We are losing key races because we don’t have enough folks living in San Francisco where they work.”
Long commutes can cause health issues, too. Oraiu Amoni, the housing and workers’ rights director with Jobs with Justice San Francisco, said workers mentioned dangerous sleep-deprived driving, and mounting stress. The oversight board’s recommendation “could be a way to start a conversation of what workforce housing could mean,” he said.