As San Francisco prepares to build some 82,000 homes in the next eight years — at least half of which must be affordable — experts have pointed out a major concern: How to pay for it.
On Tuesday, Board President Aaron Peskin proposed putting a $300 million bond on the March 2024 ballot to fund the production and preservation of affordable housing. The bond was originally planned for the November 2024 election, but the supervisors, mayor and a capital planning committee agreed to move it up to March to compensate for a dearth of affordable-housing funds. The bond would not increase property taxes.
But the bond’s impact would be a miniscule portion of the need: The bulk of the bond — $240 million — would go towards funding just 1,500 units already in the housing pipeline.
Another $30 million of the housing bond would go toward preserving aging sites like those identified in the Small Sites Program, accounting for more than 60 units, while the last $30 million would go toward adding 120 beds for supportive housing for domestic violence survivors.
And, according to the state, San Francisco must do much more than provide more dollars.
To wit: Also on Wednesday, the governor released a report from the California Department of Housing and Community Development, lambasting San Francisco for its glacial pace of development: The city has no hope of meeting the state mandate of 82,000 homes by 2031, due to a “notoriously complex, cumbersome, and unpredictable housing approval process,” the report stated, confirming what everyone has known for decades.
San Francisco must build 10,000 homes a year to meet its requirement — about 27 units a day. So far in 2023, the state said, the city has built a home a day.
“Among key findings, the report highlights policies and practices inconsistent with state housing law, delays caused by the City’s discretionary review processes, and negative impacts from local politics on housing outcomes — all of which have real costs and dire consequences for Californians in need of housing,” the state said.
Still, the bond would help fulfill fledgling local affordable housing dollars.
Historically, the majority of San Francisco’s affordable housing is funded by federal or state money. But, in the last couple of years, federal and state grants have been more competitive, meaning the city has been forced to rely on local funding like bonds or inclusionary housing.
But even that has been jeopardized recently: The construction sector is so sclerotic that recent legislation passed by the Board of Supervisors and signed into law by Mayor London Breed has temporarily lowered the affordable housing requirements of market-rate buildings, threatening a major source of affordable home production.
Peskin on Wednesday said that the bond would help fill some of the city’s dire need for local funding. It would be “part of our ongoing effort to provide what the state government is not providing, which is a source of funds to meet our 46,000 unit mandate.”
“Inclusionary fees have been the second-largest source of funding,” said Eric Shaw, director of the Mayor’s Office of Housing and Community Development, at the meeting, after bonds. “But since the pandemic, those fees are shrinking.”
All of the bond’s funds are expected to be spent by the fiscal year 2028-29, Shaw said.
Bond measures must receive at least two-thirds approval to pass, which is often a difficult threshold. During the June 2022 election, voters narrowly rejected a bond that would have funded transit.
San Francisco voters have twice approved similarly sized housing bonds in recent years, however. In 2015, voters greenlit a $310 million general obligation bond that has funded some 1,500 homes and, in 2019, voters passed a $600 million general obligation bond that funded some 3,100 homes.
The Budget and Legislative Analyst’s office noted some $165 million of the 2019 bond has not been spent, however, and another $175 million has been authorized, but will be spent in 2024.
That raised questions among some supervisors.
“What’s the plan for those?” Supervisor Ashai Safaí asked Shaw.
The $165 million will go to previously identified projects in the pipeline that need gap funding, Shaw said, and not new projects.
More than a dozen attendees spoke in favor of the bond, including a majority of advocates for unhoused women or survivors of sexual violence. Representatives from other local housing organizations, including the Council of Community Housing Organizations and Mission Economic Development Agency, spoke in favor as well.
Gen Fujioka of the Chinatown Community Development Center said the nonprofit developer has five projects currently in the pipeline, two of which “do not have the funding necessary to proceed without this bond,” amounting to roughly 340 units of family and senior housing.
The committee voted unanimously in favor of amending the legislation to add specific language regarding findings of labor, domestic violence and climate. The proposal next goes to the Board of Supervisors for a vote.
“We still have a long way to go to put this on the ballot,” Peskin said, acknowledging the repeated calls of support. “But we’re off to an auspicious start.”