In Our Element

The San Francisco Housing Element is the City’s plan to build 82,000 units of new housing — 46,000 of them affordable — by 2031, in order to comply with state housing mandates. This is the second article in a four-part series exploring multiple perspectives on the plan and its potential impacts on both the building trades and the City. This month, we hear from SF’s residential developers.

Developers Look to Local Unions to Help Achieve New Housing Numbers

By Jessica Zimmer, Contributing Writer

As California pushes cities to ramp up residential construction, developers working on projects in San Francisco are strengthening their collaborations with local building and construction trades unions. The developers’ objective is simple: to make sure the projects mentioned in the 2022 SF Housing Element get done on time.

They’ve come to realize the best way to do that is to put union building trades workers on the job.

Building Trades Workers Keep It on Track

For the past three years, developers have watched the Bay Area building trades step up and achieve significant construction goals despite difficult phases of the Covid pandemic, supply chain disruptions, and materials shortages. This diligent, highly skilled hard work has translated into high value for these developers. It has also demonstrated the benefit of using union crews — and of ensuring a percentage of newly built residential units are within reach of those crewmembers and their families.

Time pressure is another factor turning developers increasingly toward a union construction workforce. After all, 2031 isn’t far off.

Between 2015 and 2020, the number of approved construction projects in the City more than doubled. Those projects tended to be larger than usual, but more recently approved projects are smaller in scale. The large projects typically involve buildings constructed in phases and extended entitlement periods — set timeframes for which the City has approved a development agreement. The entitlement agreement for a large project ranges between 10 and 30 years. A standard entitlement agreement lasts for three.

Working well with building trades locals improves a developer’s ability to guarantee the success and reputation of a project, regardless of size. Locals give developers a way to stay in close contact with the City, as their members (or members of affiliated unions) work on City infrastructure and in City buildings. Having a way to keep the conversation about a project active and positive can prove very useful.

When locals and developers work well together and communicate easily with the City, everyone who touches the project benefits. So do groups outside of the development agreement, including tenants looking to move into new units and neighborhood businesses owners looking to grow their customer base.

Union Builders Deliver the Goods On-Time and On-Budget

Michael Cohen, founding partner of Strada Investment Group, said that progress on the Market and Colton Project at 1629 Market Street in SoMa is an example of what developers and locals have accomplished together.

Four out of five buildings of the mixed-use project have been completed. Two notable new structures are the new union hall for U.A. Local 38 Plumbers and Pipefitters and Colton Street Affordable, a 100-unit residential complex for individuals who have experienced homelessness. The third and final multi-family building, building B, is on track to be finished next year.

The project, which will provide a total of 595 residential units once complete, is an all-union job and has so far been delivered on-time and on-budget. Market and Colton’s smooth success has Cohen looking west for his firm’s next big build.

“In the next few years, Strada is paying close attention to opportunities on the west side of San Francisco,” Cohen said. “This area has historically seen neighbors challenge new residential development. The 2022 San Francisco Housing Element, together with initiatives to reduce fees and streamline development, is part of a huge political shift supporting housing construction.”

PLAs Ensure Faster, Higher-Quality Work

Enrique Landa, managing partner of Associate Capital, said developers and locals benefit by agreeing on the terms of project labor agreements early in the process.

Associate Capital is developing the Potrero Power Station, a 29-acre mixed-use megaproject on the City’s Central Waterfront set to be built in multiple phases over 30 years. It will feature over 2,600 units of new housing, 780 of which will be designated affordable.

The project had a signed PLA before it was entitled.

“When a project is entitled with a PLA, it means the trades are guaranteed to do all of the work throughout the life of the project,” Landa said. “It helps if locals and the developer work together for years, from entitlement to construction finish. Then they can advance the project faster and ensure quality work on it in every phase.”

Landa said that one way he keeps residential construction organized and funded is working with local unions to brainstorm solutions, when needed — creative thinking about how to deal with a rise in interest rates, for instance. The collaboration is a great help in maintaing a project’s forward momentum, he said.

Construction on infrastructure for the Power Station is now underway, with groundbreaking for the first of the project’s buildings scheduled for October.

“When units in the Potrero Power Station are completed, we’d love to have people in the locals apply,” Landa said.

Building Trades Members Create Housing They Can Afford

Not all of the City’s developers are for-profit. Some are community organizations. One such developer is Mission Economic Development Agency (MEDA), a nonprofit founded 50 years ago to help Latino families and residents in the Mission District.

MEDA’s current aim is help its client base grow prosperity, community ownership, and civic power. To that end, in 2013, the organization began developing residential units.

MEDA’s director of community real estate, Karoleen Feng, said the organization currently has a whopping 2,200 residential units in the pipeline. Those include 116 units of family housing at 515 South Van Ness Avenue, 63 units reserved for teachers at 2205 Mission Street, and 575 units — at least 50% of which will be designated as affordable — at the Potrero Bus Yard at the intersection of Bryant and Mariposa streets.

Feng said MEDA is also working with Bridge Housing, Chinatown Community Development Center, Tenderloin Neighborhood Development Corporation, and other affordable housing developers based in the City.

“These partnerships reduce lenders’ concerns about working with a nonprofit that started out providing services,” said Feng.

As MEDA makes progress in development, Feng continues to listen to the concerns of residents who come to the organization for other services, from tax prep to workforce development to small business growth. Through this work, she has become acutely aware of the needs of building trades members.

“Hearing the voices of the community teaches us that housing is just one way to build a strong safety network for workers,” Feng said. “The Covid-19 pandemic stripped a great deal of wealth from low and middle-income workers. […] Members of buildings and trades locals are among this group. We want to ensure we meet their needs as we develop affordable housing.”

Available, Affordable Housing Empowers the People

Strategy consultants who work for developers and locals serve as another critical component in keeping up a positive dialogue. S2 Partners does a great deal of this work. Its clients include SF Building Trades Council affiliates Local 38, IBEW Local 6, and Sheet Metal Workers Local 104.

Ontario Smith is managing principal of S2 Partners.

“When we talk to developers and locals, we explain that a developer doesn’t have to choose between building housing or giving union workers dignified career pathways,” Smith said. “They can do both.”

While he’s excited that the SF Housing Element requires 46,000 of the total units built in the City to be affordable, Smith said he thinks the City can — and should — do more.

“S2 Partners encourages developers not to be formulaic when envisioning returns,” he said. “Overall returns can be higher when a project can be expanded. A project should include affordable units for the workers who build them.”

Smith said a key to meeting the goals of the SF Housing Element is maintaining the dialogue between developers and locals.

“Developers can have a meaningful impact in advancing the dialogue with the public surrounding worker rights,” he said. “Improvements in pay and benefits not only improve productivity impacts but lead to other positive outcomes.”

One topic Smith regularly discusses with developers is how San Francisco locals recruit a diverse range of apprentices from SFUSD schools. This tactic empowers workers who are already residents of the City.

“In an increasingly difficult world, we’ve tried so many other ideas,” Smith said. “It’s time to give people the power. Let’s give that a chance.”