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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 third 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 city officials and staff.

With Concerns About Housing Equity, Distribution, and More, They’ll Have to Work Together Diligently

By Jessica Zimmer, Contributing Writer

Successfully facilitating the construction of 82,000-plus residential units in San Francisco by 2031 will be no easy feat for city officials. Meeting the demands of the SF Housing Element requires various departments to work cooperatively. It also requires members of the San Francisco Board of Supervisors to collaborate on common goals.

One of the City’s primary objectives is to ensure that 46,000 of the stipulated 82,000 units are affordable housing. Elected officials and city agencies will also have to be responsive to resident and constituent concerns about equity and growth. They must do all this all while dealing with a host of obstacles, including high interest rates, less-than-optimal financing, and the inconvenient impacts of new construction on neighborhoods.

District 1 Supervisor Connie Chan represents the Inner, Central, and Outer Richmond neighborhoods, as well as Lincoln Park, Golden Gate Park, and the University of San Francisco.

“We currently have about 60,000 units of new housing in the pipeline already approved,” Chan said, speaking of the City overall. “The question is how we boost the speed of production without sacrificing quality. That’s where union labor is particularly important.”

Who Picks the Numbers, Who Has to Fulfill Them, and Who Pays for It?

A locality’s Regional Housing Needs Allocation (RHNA) is the number of residential units necessary to meet its expected housing needs for the next eight years. A nine-county regional planning agency, the Association of Bay Area Governments (ABAG), sets the RHNAs for all of the Bay Area’s localities. ABAG is governed by its General Assembly, which includes an elected official from each city and county that’s a member of the association.

The RHNA numbers are already a concern for San Francisco neighborhoods dealing with an outsized share of growth. These include District 10, which contains Potrero Hill, Bayview-Hunters Point, and Visitacion Valley.

“District 10 is currently building for all ranges of income,” said that district’s supervisor, Shamann Walton.

Construction includes more than 5,000 new or rebuilt units across four public housing sites, the Potrero Annex Terrace in Potrero Hill, Hunters View and Alice Griffith in Bayview-Hunters Point, and Sunnydale-Velasco in Visitacion Valley. Before rebuilds, many units in these sites had been in poor condition for years.

Another large-scale development coming to District 10 is the Potrero Power Station, a 30-year project that will contain over 2,600 units along the central waterfront. Thirty percent of the Power Station units will be affordable.

Walton called the City’s RHNA “arbitrary.” He said a central concern is that San Francisco is required to build far more housing than counties to its north and south; Marin County’s total RHNA is 14,210 units, and San Mateo County’s is 16,418 units.

“We want people to live and work in the City,” Walton said. “Yet, District 10 and other areas of the City that have seen enormous growth are a long way from having equity. There is a need for improved public transportation, more parks, more shopping centers, and all of the other infrastructure necessary to maintain a good quality of life.

“We could use more financial support from the state to meet the RHNA’s unfunded mandate,” he concluded.

Walton agreed with Chan that union labor would be a significant factor in constructing quality housing and building infrastructure.

How Might Development Vary Among Districts?

Meeting the numbers stipulated in the 2023-2031 RHNA will require keeping current projects on track, building more housing on the west side, looking for new sites for multi-family housing, and determining the cost and feasibility of converting commercial properties such as downtown offices to residential units.

One of those factors — west-side development — has been a problem in the City for years. District 4 Supervisor Joel Engardio represents residents from 19th Avenue west to the ocean, including the Sunset, Outer Sunset, Parkside, and Merced Manor neighborhoods. He said that an interest in new types of housing is present among his constituency.

“Couples who moved to the Sunset during Covid want affordable apartments and homes that will allow them to stay in San Francisco and raise their families,” Engardio said. “If individual homeowners want to convert their property into a duplex or fourplex, they should have that right, especially if doing so benefits their family.”

It does go beyond just single-family concerns. Post-pandemic shifts that have affected how residents work and live in the City provide an opportunity to reimagine San Francisco’s housing policies. Engardio said he’d like to allow for multi-family housing in neighborhoods that have traditionally been zoned exclusively for single-family residential. He’d also like to facilitate more housing construction along west side transit corridors.

District 5 Supervisor Dean Preston represents the Inner Sunset, Haight-Ashbury, Japantown, Western Addition, and portions of Hayes Valley. He said that San Francisco needs to make construction of affordable housing a top priority.

“Over the last eight years, we exceeded goals for market-rate housing,” Preston said. “We didn’t even hit half of our goals for affordable housing.”

Preston is frustrated that Mayor London Breed has so far decided not to build that housing using existing funds. The primary city office that builds affordable housing is the Mayor’s Office of Housing and Community Development (MOHCD). Its stated mission is to coordinate the City’s housing policy and provide financing for the development, rehabilitation, and purchase of affordable housing. Preston said that financing exists and could come from the City’s $293.9 million Fiscal Cliff Reserve, meant for managing budget shortfalls, and from revenue generated by 2020’s voter-approved Proposition I, which raised San Francisco’s real estate transfer tax to fund pandemic-related rent relief and affordable housing. That tax money goes into the City’s general fund.

Preston, who sponsored Prop I, said he’d like to see the City use these monies to get serious about housing stability by creating new affordable housing.

“Movement on affordable housing needs to be depoliticized,” said Preston. “That’s why voters approved Prop I, overwhelmingly so in [District 5]. My constituents want as much affordable housing in [District 5] as possible.”

In the meantime, Preston is getting creative to ensure that housing does get developed in his district ASAP.

He authored a resolution that would mandate the creation of affordable housing on a portion of California Department of Motor Vehicles-owned property on Fell Street that the state has set aside funds to redevelop. He also made a deal with Related Companies, the developer of a residential market-rate tower to be sited at 98 Franklin Street, that will increase residential capacity in the tower offset by a $1 million allotment to build affordable housing at the corner of Octavia Boulevard and Hayes Street. The deal requires Related to purchase the former McDonald’s property at 600 Van Ness Avenue for affordable housing to be built by MOHCD.

Down in District 9, Supervisor Hillary Ronen represents residents of the Mission, the Portola, Bernal Heights, and St. Mary’s Park. Ana Herrera, a legislative aide for Ronen, agreed that the City needs to prioritize affordable housing and that the state should provide more funding.

Herrera said that Ronen and her office have worked closely with numerous neighborhood nonprofits engaged in housing development. These partnerships, Herrera said, have resulted in the development of hundreds of affordable residential units in District 9 in the last five years.

Herrera said that as the City looks to areas on the west side, it is critical that it continues to allocate resources to Priority Equity Geographies. These are areas with a high density of vulnerable populations as defined by the San Francisco Department of Public Health.

“[That] includes most of the Mission District, including the areas recently added by redistricting,” she said.

Supervisors Engardio and Preston and legislative aide Herrera all remarked on the positive value and desirability of having members of the building trades on these jobs.

District 7 Supervisor Myrna Melgar, who represents residents of West Portal, Forest Hill, Parkmerced, Inner Sunset, and St. Francis Woods, was out of the office and unavailable to comment by press deadline. The office of District 3 Supervisor Aaron Peskin, who represents residents of North Beach, Chinatown, Fisherman’s Wharf, Union Square/Financial District and Russian Hill, stated that Peskin was unavailable to comment for this article.

What’s Going on Inside City Government?

To achieve the goals stipulated by the SF Housing Element, numerous San Francisco agencies must collectively work to realize the 37 policies and 250-plus actions to which the City has committed itself. This means affecting significant policy shifts that include elevating rental assistance to prevent evictions, enhancing eligibility for affordable housing, and expanding support for community-based organizations that deliver tenant- and eviction-protection services.

Ensuring these big changes get made is doable, but it won’t be easy. Daniel Sider, chief of staff of the San Francisco Planning Department, said that this spring, the City expects to amend zoning rules to remove barriers for affordable housing production and add capacity for 36,000 units.

“To foster more inclusive communities and undo the harmful effects of housing segregation and discrimination, the department will target existing zoning regulations that limit low-and middle-income housing from being built in family-friendly neighborhoods with access to parks, schools, and public transportation,” he said.

Sider also said the Planning Department will be working on securing additional funding and providing the necessary land banking and site dedication for affordable housing to be built by MOHCD. Twenty-five percent to 50% of that housing is slated for “well-resourced neighborhoods,” he said.

For her part, Mayor Breed advanced the City’s plan to meet the Housing Element’s goals by issuing the Housing for All executive directive in February, a month after the City officially adopted the Housing Element. The directive is meant to create accountability and oversight for implementation of the Housing Element. It also sets requirements for administrative departmental actions and initial legislative actions and timelines.

Sider said that the City is currently looking to collaborate with equity committees and cultural districts to address housing needs; coordinate across government, private, nonprofit, and philanthropic funding sources to fund affordable housing; and simplify permitting and approvals to reduce housing costs.

He added that union labor is indispensable to the City meeting its housing needs now and in the future.

A New Breed of Housing From MOHCD?

Lydia Ely is MOHCD’s director of housing. She said that MOHCD is focused on maintaining a steady pipeline of production by balancing funding between current construction projects and adding sites to the queue. Those new sites must meet geographic goals and be competitive for state funding.

“We continue to advocate for policies and programs that ensure streamlined approval of affordable housing and for expanded funding opportunities at the state and federal level,” she said.

Ely said that affordable housing is subject to the same market forces as market-rate development.

“We can’t control the economy, but we can remain focused on keeping an active pipeline,” she said.

One of the initiatives stipulated by Breed’s Housing for All directive is the convening of an affordable housing leadership council. This council helps the City determine how to meet its affordable housing goals while simultaneously working with city administrators to rethink the approach to affordable housing in general. The council is informed by an analysis of the City’s current funding landscape for affordable housing.

Ely said that city administration is considering a multiplicity of ways it might help accelerate the construction of affordable housing. Ideas include exploring commercial-to-residential conversion, amending inclusionary laws, and targeting public financing to fund critical infrastructure at residential megaprojects.

Another shift will be improvements to the City’s site permit approval process. Legislation for the change is currently being drafted. It will be introduced after an April public forum and outreach to further inform the policy.

Ely said that MOHCD projects pay prevailing wages and are built “overwhelmingly” utilizing union labor.

“We recognize the value and importance of building housing that is affordable for people working in the construction trades,” she said.

Who Else Is Involved?

The Office of Community Investment and Infrastructure (OCII) is the successor to the San Francisco Redevelopment Agency. It is responsible for development in Mission Bay, Transbay, and the Hunters Point Shipyard/Candlestick Point neighborhoods.

OCII is about to start construction of affordable family housing in Hunters Point Shipyard, blocks 52/54 at 151 and 351 Friedell Street, and block 56 at 11 Innes Court. Completion of both projects is expected by May 2025.

In January 2021, OCII completed development of 152 affordable housing units, including one manager’s unit, at Sister Lillian Murphy Apartments at 691 China Basin in Mission Bay.

Thor Kaslofsky, executive director of OCII, said a change that would help the entity continue to develop affordable housing would be the continuation of the OCII’s tax increment financing powers (TIF). TIF refers to the practice of financing development projects with revenue generated by the development.

Kaslofsky said that if passed, State Senator Scott Weiner’s SB 593 would go a long way toward helping OCII achieve Housing Element goals. SB 593 would allow for a limited continuance of OCII’s TIF powers to fund up to 5,842 affordable housing units as replacement for units that were never replaced following the period of urban renewal between 1955 and 1975.

Additionally, Kaslofsky said that OCII is also working from the beginning of its design process to make its buildings more cost-efficient. It’s trying out different financing structures to make its projects more competitive for tax credits.

He said the City appreciates unions and the history they have made in building housing, infrastructure, and commercial real estate.

“[Unions] have invested their sweat and heart into every square foot of our city,” Kaslofsky said. “They’ve been a great partner to OCII in building our projects, and we look forward to continuing to collaborate.”

What If City Officials Fail? Will They Be Punished by the State?

San Francisco has a lot to accomplish with this Housing Element. When considering the task, it’s important to look back on how recent legislation has changed the role of the California Department of Housing and Community Development (HCD).

HCD administers policies and programs from Sacramento regarding the expansion and preservation of affordable housing statewide. The department’s identification of total housing needs has changed to account for unmet existing need. Before, they accounted for projected need.

Today’s RHNAs are meant to alleviate conditions for overcrowded and cost-burdened households (considered to be those spending over 30% of their income on housing) as well as to achieve a target vacancy rate for a healthy housing market (regarded as a minimum of 5%). That’s why most RHNAs tripled in 2023-2031 housing elements throughout the Bay Area when compared to RHNAs in the last round of housing elements (2014-2022).

HCD has also set new limits to the extent on which localities can reuse sites included in prior housing elements. HCD also provides that an RHNA must affirmatively further fair housing. This is a way of requiring that localities actively prevent segregation and poverty concentration, as well as increase access to areas of opportunity.

Numerous incentives exist to encourage the City to comply with the SF Housing Element, such as state grant and loan programs for local transportation improvements. If a local government’s actions don’t comply with state law, HCD has the power to revoke housing element compliance.

State courts also have the authority to commandeer local governments’ residential and nonresidential permitting authority in order to bring a jurisdiction’s general plan and housing element into substantial compliance with state law. For example, if the City does not meet its goals, a court could suspend the City’s authority to issue building permits and grant zoning changes, variances, and subdivision map approvals.

The consequences for city agencies and politicians could mean a divestment of power. This would also result in a lack of elected representatives and local staff guiding San Francisco’s growth, as well as potential departures from goals shaped by local communities.

District 10 Supervisor Walton said that determining whether new development results in equity can help the City avoid increased oversight by HCD.

“Some of the goals of the 2023-2031 San Francisco Housing Element could force out people who already live here,” he said. “That’s especially true for people of color.

“We need to make sure that not all duplexes on corner lots are built on the east side. Innovative and creative policies sound great, but they have the potential to cause negative impacts. Together, we need to make sure current solutions avoid further gentrification.”

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