Making Upzoning Affordable Is A Political Choice
This month, the SF Board of Supervisors will vote to adopt a billionaire-supported plan to redevelop two-thirds of San Francisco. The Mayor and several Supervisors have framed this proposal as a “gun to the head” and the only way to prevent a “State takeover” where developers don’t have to offer any concessions to the City or submit to value recapture.
The reality is that those two options are not that dissimilar, especially when framed as a way to appease development interests looking to take advantage of the next tech boom market. It is a false choice. There is a third way, a plan that uses upzoning as a tool to build the affordable housing we need faster — without displacing residents.
In San Francisco, due to the concentration of high-income earners, the housing market has steadily built single bedroom units priced at an average of $3,500/month. If you’re spending no more than 30% of your income on rent – that means you’d have to be making $11,700/month to afford standard rent in SF. Now imagine you have kids! These prices continue despite having available rental stock in the city, not because of a lack of demand but because that is what developers know the market can bear.
Left to their own devices, developers will always build to meet the ever-growing Return On Investment (ROI) demands of their investors. SF legislators can strengthen the upzoning plan by requiring more concessions from private developers in exchange for the benefits they receive from increased land values. Ultimately, it’s a political choice.
Critical Changes to Proposed Upzoning
Land Held in Public Trust Is Most Valuable of All
Land is the most precious commodity, and it’s harmful when it’s primarily developed for people that make an average of $11,700/month. City land is the most precious of all, because it’s own by all of us, the General Public. This is why voters resoundingly adopted Proposition K in 2015, which said that public land should be developed for the highest public good: affordable housing.
The Mayor’s Plan takes over 27 publicly-owned sites and earmarks them for private development. These are sites we will never be able to get back in a city where land values are at a premium. Without landbanking these sites for dedicated affordable housing, the proposal would cost us THOUSANDS of affordable housing units. That’s not even including privately-owned large opportunity sites, like those above grocery stores in every neighborhood in the city, that could be upzoned for affordable housing specifically.
At minimum, the Board of Supervisors should create an Affordable Housing Special Use District (SUD) to require a minimum of 50% affordable development on all feasible opportunity sites, and ensure public land is 100% affordable to the broadest range of San Franciscans making under $140k/year. As PROPEL has reported, we have the financing tools to make this happen, we just need the political will. The recent loss of 365 units at the Portero Bus Yard site is a disappointing indicator of what the future of our public sites could look like without that political will and creative leadership.
Preserving Rent Controlled Homes Is A Mandate
A significant problem with the Mayor’s proposal is the inclusion and targeting of over 100,000 rent-controlled homes. This is a clear violation of our regionally-adopted “3 P’s” housing strategy and the Board must remove ALL rent-controlled homes from the Mayor’s Plan. The State has already taken signficiant steps to erode protections against the demolition of rent-controlled homes, and the incentive for Ellis Act evictions has never been greater, particularly for 2-8 unit buildings, which have historically been very attractive for Ellis Acts.
We can still build the housing we need on opportunity parcels without displacing rent-controlled homes. When SF Planning did it’s original calculations in 2022, they excluded all parcels which they believed to have rent-controlled units in their Housing Element – which the State later approved.
Tenant protections that help you relocate after you’ve been evicted are too little too late – we can do better, and we absolutely should. (* Note – recent press announcements have signaled that the Mayor and at least one Supervisor have struck a deal to carve out more than half of the rent-controlled units of 3-units or more, similar to Senator Wiener’s backroom deal on Senate Bill 79. It is very concerning to see vulnerable tenants’ homes become chits in political negotiations, and we are opposed to any precedent where a couple of wealthy homeowner politicians get to decide which rent-controlled tenants are deserving of protection and which aren’t. The Board of Supervisors must not buy into this false choice – we can and must carve out ALL rent-controlled units and still meet our State capacity mandate.)
We Should Be Requiring MORE Affordable Homes –
Not Replacing Them With Market Rate Units
City Hall has already dramatically lowered “inclusionary requirements”, the percentage of affordable units private developers are required to build on-site. What was a temporary pause to allow for the pandemic market to course-correct has become permanent. And there are proposals to replace inclusionary requirements with a voluntary “opt-in” for rent controlled units, which would further undermine a proven method to build Below Market Rate (BMR) units – or “forever affordable” homes.
We support rent control expansion and it should happen (it almost went to the ballot in 2024 as a progressive policy) -– but not at the cost of Below Market Rate (BMR) homes. And not in conjunction with the demolition of rent-controlled homes. It should be a stand-alone requirement for all MARKET-RATE units – because ultimately, that’s what they are. Creating a new rent-controlled unit simply means the Developer/Landlord can set the rents at whatever the market will bear. They just can’t jack it up every year beyond the pre-approved formula.
The Board of Supervisors should vote down any proposals to swap BMR homes for rent-controlled market rate units. And it should increase the BMR inclusionary requirements to 20% on-site, so that the private housing that does end up getting built is at least affordable to 20% of working San Franciscans.
Require Family Size Homes for A Growing San Francisco
While the branding of the Mayor’s Plan’s has emphasized families, the reality is that 75% of the proposed upzoning is designed to accommodate individuals without dependents. The proposed rezoning currently incentivizes micro-units (because you can cram more units on-site the smaller you make them) or mega-mansions, with lot mergers. This is not affordable family housing. If we want 2-3 bedroom+ units with communal space, the Board of Supervisors will have to legislate it by requiring developers to make 50% of the units 2-3 bedrooms plus communal living space.
Mom & Pop Small Businesses Shouldn’t Be Collateral Damage
A recent survey of 22 “new” (opened between 2008-2022) residential projects with groundfloor commercial space found that one-third of projects had a “cold shell” vacancy – and had for years. These projects are in highly de-controlled areas that allow formula retail and are geared toward larger footprints that can accommodate very high commercial rents. The types of small businesses that these developers are looking for are backed by major capital.
These are not the small businesses that are being targeted by the Mayor’s Plan in intact neighborhood commercial corridors. The small businesses that our most at-risk (the Budget & Legislative Analyst projected between 60 – 188 small businesses would be displaced a year) are on “opportunity sites” where they are the only building on a lot, or where they have 2-6 units of rent-controlled housing above. Everyone can agree that affordable housing development is a priority, but we must have a plan in place for the mom & pop owners who have sunk their life savings into businesses and stayed in their communities, even through the pandemic when many large corporations fled.
The Board of Supervisors must prohibit the demolition of SF-certified Legacy Businesses and require developers to pay true relocation costs and provide “warm shells” (turn-key tenant capital improvements) for displaced businesses, at a minimum $150k. The Office of Small Business typically does not grant above $50k grants, and their policies will have to change to accommodate the realities of struggling small businesses impacted by displacement.
Living Wages for the Workers Building Our Housing
Tying worker wage’s to State prevailing wage belies the reality that SF workers live in one of the most concentrated wealth centers in the world – San Francisco has a local prevailing wage for a reason, because workers need more to live here. The Board of Supervisors should require a local prevailing wage for the construction trades workforce that is building our housing – (and make some real movement on using funding programs like WHAMI to build workforce housing!)
The Land Use and Transportation Committee will be discussing potential amendments to the Mayor’s Plan in the weeks ahead – if you’re interested in advocating for these amendments, check out www.allianceforaffordableneighborhoods.com for ways to engage this month!