San Francisco is inching toward 900,000 residents. Rents and home prices are going nowhere but up. Short of chasing 100,000 people out of town and then pulling up some metaphorical drawbridges, demand for housing will continue to outstrip supply.
In the upcoming election of San Francisco’s next mayor, no issue will be as central: how much housing to build, where to build it, whom to build it for, and how quickly. This is the funnel through which all other discussions flow.
So when an annual pro-housing meeting called Housing the Bay took place 10 days ago near Union Square, it was interesting that the top three mayoral candidates didn’t show. Not Supervisor Jane Kim, who supports denser housing in her South of Market district but opposes a statewide push for more density along transit lines; not former supervisor and state legislator Mark Leno, who has the support of the Democratic machine and is trying to walk a fine rhetorical line on housing density; not even London Breed, the only major candidate so far to spell out her housing agenda, making no bones about the need for a lot more of it.
There were no chants of ‘build, baby, build,’ although some applause lines used overregulation as a punching bag.
Breed, president of the Board of Supervisors, became acting mayor after Ed Lee’s death, but her fellow supes shoved her out of the mayor’s office, in part because of her support from the city’s pro-development faction — including the progressive wing’s “everything-wrong-with-the-city” figure Ron Conway, a tech investor.
It’s not that the Housing the Bay event, run by the Urban Land Institute, a nonprofit think tank, is too small for the political circuit. David Chiu, a former SF supervisor who now chairs the California Assembly’s powerful housing and development committee, anchored the day’s final discussion. Chiu is backing state Senate member and fellow San Franciscan Scott Weiner’s SB 827 bill to make dense housing easier to build along transit corridors. Young pro-housing activists called YIMBYs (“yes in my backyard”), wading deeper into political waters with a ballot measure to speed affordable housing construction, also enjoyed time in the spotlight. (I’ve embedded a session from the conference courtesy of the YIMBYs, below:)
Conspicuously absent (or, if they were in the audience, at least silent): the city’s various neighborhood groups fighting growth in any shape or form.
The running theme of the event — fighting a multifront war against the housing crisis — did not include ideas from NIMBYs. If you didn’t agree with the basic premise that San Francisco (and the Bay Area, and California) need to build more housing of all kinds, including plenty of affordable units, there wouldn’t have been much for you beyond the lunch buffet and free all-day coffee.
There were no chants of “build, baby, build,” although some of the day’s biggest applause lines used overregulation as a punching bag. “I don’t want to see any more public hearings on single-family additions of a deck,” said Denise Pinkston of TMG Partners, a Bay Area real-estate developer that focuses on urban spaces.
There were calls for caution as well. The Bay Area’s top three planning directors — William Gilchrist of Oakland, Rosalynn Hughey of San Jose, and John Rahaim of San Francisco — acknowledged the struggle with displacement. But the trio underscored the need to build more supply to bring down costs. Hughey, until recently a top city planner in Washington, D.C., said she’s been wrestling with California regulations like CEQA — the state’s environmental impact law often used to hold up projects. “I was learning the beast of CEQA,” she told the crowd, “and would ask myself ‘How does anything ever get built here?’ It’s been quite an adjustment.”
In his talk “Race, Power, and Housing: Designing for Equity in the 21st Century,” UCSF and SF State professor Antwi Akom asked folks to imagine themselves as black- or brown-skinned kids running a daily gauntlet of rough neighborhoods, junk food, and unsympathetic teachers. Designers and developers need to keep these kids in mind, and provided a few examples including Dudley Square in Boston’s Roxbury neighborhood. He admonished the Housing the Bay audience for being good at “place-making for the 1 percent,” but not factoring race and inequity into urban design and development.
While no one would (or should) argue the history of outright racism marking property lines (read this book for a deep dive), Akom’s “1 percent” remark seemed a bit off the mark. There were indeed ideas at the housing summit to address those wrongs and to make housing more affordable. Not least of which: the overarching idea that the working poor and middle class will continue to suffer displacement when housing stock is scarce.
Along with building new units (including modular housing), it’s important to renovate and protect current apartments, along with the renters living in them. Heather Hood of nonprofit Enterprise Community Partners described strategies to buy rental buildings that “often need a lot of love,” and rehab them in stages with minimal disruption to the tenants.
Affordable housing, whether renovated or built new, doesn’t happen magically, of course. Building a single unit of affordable housing costs roughly as much as a unit of market-rate housing: more than half a million dollars, and possibly closer to $1 million, depending on the project. What developers can build costs more than what renters and home buyers can pay, said TMG’s Pinkston. “And it’s getting worse.”
So how can public finances and private investment come together for solutions, without those on the left screaming “corporate give-away” or free marketeers spouting off about quasi-socialism? Eric Tao, managing executive principal of SF-based developer AGI, argued that a more generous property tax exemption for affordable housing could attract low-risk investments — from pension funds and the like — that are often plowed into bonds. Tao, whose company has an affordable-development track record in the city, walked through some of the math, arguing that a predictable stream of lower rents from “teachers, tradespeople, and first responders” would provide ample return for those investors. Take away the property taxes, and it becomes a “fantastic deal,” he added.
That would require more tweaking of the rules that allow property-tax exemptions for housing built for low- and moderate-income renters and homeowners. (It’s all based on area median income, or AMI, a measurement used to determine eligibility for affordable housing; here’s the city of San Francisco’s explainer.) In the Bay Area, the median is sky-high, but so is the cost of housing. People who elsewhere would be well-to-do are now potential candidates for housing subsidies.
Getting wonky
Denser development. Finance schemes for renovation of rental stock. Wider eligibility for housing subsidies. Other remedies were ripe for discussion, too. Perhaps the wonkiest session of the day was devoted to the development taxes that cities levy against builders. Often called impact fees, some are earmarked for civic improvements, and others are general. Some are negotiated on a project-by-project basis, often akin to a single member of Congress holding up a bill until he or she extracts maximum concessions.
However applied, California’s impact fees are four times the national average, according to David Garcia, executive director of UC Berkeley’s Terner Center for Housing Innovation. Garcia acknowledged that the fees aren’t going away.
“Cities don’t have many tools to pay for things they need to accommodate new growth,” he said, but more transparency and standards are needed. In San Francisco and elsewhere, special interests can hold up a project’s approval just to get more benefits. One developer on stage agreed. “I’m tired of looking at project by project; hand-to-hand combat is no way to win a war,” said Michael Ghielmetti of Signature Development Group.
You can’t talk about development-related fees in California without raising the specter of Proposition 13, the 1970s voter-approved law that, in essence, froze property taxes in amber and has starved local districts of funding ever since. Prop 13 reform was a big topic at Housing the Bay. One idea — the “split roll” — would maintain the statute’s limits on residential and agricultural properties, but tax commercial properties at full market value and raise billions of dollars more per year for local governments.
In other words, Prop 13 and other tax reform is part of a bigger effort. Changing Prop 13 alone — often considered the third rail of California politics — will remain a tough sell, advised Chiu, even with momentum swinging toward more development.
Perhaps the pithiest line of the day came from San Diego planning commission member Vicki Granowitz, who flew in to tell the crowd about her city’s ongoing push, led by an unlikely left-right partnership on the city council, to build more housing. She talked about listening to all stakeholders. She talked about finding diverse community leaders. And then she admitted that real estate, like all civic issues, isn’t all sunshine and kumbaya. Once in a while, she had to shove NIMBYs out of the way. With tongue (slightly?) in cheek, Granowitz said “You have to be evil to get this done.”
Alex Lash is editor in chief of The Frisc.