When Board of Supervisors President Aaron Peskin, one of San Francisco’s most powerful and influential politicians, kicked off his campaign to unseat Mayor London Breed at an April rally in Chinatown, he promised a “Marshall Plan for housing.”
Two months later, few details of the plan – which, by that description, should be audacious – have emerged. So far, here’s what we know: Peskin wants to increase city funding to create homes for moderate-income San Franciscans while using “little to no public funds,” he claims.
The city would issue bonds to fund homes that the city would own but private entities would build and manage. SF already uses these sorts of bonds to finance roads and other infrastructure, but has never deployed them for housing.
In doing this, Peskin is stumping for the so-called “missing middle”: people who earn too much to qualify for most low-income housing but still can’t afford market-rate residences, even if they’re pulling in six-figure salaries.
The phrase takes a page from the playbook of YIMBY housing advocates, a movement that Peskin has often butted heads with. Indeed, the proposal’s name — the “Missing Middle Workforce Housing Act” — seems calibrated for election-year sensibilities.
Peskin can claim common cause with YIMBYs on one issue, all while lending support to neighborhood groups that use what the city’s planning department calls “fear-mongering” and “bogus” tactics to oppose plans for more density, as happened at a meeting last week.
But Peskin’s idea of subsidies for middle-income homes also has critics, some who often don’t see eye to eye.
It remains to be seen how Peskin’s idea, once fleshed out, resonates with his main election rival. Mayor Breed promised earlier this year to veto “anti-housing” legislation, then quickly wielded her pen after supervisors approved Peskin’s bill to ward off high rises in a small section of his district.
Peskin and seven other supervisors overrode the veto, but it teed up what promises to be a tug-of-war between Breed and Peskin, who have often found themselves at odds over SF housing and development for years.
Peskin’s own housing record, stretching back two decades, is mixed, as The Frisc reported last year. He has supported dense new housing in some eastern neighborhoods, but vociferously defends his own turf and, in meetings like the one last week, is rallying resistance to efforts that would add more density across wide swaths of the city.
Until there’s more information about his new missing middle bill, we won’t know how much desperately-needed housing it might produce.
But it’s a telling – and very San Francisco — moment. Housing for “the middle” is definitionally “homes priced for most people in San Francisco,” notes Matthew Lewis, spokesperson for California YIMBY. How did the city end up needing to subsidize what should be the most common type of housing? And why do some people still loathe the idea of those subsidies?
Three little letters
San Francisco’s subsidized (or, in more common parlance, “affordable”) housing process revolves around three letters: AMI, or area median income. What San Franciscans earn guides how much the city and the state charge for affordable homes.
For 2024, the city estimates a median single person (a one-person household) makes nearly $105,000 a year, while a four-person household earns nearly $150,000. These figures are roughly in the middle of the “moderate” income range; all income levels are set by the federal government. (See table below.)
According to the same federal numbers, a single person making up to $83,900 is considered “low-income,” and anything below $31,450 is “very low-income.”
Affordable housing rents are pegged at 30 percent of the monthly income for the household. Anyone paying more than that for housing is considered “cost burdened,” according to the federal government.
In a 2019 report, the UC Berkeley’s Terner Center For Housing Innovation found more than 20 percent of SF’s median-income renters can’t afford an average SF rent without ending up cost-burdened, despite their six-figure incomes. Barely 30 percent of homes sold were affordable to those “missing middle” households.
A new Terner study published last month also shows that, as the cost of living rises, SF is too expensive for nearly two thirds of Californians. “Whether a teacher could move to San Francisco and stay a teacher, choose to have children, and live in a home suited to their family size” is going to determine the future of SF’s middle class, the Terner researchers note.
Whether a teacher could move to San Francisco and stay a teacher, choose to have children, and live in a home suited to their family size is going to determine the future of SF’s middle class.
a 2024 report from uc berkeley’s terner center for housing innovation
“If you have a teacher and a Muni driver living together, that’s $180,000,” says SF’s Housing Action Committee executive director Corey Smith. (SFUSD salaries start around $76,000 annually for credentialed teachers, and MUNI advertises starting wages around $64,000, so Smith’s projection is plausible.)
“An income of that amount is, unfortunately, deeply insufficient to buy a median priced SF house,” says Patrick Carlisle, an analyst with the real estate company Compass.
In large part, that’s because single-family home prices remain sky high. Downtown condo prices, however, have begun to drop, especially in District 6 neighborhoods with a lot of new construction. “A buyer with an $100,000 income would probably be looking at a one-bedroom condo, or a two-bedroom condo in a neighborhood like SoMa,” Carlisle says.
Organically affordable
One might argue that a new housing era for San Francisco began in 2023. That’s when SF supervisors, including Peskin, approved an eight-year blueprint, mandated by state housing regulators, to make room for 82,000 new units by 2031, with more than half of them affordable. (Peskin voted yes then slammed the plan, saying he and his colleagues had no choice.)
Since the approval of the blueprint, called the Housing Element, only 6,136 units have received the city’s green light to start construction (although there’s no guarantee construction will actually begin). Of these 6,000-plus units, only 739, or 12 percent, were in the “moderate” or missing middle price range, the lowest yield for any income category. (These are what’s known as non-deed restricted: they’re not specifically meant as “affordable” but end up in that price range anyway.)
In other words, the unsubsidized market isn’t building many organically affordable homes, and it’s not just because of the recent construction slump.
In 2018, a much more robust construction year, the number of new homes affordable to the median income was even worse: fewer than 200. The markets are simply more interested in buyers and renters making 140 percent AMI or higher.
This would seem to make missing middle subsidies a powerful argument. But the idea has voluble detractors.
“I really loathe the ‘I support the missing middle’ thing,” says Sam Moss, director of affordable housing developer Mission Housing. He argues that market-rate developers would build more missing middle housing if the city made it cheaper and easier to build in general. Moss also believes middle-income subsidies would give developers more reason to avoid building low-income housing.
Tenant organizer Shanti Singh is an affordable housing advocate and deeply skeptical of market-rate development, but she agrees with Moss about the potential diversion away from those most in need. “The shortage of subsidized housing is most acute at extremely low-income levels, and there’s scarcity all around,” Singh says. “There is an understandable feeling that targeting higher incomes robs Peter to pay Paul.”
Making matters worse, the mid-range subsidized housing that exists often sits vacant. Thanks to mismanagement, understaffing, and narrow, complex qualification limits, most of the city’s units can sit empty for months or years. Peskin says his proposal will simplify the process but hasn’t released details.
Asked about Peskin’s idea, Mayor’s Office of Housing and Community Development spokesperson Anne Stanley said that “discussions around balancing the need for housing that’s accessible to more moderate income households while also providing deeply affordable housing serving our City’s most low-income residents continue to be top of mind.”
Marshalling rhetoric
Many ideas to build or encourage housing in SF are at best small steps forward, which their creators often acknowledge. Even the Planning Department’s redrawn density map, a key part of the march toward 82,000 new homes, has housing hawks feeling underwhelmed. (A new version is due any day now.)
No one has dared come forward with anything akin to a “Marshall Plan,” which, for those needing a history refresher, the U.S. used to rebuild Europe after World War II. Can Peskin’s plan match its author’s rhetoric?
Peskin wasn’t available for an interview, but his staff member Nathan Horrell said in a phone interview that it’s “difficult to estimate” the number of units the proposed bonds might help create. (Horrell called the bonds “new tools for the tool belt.”)
When asked if other cities have used similar bonds successfully, Horrell declined to say, noting that different cities are “subject to all kinds of complex conditions.”
Horrell couldn’t say when details would be available: “There’s a number of different areas that need to be looked at.”
Housing’s a hot-button issue in the mayor’s race, and keeping details vague has political appeal, says YIMBY Law founder Sonja Trauss: “There’s a broad coalition of people who want to have veto power over housing, but they have different ideas about what housing should be vetoed.”
Politics aside, will this Marshall Plan for the missing middle work? SF Planning Director Rich Hillis tells The Frisc he can’t evaluate it until it’s presented in full, but acknowledges the need: “We’ve struggled with how to get that middle-income affordable housing built. We probably need some kind of new subsidy.”
Hillis can’t say if the proposal “will get us to where these [projects] pencil out,” but adds, “if it does, then great.”