If San Francisco relies on private, for-profit developers to build most of its new affordable housing through inclusion mandates, the amount of new market-priced housing will need to more than triple what the state currently requires.
San Francisco will not meet regional affordable housing needs assessments under inclusion policies unless developers build 166,000 new units, including 120,000 at market rates, over the next eight years.
Either that, or the city should require 57% of all for-profit units to be affordable – or fail to meet the RHNA’s low-end targets and vastly exceed the number of luxury units, with the deep gentrification and the ensuing displacement.
That’s an impossible number without sweeping changes in the city – and equally sweeping shifts in housing finance markets. It is also impossible for the city to add so much luxury housing without seriously devastating existing vulnerable neighborhoods.
I got these numbers from Mark Verville, a retired financial executive, longtime resident of Santa Monica and currently a member of the city’s audit subcommittee.
It handles data that I don’t think anyone else has, although it’s all based on public records.
It starts from the idea that San Francisco (and you can apply this model to any city in California) requires market-rate developers to include a certain percentage of affordable units in their projects. State laws now allow even more density if the developer increases this percentage slightly.
Verville notes that in the last RHNA cycle, 28% of homes built in San Francisco, by all developers, including nonprofits, were affordable.
Then, it looks at how many units at market price it would take for the city to reach the affordable number mandated by the state.
The calculation is not complicated; it is simply absent from most political discussions.
Current RHNA rules require San Francisco to allow 82,069 new housing units in the next eight years. Of these, 46,598 must be below market rate.
State rules include zero funding for any of these affordable homes. San Francisco would need $19 billion to pay for it, according to the data.
But many developer advocates say it’s okay to allow more projects at market price, as long as they include affordable units.
Very good: but with an affordability of 28%, the city would need 166,000 new housing units, including 120,000 at market price, to meet the RHNA targets. In this scenario, San Francisco would end up with more than three times the number of luxury units the state says we need.
The only way that could possibly happen is for the city to allow the mass demolition of existing neighborhoods, on a scale that would far exceed the redevelopment scandals of the 1950s and 1960s.
And even then, unless most of the units are sold as investment properties and never occupied, it’s hard to believe that developers could make enough profit at this scale, in such a short time, so that something resembling this level of construction could actually happen.
The numbers don’t lie: building adequate affordable housing by allowing new housing at market price will not work.
Verville did the math for the state as a whole: Assuming 23% affordability, the state would need 6 million new units to meet the RHNA’s affordable housing goals.
Again: No one in their right mind believes this will happen. The state could eliminate all zoning, repeal CEQA, give developers the green light to tear everything down, bulldoze neighborhoods, destroy every low-income community in the state – and yet we won’t see 750,000 new dwellings per year.
Then add the interesting fact that San Francisco, like many cities in California, has actually lost population over the past decade, especially in recent years, and the state is losing and may continue to lose population population.
Hardly anyone talks about demolition when they talk at the state level (and even, to some extent, at the local level) on the objectives of RHNA. In some parts of the state, there are undeveloped vacant lots that could be new housing, but in San Francisco that’s pretty rare: building something new in this city almost always means removing something that’s already there.
There are, indeed, a number of large lots that can accommodate housing, such as the former Schlage Lockworks on Tunnel Avenue. But there are not enough for 166,000 new units.
Achieving this goal, or even a small fraction of it, will require either demolishing the existing industrial space, which provides blue-collar jobs (and in many ways is necessary for the city to function), or demolishing the existing dwellings.
At a recent supes committee hearing, several board members pretty much agreed: San Francisco can’t adapt to state mandates without accepting bulldozers in neighborhoods.
I had a conversation a few years ago with the former head of SPUR, and he told me he didn’t understand why so many San Franciscans thought buildings were more important than people; that is, why can’t we just tear down the existing buildings and build bigger ones to accommodate more residents?
Two flaws here: the first is that more density doesn’t mean more affordable. If the demolition of existing housing were guaranteed to create more affordable housing, it would be a much easier choice.
The other: In a housing crisis, the most valuable affordable housing is existing affordable housing. Encourage demolition, and very soon developers will start demolishing not only single-family homes on the west side of town, but also rent-controlled four-unit buildings with tenants who will have to leave.
We can try to limit that, but then, as with the Ellis and Costa Hawkins Act, the real estate industry will undoubtedly force the state legislature to stop cities from protecting existing tenants. And the Scott Wieners of the world, whose policies would create this nightmare, will wring their hands and say there is nothing they can do.
Wiener said he supports repealing the Ellis Act. It’s a safe position, because he also knows this will never happen unless he and the other leading Democrats make it clear that there will be no new favorable housing bills. to developers, none, until cities are allowed to protect their existing vulnerable communities.
It’s not something a rep from San Francisco to Sacramento is saying right now.
The real estate industry is one of the three most powerful forces in the California legislature (the other two are oil/gas and telecommunications). Does anyone seriously think tenants will be protected from demolition and eviction? (Have you heard of the end of fracking in California or the recent imposition of a severance tax)?
The other element missing from this whole discussion: Putting lots of luxury housing in vulnerable neighborhoods leads to gentrification and displacement. While existing residential tenants have rent control, commercial space does not (again, Sacramento: State prohibits cities from imposing commercial rent control).
You put a bunch of wealthy people in a low-income neighborhood and they’ll want fancier coffee and fancier restaurants and clothing stores, and soon the existing places that offer cheap food will be gone. Then residential landlords will see property values go up and either sell or try to get rid of their tenants…it’s a classic cycle, and it’s been well documented for many years.
You can’t put 120,000 new luxury homes in San Francisco without creating mass displacement, unless the state legislature gives the city the ability to protect residential and commercial tenants, and that’s not one of them. of the agreement.
The message from the data is clear: Either the RHNA’s goals, and the legislation behind them, are completely wrong and impossible, and the people who promoted them are delusional…or the state is going to have to put in very large sums of money. money for affordable housing…or this whole RHNA process is a scam to allow more for-profit real estate development and speculation that will never lead to more affordable housing.
Want to guess?