This is a response to Aaron Peskin’s March 2016 article in the Marina Times about the Affordable Housing Bonus Program (AHBP), entitled Progressives Didn’t Cause This Problem.
Before I launch into this tirade, I want to state upfront that I don’t mean to suggest that Supervisor Peskin is bad or evil or malicious. Google him and you can find countless examples of individuals facing extreme hardship (usually eviction) who have benefited from his intervention. However, Supervisor Peskin flagrantly mischaracterizes the Affordable Housing Bonus Program (AHBP) in his article below. Love it or hate it, his constituents deserve an honest discussion about the program on its merits.
Peskin’s original text is in normal font, my responses to each paragraph are in italics.
Progressives didn’t cause this problem
The headline is really bonkers (that’s probably on the Marina Times editors). The article isn’t about Progressives, its about the AHBP. However, the more operative question is “Will Progressives Fix This Problem?” By flat-out opposing the AHBP, Progressives will have continued it.
A 1979 relic of a state law permitting developers to add height and bulk if they set aside 13 to 20 percent of units for “affordable housing” has our Planning Department ready to push through a flawed local Affordable Housing Bonus Program (AHBP). The Planning Department’s argument for what is essentially a plan to up-zone most of San Francisco is a 2013 court ruling that Napa County’s local density bonus ordinance placed unfair burden on developers by setting a higher threshold than is allowed by state law. Napa had a 20 percent inclusionary housing requirement, and its density bonus program required even more. The court sided with the developers, upholding their right to cough up less affordable housing in exchange for significant height and bulk increases.
In the paragraph above, Mr. Peskin calls the AHBP “flawed.” However, you’ll see that he never actually lists a flaw with the program. He perpetuates two untrue myths about the program and vaguely derides up-zoning.
Our Planning Department is worried that San Francisco will be challenged next, because we are subjecting developers to “unfair” affordability requirements with the 12 percent inclusionary housing requirement. After 37 years without a peep regarding the state’s density bonus law, the sudden fear of legal action for not doing enough to incentivize development density seems more than a little bogus.
One important point that Mr. Peskin leaves out: The state density law goes into effect regardless of whether or not the AHBP passes. The point of the AHBP is to force developers to implement the state law in a way that generates more affordable housing. Developers are already submitting applications asking for their state-mandated density bonus.
Regardless of what has happened over the last 37 years, land-use law firms are already fishing for cases in San Francisco. However, if the question is “Do we even have to follow the state law?” then the answer can only be provided by the City Attorney (who signed off on the AHBP see FAQ 55). However, if we do have to comply with the state program, then the AHBP is actually a lot stronger than the state law. It requires more affordable housing.
WHERE’S THE FIRE?
According to the Association of Bay Area Governments’ 2015 housing progress report, our tiny 49 square miles have taken on the lion’s share of regional housing production in the last decade. To give you a sense, between 2000 and 2009, San Francisco averaged about 2,892 new housing units per year, compared to 605 units in all of Napa County. For all of SPUR’s caterwauling about how “progressives” created the housing crisis, the decade I was first in office saw a tremendous amount of housing production, mostly as a result of up-zoning in eastern San Francisco, enabling us to create some 10,000 new units. The reality is that other counties are not pulling their weight when it comes to building housing for the Bay Area’s growing population. In fact, the growth has not been in San Francisco; the city’s chief economist recently submitted a report highlighting the real impacts of gentrification and displacement: a stunning outmigration of 62,757 San Francisco residents since 2014.
How does someone start a paragraph off arguing that San Francisco has built enough housing and end that very same paragraph decrying the plight of the displaced? This is total doublespeak. Our neighboring counties have definitely failed at producing enough housing, but so have we. According to that same city economist Mr. Peskin cited, we’re not doing well at all. 2,892 units per year is still about 1000 units too few to stabilize housing prices (slide 9). That problem is compounded every year we build too little.
But since you brought up “fire,” Mr Peskin, it’s actually a really big problem for tenants in San Francisco. Here are three articles about it. Sadly, when old apartments burn down, there’s no mechanism to replace those lost affordable units. That’s exactly what the AHBP aims to do. Instead being replaced with a totally market-rate apartment building, developers know have an incentive to make a third of their units affordable. Under this program, they can build larger buildings, so that 30% gives you an even greater number of affordable units.
No, San Francisco’s issue is not that we haven’t built enough housing — it’s that most of the housing that is being built is out of reach for over 60 percent of the population. Even with the passage of lofty policy goals and studies galore, the city is still building at 150 percent of its market-rate development goals and only 30 percent of its affordable housing goals.
We have not built enough housing at any income level, especially lower income levels, but the AHBP was designed to address exactly the problem laid out by Mr. Peskin.
The goal of the AHPB is to produce more affordable units. It takes developments that would be entirely market-rate and turns them into potential mixed-income affordable developments.
Without this program developers have no incentive to build any affordable housing. They can just continue to build the market rate housing they always would have built. This program allows up to two additional stories of height as long as the entire building (that includes the two new stories) is 30% permanently affordable.
THE AFFORDABLE HOUSING DISPLACEMENT PROGRAM
For starters, more density cannot come at the expense of our existing renters and small businesses. Recently, while enjoying coffee at a local cafe, I was stunned to hear from the proprietor that he and his fellow merchants were relegated to month-to-month leases after the landlord declined to renew their long-time agreements. The reason the owner gave? He was eagerly awaiting passage of the proposed AHDB program so he could tear down the building — rent-controlled units above and commercial retail below — to build anew and up. This is just one troubling tale in a chorus I’ve heard from people citywide, reinforcing my belief that any incentive program that applies to existing housing and commercial sites is a recipe for displacement, not density.
This is where I flipped out. Mr. Peskin is perpetuating two myths about this program that are wholly untrue.
The AHBP cannot short-cut the current demolition process. If this landlord can’t get a demolition permit now, then he won’t be able to under the AHBP.
But guess what? Even if he can get a demolition permit he still can’t take advantage of the AHBP. Buildings with rent-controlled units are excluded from the program. Supervisor Breed’s amendment on this subject can be found here.
It’s true that the program can be used on buildings that are existing commercial sites, but this isn’t a flaw of the AHBP, it’s a function of the state law (remember that Napa case?). The state law applies to every parcel of land in the city: rent-controlled, commercial, etc. If someone is going to take advantage of the state density program, wouldn’t it be better if we could get them to use the AHBP instead and provide more affordable units?
Not to mention that tearing down an existing building, evicting all the tenants, spending years (and millions) getting a new (only modestly taller) building approved and built is an incredibly expensive proposition. To get the maximum density bonus, 30% of the units in the building must be permanently affordable. So this landlord can only collect market-rate rents on 2/3rds of the building even after spending years not collecting anything from a vacant building. This makes no sense.
This paragraph was really sneaky. Mr. Peskin didn’t actually say that he believed this program could be used on rent-controlled units. He said he a cafe owner told him that their landlord planned to use the program to demolish rent-controlled units. By using that clever rhetorical device (hearsay), Mr. Peskin can put misinformation out into the world without having to make the claim himself.
The problem? Mr. Peskin is a city Supervisor. It’s his responsibility to dispel misinformation about government programs. If he has an honest beef with some aspect of the program, we certainly don’t get to hear about it here.
TIME FOR DENSITY EQUITY
To be clear, I support density, but I think it’s time we had a real conversation about who we are building for and who is absorbing the burden of that development. District 3 has some of the city’s densest neighborhoods — you can find it easily on the AHDB map, bathed in color indicating it’s ripe for up-zoning. The Planning Department claims the program will net 15,000 units on 240 potential “soft sites,” yet it’s not targeted those, and the potential impact on historic rent-controlled neighborhoods where tenants and small businesses are already struggling to survive is clear.
Density: Less density is VERY costly to existing renters and small businesses. The State’s Legislative Analyst put out a report showing that neighborhoods with less development gentrify more rapidly than those with less development. Specifically in San Francisco, the city economist found that NOT building was likely causing more rapid displacement in the Mission. Density isn’t the problem. It’s that our city’s population grew by A LOT, but our housing stock didn’t.
Application of Soft Sites: “Soft sites” are places like abandoned gas stations or parking lots. These sites are ripe for turning into housing, but the program doesn’t just apply to those sites. Why? Again, the program applies to existing buildings because the state law applies to existing buildings. We can limit the AHBP, but that means that developers can use the state program to get more density and provide fewer affordable units.
My office is working to refresh an old piece of legislation I introduced during my first term, allowing the construction of accessory dwelling units citywide. Though we didn’t have a majority to pass the citywide law then, Supervisors Scott Wiener and Julie Christensen each passed district-specific versions last year. With the Planning Department projection that the District 3 legislation alone will net 3,000 units of rent-controlled housing stock, this is a far better citywide alternative than passing wholesale up-zoning of a city still struggling with concerns about incentivizing displacement. When the Planning Department’s projections are applied to all 11 districts, we’re looking at a minimum of 33,000 potential new units with tenant protections. This is just one tool to tackle the affordability crisis in San Francisco, and I haven’t even gotten to June’s Fair Share and Feasible Affordable Housing Charter Amendment or Rent Stabilization Act. Let’s pick this conversation up next month.
This is all great stuff! It really is, but it has nothing to do with the AHBP. In fact, no one ever suggested that AHBP was the only solution to the housing crisis. We need LOTS of different policy tools in our toolbox. This program does one thing: it helps turn entirely market-rate housing developments into partial mixed-income affordable housing developments.
As we kick off the Year of the Monkey, we’re hoping the city benefits from some of the monkey’s best traits: cleverness, shrewd business sense, magnetism, and most important, mischievous fun. Gung Hay Fat Choy from District 3.
There are plenty of honest changes one could want to make to the AHBP. Supervisor Breed did just that by amending it to exclude rent-controlled units. Maybe Supervisor Peskin thinks that the affordable units generated by the program should be targeted at lower income populations (it currently targets people with “middle-incomes”). Maybe Supervisor Peskin knows that his constituents hate the idea of modestly taller buildings (many of them do). Personally, I wish the AHBP applied to all the single-family housing zones in the city (it currently can only be used on parcels zoned for 5 or more housing units). A perfect program, it is not. It is MUCH better than the alternative – no density bonus and no incentive for affordable housing development.
Supervisor Peskin doesn’t engage in any legitimate criticisms of this program in his article and that’s not fair to his constituents. They deserve deserve the facts and his honest opinion.
Perhaps there’s a political calculus in play, maybe Supervisor Peskin will alter the program in some way (limit it to soft sites only) that has no real impact on the program anyway and call it a political victory. I hope that’s the case here. Despite the fact that Supervisor Peskin spends much of this article congratulating himself on how many housing units have been produced in San Francisciso, we’ve gone far too long and done far too little.