Purchase Of Land To Build $889K Affordable Apartments ApprovedJuly 29, 2015
San Francisco’s Board of Supervisors has unanimously approved the City’s $18.5 million purchase of the corner parcel at 490 South Van Ness Avenue and 16th Street in the Mission, a site which is approved for the development of a 72-unit building.
The City intends to build permanently affordable apartments on the site for families making no more than 50 percent of the Area Median Income (AMI). Twenty (20) percent of the units will be designated for formerly homeless families making less than 30 percent of the AMI.
As we first reported last week, according to a Project Manager at the Mayor’s Office of Housing, the project cost for the 72-unit building, including the land, has been estimated at $64 million or roughly $888,889 per unit.
And as a number of plugged-in readers have noted, as the City’s approval for the development last year included 12 Below Market Rate units, the effective incremental cost to the City for the development of an additional 60 affordable units on the site will be well over $1 million apiece.
The City is planning to issue an RFP for builders this fall and start construction spring 2016. The building should be ready for occupancy by the end of 2017.
Comments from Plugged-In Readers
The median price of a home in June 2015 was $281,000. The average was $328,700 (source census.gov). This is absolutely absurd. Most people can only dream of spending almost $900k on a house. That’s luxury everywhere else in America, not affordable. This whole situation is messed up on so many levels. Especially because you could get so many more units for that kind of money in any other part of the city or region.
I bought my 3bd 2ba 2100 sq ft condo for <$889K.
there are plenty of 2bdr condos in SF already for <$889K. why not just buy those for BMR and house the same amount of people. this is a disgraceful waste of taxpayer's dollars. I would urge any sensible person to vote against the housing bond in Novemeber, or this is what will happen with the new money
Basically the city just handing out lottery tickets to below median income people. AKA picking winners and losers with no rhyme or reason. Totally absurd.
Affordable housing requires lots of free land and ease of development. This isn’t affordable housing, it’s a luxury housing giveaway.
Yep. Crowning lucky winners is not the same thing as a real policy that actually changes something. Unfortunately it seems like a lot of gov policy is about lucky winners and demo projects. Looks good even if it accomplishes nothing
The city is run by [removed by editor] who are instituting policies for cheap votes that have destroyed this cities real estate market. Campos is by far the worst example of an idiot ruining the lives of the middle class, but most of the local government is not far behind. That anyone thinks this is a good idea or voted for it shows how intellectually bankrupt SF progressive politics are, and I am a progressive.
If this is how SF spends city money for housing then I’m definitely voting NO on the housing bond this November. I’d also like David Campos to please explain why he blocks ‘luxury’ housing and supports affordable housing when it doesn’t appear there’s much cost difference between the two. 30 years of NIMBY policy has left us with only one type of housing… too expensive
Maybe it’s because luxury housing gets sold at luxury prices, while affordable housing goes for affordable prices. The concern is about the residents living in the city, not those who are building the housing. It doesn’t take a rocket scientist to figure that out.
very little “luxury” housing is being built in this city. people willl pay luxury prices for crap because there is so little supply. This is asinine
Crazy… how did the vote go? who was for and against approving?
Unanimously approved. This is an obscene use of tax money
Could someone w/ more than basic math skills please run so we can get rid of these Sups.
We have no supervisors with any economic sense (except Farrell and maybe Weiner, and maybe Tang).
Jane Kim, Campos & Avalos, and Eric Mar just want to give anything you had away and tax you while they’re at it.
With affordable housing costs such as these – we need luxury housing in SF to pay the cost to build it.
VOTE ‘NO’ ON THE 310M HOUSING BOND in Nov elections. This cost per unit is beyond obscene.
Did you vote against them? Did you donate money to their opponents? Did you campaign for their opponents?
Instead the City should just offer each landlord 900k to swap the deed for a rent controlled unit. It would save on ‘all’ those future evictions.
@sfrealist It’s tough to vote for the opposition when there’s no opposition to run, the choices are wacky or wackier.
I can’t even convince middle class friends here that they’re being misled, and then they wonder why they can’t buy a house or why rents have gone up…… But they vote for people like Avalos just because they heard his the name, but they don’t even know what he stands for (!!!?). Pretty dumb. Is it just Californian/ American laziness, accept the status quo, and don’t think too hard.
This is a travesty. The media are not even bothering to ask the right questions about this, either. Pathetic. Not only is the fee per unit ridiculous, we all know the corruption that will applied when doling out these homes.
From the rendering, it looks like the project also removes the MUNI overhead wires and undergrounds utilities. Say it isn’t so.
At this rate the Mayor only needs about another $8B to meet his affordable housing goal.
It may be cheaper to buy cruise ships and house people in those…
WHY IS THIS SO SHORT
I used to think the shenanigans at Wreck and Pork would turn me into a Republican. The Board of Supes just took a probably insurmountable lead in that endeavor.
can someone get the information about this deal to DOnald Trump? I would love to hear his tirade on this
Guys, let’s keep this into prospective. Each unit only costs the price of a car.
Everyone, get all your facts in line, in clear terms, and then instead of posting your outrage here (where we all agree), let’s each post it in the “arguments against” section of the ballot for the Housing Bond in the upcoming election (where it might possible help to stop this political corruption)
How do we do that?
By all means, let’s give away housing to the poor. In fact, I should move out of my apartment so someone on the street can move in. Maybe SF policy can be established wherein a college degree and/or starting a small business requires you live out of your car for ten years. Should we put that on the ballot?? Jane Kim would love it.
That would teach people how foolish it is to join the middle class and earn a living wage.
These apts aren’t for the poor. They’re for the middle class lucky players!
I’m working my @ss off till I’m 70 while paying taxes for this? A flipping outrage.
I’m happy for my taxes to help pay for housing like this, among other things. That’s what taxes are for: building society and keeping it running. In SF’s current housing climate, affordable housing is a good thing, and I’m glad we’re getting more of it.
If you’re happy helping to pay for City-built housing that will end up costing somewhere over $1,000 per square foot, I’d be happy to find you thousands of buildings that the City could buy for under $700 a square foot. I’ll save you and me and every other taxpayer 30%. With less effort!
Or doesn’t it matter to you if our taxes pay $1,000 or $700 or $1,000,000 a square foot to obtain housing?
Farrell voted for this. So did Wiener. They’re no better and maybe even worse – they hinder developments in the their own neighborhoods and then play the indignant pro-development/housing (elsewhere) card.
Good. The city needs housing for people of all income levels, glad to see it approved. Funny to see so many commenters get all excited whenever a market-rate (luxury) project is approved, yet when it’s an affordable project, you guys collectively flip your $h!t.
That’s because my tax dollars don’t pay for market-rate housing. They pay when politician overspend $$ to try to play “developer” just so they can gain a political talking point.
I’ve now seen enough comments by cfb to suspect he works for a Supervisor, and thoroughly demonstrates their profound amount of either incompetence or corruption.
Affordable for the end user, not for the community. This ends up costing more than luxury condos. And these are only the planned costs! With the typical cost overruns this will certainly cost close to $1500/sf
Hell, forget Daly City or Modesto! They should build it in DUBAI it would be cheaper!
no one here is against affordable housing. we are against the city massively overpaying for it.
I am against “affordable” housing. All of it. It’s merely subsidized housing. under a different name Market Rate housing would make housing affordable for more.
Agreed. I’m just happy that there will be more housing in the city. Doesn’t matter a lot to me who will build it or for whom it will be built.
What about who pays for it? That’s the issue here.
according to the previous SS story, $30 million is SF money and $34 million is state and federal money. If that is the breakdown, then maybe this is an example of the larger community (CA and USA) helping to pay the costs to keep ‘moderate’ income folks in SF. Not saying this is a good use of these money pots, but the direct SF taxpayer slice looks like it is around $417k/unit. That would also mean that the eventual rent would cover most of the SF costs.
last i checked, i also pay federal and state taxes.
moto, yes, and this is a way to get some of it paid back to your community instead of Manteca or Detroit or…
i also prefer my federal and state taxes to be used more efficiently, meaning not towards $900K BMR units. i would rather the federal money house 10 families in Detroit than 1 in SF, and I would rather the state house 3-4 families in Modesto than 1 in SF. If I can help 10 families instead of 1 with my taxes, i dont care where they are. we are all americans
Want to see a waste of taxpayer money? Try the $400 Billion (so far) the Pentagon has sunk into the “next generation” fighter-bomber. Think of the transit improvements across the country that kind of money would fund.
sure, moto, we would all like tax money spent more efficiently and more effectively. Realities in both Sacramento and DC are moneys aren’t allocated on a strictly utilitarian or rational basis, though. More like a supply/demand mosh pit, aka hogs-at-trough, esp in DC. May as well howl at the moon as complain about that reality.
Federal money does go to Detroit and Modesto for housing (namelink to Modesto City HUD programs and plans). Compared to SF, they are both more in need of additional jobs than new residential buildings. And they both receive Federal funds to help grow jobs.
BTW, the US spends much less than it used to on housing, thanks to Reagan and the GOP. They cut the Federal budget for housing in half in the early 1980s and ever since have keep it below the previous levels. Guess when the homeless population boomed in the USA.
There is an easy way to use $64M.
Say a family can afford $2500/month but can only find suitable housing at $4000/month. The City could give a $1500 voucher to the tenant family that would the rental affordable to them. Of course the voucher would go straight to the landlord, it’s not an “income”.
A family would cost $18000/year in vouchers. $64M could pay for 10 years of vouchers for 350 families. A bit more if the money is safely invested.
I forgot: the City would not forgo the very precious property taxes, since the landlord would be paying his.
I’m sure there are many ways to spend $64 million, though getting the political approval may not be so easy as this project has been.
According to the SS articles on this place, it is targeted at people that make ~50% of the median, which comes to ~$40k for a couple and ~$50k for a family of four, according to the SF gov housing tables linked to by SS. AFAIK, they are only supposed to pay up to 30% of their income on these rents. If all that is correct, then most of these units will rent for $1000-1250/month because that is what the target population can afford.
Not sure what the market rate would be for these or for comps, but if we just use your $4000/month, then the costs for vouchers would be ~$2.5 million/year to help these 72 families (72 * 12 * ($4000-$1125)) instead of government owned. If the $64 million in government bonds pay 4% over 30 years, then they will cost about $3.7 million/year and after 30 years we the people can retire the bonds and then the costs are maintenance. An extra ~$100k/month to buy vs rent doesn’t seem unreasonable. And it is almost certainly even better in future years as that $4000/month rent goes up while the 4% bond is fixed. How expensive will your housing voucher be in 5 or 10 years? How easy will it be to get the budget for the vouchers approved every year?
SF will own these units long past when your voucher approach would expire or lose favor with changing politics in SF, Sacramento, or DC. There are voucher programs for housing assistance including in SF, but this looks like a much more prudent way to leverage our tax moneys. Why shouldn’t the government get in on the appreciating SF RE market? Would be nice if they didn’t overpay for the land. That smells like the real scandal here. But good that they can borrow on more favorable terms than most developers. Maybe voucher programs are an even bigger waste of taxpayer money than the rumored (and not verified by anyone, afaik) bloated budget for this building.
Agreed Jake, the scandal is basically that they could have just bought a similar building on the open market for less. Or bought two buildings for the same amount, etc. I don’t have a problem with the city owning units, it’s the overpaying that is maddening.
Jake, indeed with your calculations this “might” make more sense, though the City could find good ways to invest these 64M. Also, my numbers show you can pick up the tab for 100s of people, not just a couple of dozen lucky few.
Building housing for a certain segment is an acknowledgment of 2 failures: 1 – failure of letting the private sector do its job and provide enough housing. 2 – announced failure that we will never manage to pull these people out of their low income ditch. A time-limited voucher system at least makes the assumption that a handout is designed to be temporary.
The purpose is what it is, and if the City prefers to do it this way, why not? But the price tag is the big sticking point here. I feel like they were in a “we gotta do it whatever the cost” mindset, which is fine for risk takers, but less so when we are dealing with the People’s money.
Yes, your voucher approach could subsidize more people short term, but would surely help fewer people longterm and would use public funds to finance private equity instead of public equity.
If for the sake of calcs we set the average subsidy at $2875/unit-month ($4000 market – $1125 cost to household), then the voucher cost would be $34,500/year-household. $64 million 2015 spent in vouchers over the next ten years would cover less than 2,000 household-years, or about 200 households per year for 10 years. That is based on the landlords accepting CPI-based rent increases as SF often negotiates for voucher programs. If SF had to pay full market rate over the ten years, then the number of household-years of subsidy would probably be lower.
The same money invested in this over-priced project is supposed to subsidize 72 households-year nearly indefinitely. You could time-limit that by household just as easily as a voucher system.
I’m sure someone more ambitious could try to factor in the additional maintenance costs and lost taxes to better estimate the total cost of government ownership, but I think it is clear that in the longterm (30+ years), investing to own is a better deal for SF than just burning the cash subsidizing rents. And the government is the ultimate long term investor. If we no longer need this building for subsidized housing sometime in the future, we have an asset we can sell or lease. Profit for the people, by the people, and of the people, so to speak.
And don’t you like the idea that through ownership (we the) people gain some cost control? Isn’t that just what you advise individuals?
SF is just a bit player in all this. The feds can print money if they want to own more (including owning airbases and huge embassy compounds on the other side of the world). Imagine if they had swooped in to buy up distressed properties 5-7 years ago. Would have helped stabilize the housing industry and assembled a portfolio of properties on the cheap. Oh well, maybe next depression.
Agree Jake. Though again, why not take the same amount of money and buy a building on the open market? Why does the government need to be involved in actually constructing the building if they pay so much more to do that? I get that maybe the gov could build up some scale efficiency if they planned to build a bunch of new buildings, but that isn’t in the cards. So why not just use the money to buy buildings already out there for less?
If SF were to just buy a building there would be fewer favors to dole out to the construction trades. Thus, the positive political benefit would be lessened.
Also, it would be very difficult for the government to build something for less than the private sector given all the prevailing wage regulations in place.
The reality is that it doesn’t make much sense for the gov to buy existing buildings- remember, they are already occupied with tenants. They want empty units so they can offer them to the designated population.
If the city is so bend on doing this, at a cost of $600k to over &1 mil per unit, and voters approve it, so be it. The reality is that it won’t make a damn bit of difference to the general gousing market. If anything, it limits new developments, benefiting existing property owners. And as for having a lower income bldg on this corner, the mission has already proven beyond doubt that ulti million dollar units can exist cheek by jowl with SRO’s, cheap RC rentals, etc. newer buildings like (1850 I believe) Alabama st has a significant affordable housing component in addition to market rate. Seems fine to me every time I walk by it.
If the city buys a few plots and manages to build a few new affordable housing buildings, it won’t have much of an effect on future market rate property values. Likewise, these high visibility programs will only benefit a handful of lucky lottery winners. Overall, much ado about nothing, but par for the course in SF.
@SFrentier, I wasn’t talking about an existing occupied building, but rather one of the dozens of buildings that has been completed in the past few years (or will be completed). Buy the whole building before tenants move in.
Yeah I vaguely thought of that. But the city would need to have its act together and finances lined up ahead of time. Imagine if the city did that with a building like Vida on mission/22nd st. It would still be preposterous public policy.
Vida Developer: we are going to yuppify mission st. We think buyers are ready to plop down $1mil+for condos on mission st.
Campos: we’re so pissed about this, and have so much city money to waste, that we’re just going to buy Vida, part and parcel at retail, and just make those affordable housing. So there!
Pretty much the same result as what they are doing now, only now they can better control the bldg design and probably talyor the bldg for lower end use.
Either way is a tremendous waste of city resources. But SF has a massive city budget by almost any measure, so that’s what we get. Wait until the next downturn, maybe some of these elaborate expenses will come back to haunt their supporters.
There is nothing affordable about these. It is an outrage. It is complete corruption.
$1298 per square foot. Unbelievable.
How is this a good system? My fiance makes $47,000/year (and has college loans) and applied for affordable housing. She was told there was a three-year waitlist.
How is this a good system, when someone who needs affordable housing can’t get it? So instead, she’s paying $1500/mo for market-rate housing. Wouldn’t we be better off making market-rate development cheaper, so people like my fiancee are paying 30-40% less? Why is it better to create a lottery for a small number of affordable housing recipients? How is that good public policy?
Ummm. I don’t think any of these commenters read the article. The numbers discussed weren’t what the units would be priced at, they were what the construction cost would be. There also was no discussion of per unit square footage, so I’m not sure where the $/sqft numbers are coming from. Ultimately, the numbers do show that it’s just very expensive to build in San Francisco. As far as I can tell, this is intended to be a rental building – not condos. The article strictly alluded to costs of construction, not costs to the ultimate occupants.
Maybe you should click on the link and do a bit of reading first before being outraged about the outrage.
And that’s exactly what we’re objecting too–the enormous amounts of our tax money spent to subsidize housing costs for just 72 random lottery winners. But if the city really does want to spend our tax money subsidizing a small number of lucky lottery winners, they could buy existing units for much less. I’d much rather have double the people in homes than 72 in luxury new construction on some of the most expensive land in the city.
I agree they should purchase existing buildings.
What a great idea actually! Pick properties undee the vise of rent control, and convert the rent controlled tenants into subsidozed tenants.
Um, we’re talking about the construction cost…I thought that would be obvious? If the city can’t build something for less than $1200 a square foot, they should just use the money to buy buildings on the open market for less than that. This is a disgusting waste of government resources, and really, the people it’s hurting the most are the folks that need subsidized housing. We just signed up for producing a whole lot less than we could.
encourage all to vote no on the housing bond, or more of this will occur with our money
Terrible public policy. The City should maximize value from these prime-ish lots to provide funds to build more cheaply elsewhere (yes, this city still has plenty of vacant lots). The NPV of foregone property tax revenue boggles the mind.
Buy existing buildings! Way better use of $$$
How about a Habitat for Humanity approach, in which people can help build their own affordable housing?
Better yet: start means-testing rent control and put the units back on the market. If we want to house people who cannot afford the neighborhood, use some of the money they wanted to waste on subsidizing the tenants, but the landlord would collect market rents.
Wow, I don’t know how I could possibly build two units for $900k each. Oh, wait, I have a 2200 sq ft house completely re-done from the studs (with new foundation), a legal 600 sq ft (furnished NICELY, no less) in-law apartment, solar, re-landscaped back yard, and facade restored to its original detail per historical photos (yes, with real redwood heartwood siding to match the rest of it). Once I add in the solar panels, and TWO Tesla P85Ds, I’ll be just a hair shy of what the city is paying.
The difference? I’m an evil Google gentrifying, Mission destroy techster, they’re building “affordable housing” for “poor folks”.
I don’t know where to begin.
This is so stupid and asinine and mathematically wrong on every level.
Can’t wait to see Scott (Wiener) or Jane (Kim) so I can yell and scream.
Jane won’t give a sh!t. Scott maybe a little.
How is this not bigger news? People in SF get outraged over lesser things, and yet spending $889k per unit to build affordable housing is somehow not getting any attention.
UPDATE: Delayed Mission District Development Positioning to Finally Break Ground
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