SF’s Bonus Height Program Amended to Limit Impact and ‘Abuse’January 27, 2016
The terms of San Francisco’s proposed Affordable Housing Bonus Program (AHBP), which would allow developers to build up to three stories higher than currently zoned, have been amended.
And while a public hearing for the amended program will be held this week, the potential adoption of the AHBP has been pushed back by at least three months as the Planning Commission plans to continue its review until April at the earliest.
If adopted by both the City and developers, the program would add the potential for building another 16,000 units of housing across the city over the next 20 years, an increase of roughly 4 percent over the 380,000 units that currently exist.
“Included in those 16,000 new residential units would be 5,000 permanently affordable, income-restricted units: 2,000 homes for very-low, low and moderate income households, and 3,000 homes for middle-income households.
By comparison, [current] zoning would likely produce fewer than 1,000 affordable units, and just under 7,500 housing units overall. The AHBP could more than double the amount of on-site BMR units for very low, low and moderate income households, while creating a new source of income-restricted housing for middle income households earning between 120 and 140% of area median income.
Currently, no programs exist which guarantee housing for middle income households, a group which includes many of the professions necessary to keep our city functioning. Furthermore, middle-income households are a shrinking proportion of our city’s population.”
The recent amendments to the proposed AHBP includes language specifying that the program will only apply to new construction projects and explicitly excludes vertical additions to existing structures beyond their currently zoned height.
And in response to concerns that the bonus height program could “create a financial incentive for [developers] to demolish existing sound housing stock, particularly older units protected by rent control, in order to build larger buildings,” Supervisor London Breed has proposed an amendment which would disallow any project that demolishes an exiting rent control unit from being allowed any bonus height, regardless of how many new affordable units would be built.
Comments from Plugged-In Readers
The “whiter” and “darker” areas are very “black and white,” aren’t they?
Um, no. You’ve obviously never been to the Inner Richmond or Lakeshore.
Actually the correct answer is “there are still black folks in SF?”
You don’t see any on your commute home to San Mateo, I suppose. But yes, quite a few.
Funny you say that about San Mateo. There was a working middle class black community there when I was a kid north of downtown too but they are mostly gone so you are right that I rarely see black folks on my commute
Why is it, in typical smug and arrogant San Francisco style you choose to deride others communities where people CHOOSE to live?
Are you so immersed in your tight little bubble of SF that you cannot see beyond your own back yard?
you keep on with that “no working class whites” + “no black folks” thing. and when pressed you’re like, “back when I was a kid,” as if that’s saying something when you’re wrong on both counts in the first place
Obviously I am exaggerating but the fact is there were significantly more working class black and white folks in San Francisco and on the Pennisula in years past.
The rate of household formation of working class native San Franciscans these days has to be very low indeed
Incredibly misleading for the City to portray this as a potential gain of 16,000 units over 20 years… implying an additional 800 units per year will result from this… we’re not talking about infill development or redevelopment like in South Beach or Mission Bay; each one of these “additional units” only comes hand-in-hand with tearing down and rebuilding an existing structure… which is beset with its own economic and political problems.
I’d be surprised if this proposal results in more than a *handful* of additional units per year.
You’re mistaken. This is infill.
“The number of parcels in the study area that contain existing buildings or are built to greater than 5% of their zoned capacity equals 3,235 parcels. Because the remaining 240 parcels, or “soft sites,” are either vacant or developed to less than 5% of zoned capacity, and are therefore deemed to have the characteristics that make them the most likely to be of sufficient appeal to developers seeking to take advantage of the Local Program.
Under existing density, height, and bulk controls, the 240 soft sites have the capacity to accommodate approximately 7,400 housing units, including 890 affordable units.20 If all 240 sites were developed consistent with the Local Program, they could accommodate approximately 16,000 housing units, including 5,000 affordable units. If the 240 soft sites were developed consistent with the Analyzed State Program, they would have the capacity for up to 10,000 housing units, including approximately 1,500 affordable units. Thus, it is assumed that the AHBP could incentivize the development of between 10,000 and 16,000 housing units. For the purpose of this analysis, this addendum reasonably assumes that this development would occur over a 20‐year period.”
You are mistaken, Jeff. The 16,000 unit number is based on development of “soft sites.” Typically, these are sites which are either vacant or have a one-story building on them.
Nevertheless, political opposition is already developing in the Sunset fanned by fears of “displacement.”
thats just a smokescreen being stirred up by the NIMBY-Affordable complex. Hopefully it will pass as we continue to shame the affordable housing side of that group for opposing a good program that creates a much better balance of housing than current policy.
the COALITION FOR SAN FRANCISCO NEIGHBORHOODS
wants to STOP BUILDING AFFORDABLE HOUSING NOW
do you agree with them?
@Chad: you are correct that that the Planning Department’s analysis of the number additional units is based on 240 soft-sites (which are all basically vacant lots). What the Planning Department didn’t really analyze is how the proposal would affect the other approximately 30,000 lots covered by the plan. Basically the Planning Department assumed there would be no development on those lots, but they didn’t actually do any economic analysis. Hence the concerns that the plan will result in the destruction of rent-controlled buildings, historic buildings etc.
With all these limitations, why would any developer even bother? You cannot add on to an existing building, you cannot tear down a building with rent-controlled units (even if you plan to replace them), you cannot build in a neighborhood zoned for single-family or two-unit homes or in any area already covered by a neighborhood plan, and unless the development is 100% affordable units, you only get two “bonus” floors in return for agreeing to build over twice the number of affordable units otherwise required by law.
So, many restrictions, plus the extra expense of having to build over twice the number of required affordable units, just to get two measly “bonus” floors.
I see this bonus program being used rarely, if at all. There is no way in hell the City will get 16,000 units out of this program. I would be surprised if they even get more than a couple of hundred units built under it.
I’m waiting for someone to sue to build under State rules..
This is a ridiculous plan and no extra units will be built.
We have 30,000 vacant unit in SF, we don’t need to build more. We need to re-instate property rights so that owners will rent out their units, especially to the middle income residents.
The ‘Middle Income folks’ are the very people who should have rent control repealed, these are the housing stock they should be buying and fixing, instead they are ofter inhabited by those who can well afford market rates but choose to keep them.
Are there really 30,000 vacant units here? I’m going to call b.s. on that.
Is there any true study done on this question? My block has at least 5 that I am aware of, but that is obviously anecdotal. Pretty much every owner of a 2 unit building in my neighborhood that lives in their building has told me they will not rent again. This is the inner Richmond.
The US Census estimates around 30-32k “vacant” housing units in SF. They break it down into categories. Here are the numbers from the 2010-2014 ACS average:
6,837 For rent
1,814 Rented, not occupied
1,171 For sale only
1,424 Sold, not occupied
7,474 For seasonal, recreational, or occasional use
12,966 Other vacant
BTW, if you own and reside in more than one home (Mitt Romney, John McCain,…), then the Census will count one as occupied and all the rest as vacant in either the “occasional use” or “Other vacant” category.
Also, this is a vacancy rate of ~8%, which is slightly lower than the rate for California. CA and SF have nearly the same percentages of “For rent”, “Rented, not occupied”, and ” Sold, not occupied”. These just look like normal churn numbers.
Good data, Jake. The “30,000 units held vacant because the owners don’t want a rent-controlled tenant” is just another one of the anti-rent control myths. I’m not saying there isn’t a single instance of this in SF (and people will weigh in with anonymous “I know a guy who keeps X units empty because he hates RC etc.”), but the tiny numbers wouldn’t even rise to a rounding error.
The utter lack of logic of this hypothetical phenomenon confirms the myth. Instead of just holding it vacant, one could (a) sell as a TIC, (b) short-term rent, (c) 1031 with a unit/building in a non-RC jurisdiction, or (d) go ahead and cash in with a RC tenant at current sky high rates. Sure, there is going to be the rare landlord who will take a loss of tens of thousands of dollars each year just because he/she is an illogical nut, but most landlords are in this business because they want to make money at it. So the illogical anti-RC ranter willing to forgo huge sums is a rare bird.
Dobby – As a SF real estate attorney and landlord, I am privy to my lots of info. Although 30K is an exaggeration, I know of around 100 in North Beach & Telegraph Hill. There are 20 on my block alone. We are all longtime owners and know that we can’t trust SF government so it is the best strategy if you can afford it.
People always say “I don’t understand why someone would do this – you are shooting yourself in the foot” You know what? Everyone who utilizes this strategy makes out better. They don’t have to deal with tenants & rent board BS and their property values move in step with the market. They don’t get capped by rent control and income ratios. I don’t have to factor in buyouts which keep growing in price as rents climb. Then again, not everyone is so focused on money like the communists at the BOS that want to take, take, take.
I once left a building vacant of 8 years – best portfolio move I ever made. It was painful at the time but now I laugh at everyone else and use it as my bank account. Soon, when this market corrects and shakes all the weak players out, I am going to make a withdrawal and accumulate more. You can bet I ain’t gonna play the rent control game ever again – it is for suckas..
How about some addresses for these 100 units that are being kept vacant because of a disdain for rent control? Not saying it can’t be true, but as a lawyer, you are aware that just saying “I know of around 100” isn’t really compelling evidence. A little easier to verify with some addresses – as Jake notes, solid data reveals that SF vacancy rates are a little lower than non-RC California as a whole, so the real evidence certainly seems to point to no real “off the market because of RC” effect.
Keeping a single 1 BR unit vacant for 8 years is giving up about $300,000 in income, with no significant reduction is operating expenses (mortgage, property taxes, etc. — some savings in wear and tear maintenance).
Please explain how you ended up ahead with that $300,000 in lost income per unit (about $30M for those 100 units – some real money). I’m curious, because if landlords can make more money by keeping units vacant rather than renting them out to tenants, that would be a real game-changer for the residential landlord business. Once this secret is out, the vacancy rate should skyrocket to something close to 100%. Rent control is bad policy, but I don’t think it even is in the same ballpark as giving up hundreds of thousands of dollars out of spite.
1st off – I don’t violate duties of confidentiality/privilege but above that: snitches get stitches.
Believe it or don’t believe – I could care less about your opinion. Your whinings here show me you know little about the real workings of SF real estate and you certainly don’t own investment property. Look around you – guys make $ by emptying buildings not filling them. It is counterintuitive but that is how the darkside works when you make laws that are unbalanced. Natural born hustlers see angles that others do not and will always exploit them. If you don’t see it, you are likely 100% booksmart & 0% streetsmart.
I didn’t say I left a lousy 1 bedroom unit vacant – I left a whole building vacant. A building full of nice big apartments and phenomenal views that hairy armpit hippies in the Tenants Union can only dream about. It earned about $2800/month under slavery. After I cleared it I could have rented it for more but why? Why would I subject myself to the headaches? R/C landlording is like picking up pennies in front of a steamroller. FMV now is exponentially higher and I can still borrow to speculate elsewhere and enjoy it all to myself.
Of course, I am already a man with means. Capital controls (which is exactly what Rent Control is) has little power against those with enough capital to defy the formula. It is most damaging to mom & pop landlords and so they will soon be extinct. Kim, Campos & their weak sisters can look at themselves in the mirror one day and blame themselves for creating a city of only haves and have not’s and no middle class.
“I could care less about your opinion”
Thanks for the compliment! For those similarly minded who care about my opinions, I will keep offering more from time to time to consider, or not. Good luck with your novel business model – I hope your means continue to grow
Is it possible to borrow money against a vacant building? I’m not trying to be sarcastic here. I always thought bankers would want to see a debt service ratio etc. etc. in addition to their security position via trust deed. Or is it only possible if you can show lots of other income sources?
Wonderfull pissing contest those two are having.
But if Jake is indeed correct that that the SF vacancy rate is lower than CA overall that’s a hard piece of data to overcome.
Not only is the data correct, but it actually overcounts “Vacant” units for which occupancy simply couldn’t be verified. And as noted above, pied-a-terres in the city, perhaps owned by Peninsula, out of town, or overseas residents, are typically counted as “Vacant” as well.
And thinking about it. Rents have been so high for a while and there are so many tech workers to choose from that would seem very likely to eventually move on to ownership. So it seems hard to see what you get for giving up all that rent.
Case A, that they move on of their own accord, seems most likely. Case B, that they require a buyout, seems that eight years of recent rents would more than cover any amount. And I’d expect the young techie types to approach the buyout situation quite rationally. And there’s opportunity cost as well. You’re also giving up eight years of compounding on that income.
I think Hitman is both entertaining and very likely telling the truth. Without going on that scale, I have a legal in-law unit in one of the most desirable location in the city – 100% transit, 99% walk score, close to Dolores. I’d contemplate leasing it for a year or two – until someone in my family needs to move in. I am going to forego $60K of rental income, or more because the laws and the climate is so abusive towards owners. A. I don’t want the aggravation of a bad or litigious tenant and B. I can afford it.
I am certain I am not alone.
To answer soccermom’s question: you can absolutely borrow against a building’s value and pay no attention to income (and likewise borrow against an income stream with no attention to value).
Finally, what municipalities like Paris do to discourage vacancies is to impose a ‘Tax on vacant apartments’. These make Hitman’s particular scheme harder to pull off profitably, depending on market conditions.
Rephrasing: what local bank have you borrowed from, using a vacant property as collateral?
They don’t have to sue – the new program implements the current state law as well (referred to in the legislation as the “Individually Requested” program.) It comes with fewer restrictions, but it’s supposed to be less streamlined.
The SF rules are more favorable than the state rules… so not sure why they’d sue.
I see where you’re coming from, but this is probably the best the planning dept can do right now in the insane political environment that is San Francisco. I would strongly support just raising the minimum height limit city-wide to 6 stories (currently it’s 4 stories). In other words, make 6 stories the floor rather than 4. A loosening of the density regulations would also be needed. This is how it is Paris, and SF is nicknamed “the Paris of the West”, is it not? 6 stories would absolutely not be out of character in any SF neighborhood…many SF neighborhoods already have 6 or more story buildings that we were built before the modern zoning code – they’re beautiful and I don’t see anybody calling to tear them down.
But this is wishful thinking. Anti-urbanists in SF would never allow this. So, if we want the city to be more dense, small and complicated measures like this is what we’re stuck with.
First of all, we’re not “Paris of the west” by a long shot.
Secondly, Paris has had 6 story neighborhoods for decades, if not centuries. It is an integral part of their urban image. Not so with ours. 6 stories here would be out of character with most neighborhoods, not to mention most residents would not support it.
And tell me again why WE want the city to be more dense? Many would disagree with you.
Why? Have you ever heard about a current issue described as “housing crisis”?
6 stories here would be out of character? Just build a whole bunch. In two decades they will blend in perfectly. Ask the future resident then they will not believe how people today vilify their perfectly fine home.
It’s actually an “affordability” issue, not a “housing crisis”. Can’t afford to live here, then perhaps one needs to look at other areas that match more with one’s income.
Your last sentence makes no sense. Ask WHO vilifies what?
“Can’t afford to live here, then perhaps one needs to look at other areas that match more with one’s income.”
So your answer to exorbitant housing cost is to tell people to go away. I think many would disagree with you. A much better alternative to this zero sum game is to create more housing.
NIMBYs vilify new housing. They call 6 stories a massive monstrosity that will destroy the quality of life. And that’s what I am confident will be proven wrong in the future.
Again, you have it all wrong. Listen carefully.
1. Exorbitant housing costs come from desirability from those who have high incomes to compete for housing and bid up the cost.
2. Lots of people come here because they see us as a “cool, hip city”, without the means to actually afford to live here. Somehow, they want others to subsidize their housing costs.
3. there are appropriate neighborhoods for mid rise and high rise housing, especially along our major transit routes. I welcome more housing there.
4. Stop kidding yourself if you think SF will become “more” affordable in the future. It wont. Is Paris and London getting more affordable? Are those cities building a lot of subsidized housing to please whoever wishes to live in the city core or the hot areas. NO.
Good luck with your fantasy.
1. correction, exorbitant housing costs come from number high incomes people RELATIVE TO AVAILABLE HOUSING. Our house median price doubles Seattle’s. But our income wasn’t double to them.
3. AHBP apply largely to transit corridor. Sounds like you are on board then.
4. When have I ever said SF will become affordable? Why are you projecting “fantasy” on me? However, compare to no new housing (implied by your idea that we do not want be more dense) v.s. 16,000 more housing will definite affect the price. Making housing affordable to more people is preferable than less people.
I don’t like it. Not in my backyard, please.
How does AHBP spur +8600 market rate units? I thought the maximum gain is only reserved for 100% affordable development.
By stupid selfish gross idea for making rich people richer.
Bye creepy regime. Bye creepy regime’s sycophants. Bye creepy sharing economy money-bleeding fake companies.
Where ya headed to?
The problem with this is that a 200 ft skyscraper isn’t going to want to offer an additional 15% BMRs for only two stories. This leaves buildings that are currently zoned for shorter heights such as 4 or 5 stories, but the problem with that is if you go from 4 to 6 or from 5 to 7 stories then you need to build a reinforced concrete building vs a wood frame building. This alone adds a 20-25% construction cost premium over wood. Unfortunately the numbers just don’t work. Not to mention all of the neighborhood oposition that will come from trying to build 2 stories about the existing height limit. Good luck to the developers who try this one. You’ll be lock in litigation for years.
Yes going above four stories brings a sudden bump in cost. Consider that those cheaper stick built units on top will sell higher than the expensive reinforced concrete units on the street. Ironic, isn’t it? But good motivation to break through the 4-5 envelope.
How many units would fit in the block occupied by Great Highway Inn, on Great Hwy between Lincoln and Irving? It is currently zoned 40-feet, but could go to ~70 feet with this. Put the affordable ones on the lower floors and give the view to the market rate condos. There’s your wall-on-waterfront west, at least by sunset standards.
If you look at the interactive map of parcels this covers (namelink), there are many choice spots like this, including the motels along Lombard in the Marina, the UCSF Laurel Hghts campus, and the whole strip of 1-2 story buildings along West Portal. Even the heart of neighborhoods like Noe, North Beach, and Castro have a few good sized one-story commercial parcels that would be choice for 7-story residential.
Looks like this could help replace hundreds of small-scale retail (gas stations, restaurants, motels, banks, dry cleaners, coffee shops, drug stores, etc) with 7 story residential, or maybe 1 story retail and 6 residential. Irving, Clement, Geary, Taraval, California, Judah, Lombard, Union, Chesnut… could all be significantly “redeveloped” over the next 20 years, just like what has been happening to PDR in SoMa, Dogpatch, Showplace, Mission.
What’s fun about a law like this is it sounds kinda innocuous and is certainly hard to envision in your own hood, until the Noe Valley Walgreens becomes a 7 story apt building. Or until they amend it during an economic downturn to lower the affordable ratio to encourage more building and maybe add one more story for good measure, think of the (developer’s) children. I remember when regs were relaxed to allow live-work lofts because they were going to house artists. Welcome to the party D1, D2, D4, and D7.
It is funny to hear a bunch of people who own no SF property talk about how they are going to encourage me to give away something for free. Guess what – I ain’t giving away nothing. Why would I build a bigger project that costs more just so I could give away a 1/4 or more of my pie to people that are going to continually oppose me politically? F that! I’ll choose to build 8 units instead of 10. 100% of 8 is better than 75% of 10.
Only market rate participants are going to be on my side so that’s who we are going to stick with. If all these measures go through, I think we will see more small projects and less large ones. Small is beautiful and those developers who can be fluid and flexible shall reap the rewards.
Who in their right mind would buy a unit in a smaller mixed income building? Wishful thinking. If I wanted to live with the working class, I simply go to a working class neighborhood and live there (much cheaper to rent or buy.) There is no need to pay expensive rent and/or buy @ $1 Million + for the privilege of living amongst them.
These City policies or “solutions” are obviously created by officials who never ran a private business in their life and/or refuse to listen to those who have. Far better for the City to step back and not get in the way for real work to be done. Stick to projects like fixing the systemic bloated budget problems and pension reforms.
Soon as the city approved some very large redevelopment projects in SF, they opened the floodgates to all areas.
Nothing is now off-limits, therefore you reap what you sow.
Better to hound on the transit impacts, and amenities and infrastructure issues, since we will have a lot more people in SF in the future, and the existing systems look pretty close to failing…
And a LOT of those people who think they are entitled to live only in San Francisco can start looking in Oakland and the East Bay for housing and jobs. By going there they can also bring economic vitality and energy to an area that is ready and willing for a larger population.
What about the people already in Oakland and the East Bay? Where do they go?
With our housing policies it is close to a zero sum game.
Who says they’re going anywhere? I didn’t.
But with more demand, it can become an incentive to build more housing across the Bay. And why not? why does everyone assume that San Francisco should assume the entire burden for new housing and population growth?
UPDATE: Bonus Height Program Debate Heats up, Possible Vote next Month
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