CFAH

In addition to a proposed ballot measure which would double the maximum income one could earn and still qualify for a Below Market Rate (BMR) apartment in San Francisco, the paperwork for an initiative which would implement a new competitive bidding process for all developers of publicly funded housing projects in the city has just been filed with the Department of Elections.

From the filing:

“The City utilizes three affordable housing funds – the Citywide Affordable Housing Fund, the
Mayor’s Housing Affordability Fund and the Mayor’s Housing Program Fees Fund – and administers them through the Mayor’s Office of Housing and Community Development. These funds receive dollars committed to affordable housing from a variety of sources, including but not limited to mandatory inclusionary housing fees. The core purpose of each fund is to facilitate and finance the production of more affordable housing in San Francisco, which is generally accomplished by partnering with or providing financial assistance to for-profit or non-profit housing developers willing to undertake housing development projects that are either entirely affordable or contain a significant affordable housing component.

The affordable housing projects which use these funds are not currently subject to a competitive bidding process, which leads to wasted City resources and the use of City funds based on favored relationships instead of merit and cost. Transparent and fair bidding should be required of developers and builders who bid on affordable housing projects which receive City funds, and the bidding process should be a competitive one which maximizes the best price for the City and maximizes the amount of affordable housing which can be obtained in any given project.”

And the initiative’s stated purpose:

1. “To ensure that affordable housing projects funded, at least in part, with the City’s affordable housing resources undergo an open and transparent competitive bidding process.”
2. “To ensure that the City actively seeks competitive bids from qualified and competent bidders.”
3. “To ensure that the City, expect in limited circumstances, chooses the lowest bid in order to maximize the City’s return on its affordable housing resources.”
4. “To ensure that if the City does not select the lowest bid, the City must publicly disclose its justification for choosing a higher bid in order to guard against even the appearance of favoritism or impropriety.”
5. “To ensure that the City’s affordable housing policies seek to maximize the efficiency and minimize the costs to taxpayers of affordable housing projects.”
6. “To ensure that the City maximizes the amount of affordable housing which can be built in any given affordable housing project by getting the most out of the City’s affordable housing resources.”

If qualified, the privately-proposed measure, which has tentatively been titled the “Competitive Bid Process for Publicly-Funded Housing Ordinance,” would appear on the November ballot.

Comments from Plugged-In Readers

  1. Posted by sixtypercenttogether

    So this seems pretty reasonable to me, but I don’t know affordable housing developments well enough to know what the consequences of this would be. Can anyone provide some insight?

  2. Posted by an architect

    my first reaction is that this is a bad idea. empirically speaking — when the city (and other municipalities) chose the “lowest bid” for builders/contractors, they end up with a less-than-desirable product. and more often than not, the budget balloons after the competitive bid process is over, which is proof that bidding quickly becomes a [dishonest] race to the bottom.

    it’s the same with design. if some developer-designer team comes in with the lowest bid, it could be because they are making poor choices. and the risk might be even greater so early in the process — often inexperienced developer-design teams propose something that is not feasible in order to get their bid price down … and then the project balloons out of budget. literally happens *all the time*.

    my two cents — we should NOT cheap out on affordable housing. there are lots of really great affordable housing projects recently completed and currently under construction. what matters most is picking a developer that is competent and HONEST about cost per unit — competitive bidding almost always results in a race to the bottom. no matter how intense the demand is for affordable housing, each project should be done right.

    • Posted by Elitist Pig

      I wish I didn’t agree with you, but I do. In theory this is a great idea, but in practice this will open the process up to unscrupulous developers / contractors who can get their foot in the door with an unreasonably low bid and then bilk the city out of funding. Unless it comes with some kind of protections / qualifications, it’s going to blow up in their face at some point.

    • Posted by BTinSF

      Competitive bidding works best when all bidders are bidding on the same product. In the case of development, that would mean a project is designed, the materials and methods selected and then it is put out for a bid on who can get it built for less, meeting the pre-established requirements.

      I don’t see how you can competitively bid undesigned projects which would inevitably produce a race to the bottom in terms of construction quality, design and materials.

  3. Posted by SFer

    Wait, did the City decide they din’t want us tax payers to pay $900k per affordable unit like they did in the Mission. Oh good!

    I’m ok w/ not building any affordable units, or they need to be very well managed w/ income verification yearly. Market rate development is what we need, and get rid of rent control. That is what will make things affordable in this town.

  4. Posted by sorry not sorry

    A solution in search of a problem. Communities across the country would be glad to have the quality of affordable housing developers and developments that we have.

  5. Posted by Orland

    What I anticipate is that “losers” in the competition will invoke whatever process is developed to contend that the criteria for selection were not properly applied thus holding up projects. Just seems to be the nature of such schemes.

  6. Posted by katdip

    I could only see this if the city provided 100% of a project’s funding. But most affordable developers have to cobble together a whole range of funding sources (state, local funding, tax credits, etc.) for any given project. It’s a complicated process to get funding and permit approvals already, and adding some byzantine bid process for a portion of the money doesn’t make any sense.

  7. Posted by SFrentier

    In addition to what was said above wrt bogus low ball bids/reneg later, I’m sure this will slow down the entire process even further. Add another 6-12 months to an already arduously sslllooowww process. Brought to you by SF Housing Productions.

  8. Posted by modernedwardian

    understand the concerns above but i guess i think that a good design process (on which bids are subsequently taken) and lawyers and contracts should be able to address these concerns. would love to see construction and management contracts competitively bid.

    sf government is among the most expensive and probably most clubby/corrupt local governments in the US. we have a lot of housing and homeless nonprofits in this city, let’s see what happens when they have to compete with each other with defined performance metrics.

    • Posted by Elitist Pig

      Yes, but I fear the only defined performance metric is going to be price. If some Joe Contractor comes in at $15M while a crop of highly qualified ones come in at $20M, you better bet people are going to complain if the city / developer doesn’t go with Joe Contractor.

  9. Posted by MossyBuddha

    exactly. multi-family wood framed housing, much like what we build as affordable in town, is a notorious site of wage theft and shoddy construction practices (i.e. the library gardens project in berkeley that collapsed). affordable housing developers wisely like to work with contractors with whom they’ve developed long-term relationships, who in turn have robust stables of subcontractors. this measure would likely throw that eco-system into disarray.

  10. Posted by MossyBuddha

    By the way who is pushing this?

  11. Posted by SLS

    As @katdip mentions, affordable housing developers already have to compete for multiple local, state and federal resources to cobble together the financing needed for each project. The City funds are not even the largest portion. The most often used, the Federal Housing Tax Credit managed by the State, already has an incentive for cost efficiency. This measure would be redundant and would only slow down the process.

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