Bonus Height Fight Headed to the Ballot BoxJune 22, 2016
With San Francisco’s proposed Affordable Housing Bonus Program, which would allow market-rate developers to build up to two stories higher than currently zoned in exchange for pricing 30 percent of the development at below market rates, appearing to be DOA, and a pared-down program which would only apply to 100 percent below market rate projects having hit an impasse at the Board of Supervisors, the bonus height fight is now headed for the November ballot.
As sponsored by Supervisor Katy Tang, supported by Supervisors Cohen, Farrell and Wiener, and submitted to San Francisco’s Department of Elections yesterday, the “100% Affordable Housing Bonus Program” initiative would allow developers of below market rate buildings to build three stories higher than zoned, without the need for Planning to approve a conditional use application and eliminating the possibility of a dreaded Discretionary Review for qualifying developments.
Comments from Plugged-In Readers
No planning by the masses…
Want lower cost housing w/out more density? Easy – END RENT CONTROL, free up thousands of units, this is what will make housing more affordable.
Restore rights to small property owners, this might free up another 15-20,000 units.
Stop voting for more pandering Supervisors who vote in more restrictive laws. Could we please get the middle class back without more subsidies?
Rent control is one of the only things keeping the middle class in SF. Abolishing it tomorrow would cause an initial rent spike that would push even more middle class people out.
Abolishing rent control would drop market rents 20-30% overnight. It wouldn’t hurt nearly as many as you would expect, just the extremely long term rent control folks. There’s no real benefit until you live in a rent controlled apartment until around year 7 or 8 when compared to a market without rent control. And most folks move more frequently then that.
The extremely long-term folks are in the tens of thousands in SF, since we’ve had rent control helping them stay through two housing crises in 20 years. I’m skeptical rents would drop that fast, because the only place it’s been tried (that I know of) was Cambridge, MA — and in fact, rents continued to go up.
Regardless, if rents dropped 30% from the current market rate (over $3600 for a one-bedroom in May), we will still be left with incredible over inflated rents, as $2400 a month is not affordable to most people.
Whether ending rent contol would decrease rents or not, no one has a fundamental right to rent control or the right to live in whatever city they want. What an absurd notion. Let the free market determine wages and housing prices.
Yes anon! Yes! we sure do agree on that one. No one has an inherent right to live in any city they want whether they can afford it or not.
I want a weekend, oceanfront penthouse in Monaco and I want the government to help pay for it.
Do you have a link to a report of the 20-30% drop? I’d love to read it.
Unfortunately, we live in a web of expensive regional housing. I have serious doubts that ending RC in SF would drop rents significantly (20-30%).
IF rents suddenly rose on 180,000 units, a good chunk near market anyway (and I doubt a sudden ending politically possible – best case scenario: abolition on new tenancies), people would move, and that would create more vacancies, which does have a correlation to lower asking rents. But given the high unregulated rents just south of the border in DC, that would put a floor under new rents in SF.
The housing shortage is region- (state?) wide. W/O action to alleviate it, we won’t see much change in housing pricing here.
The beauty of internet comments is they allow everyone to express an opinion. Their danger is that even stupid comments with no basis in fact or evidence can appear as legitimately worthy of consideration.
Tell me again how raising rents make housing more affordable?
Re: END RENT CONTROL. Lol. Do your due diligence and homework. Ending rent control will affect fewer units than you think (only pre-1972 construction). Please, do your homework. Otherwise, you run the risk of being viewed as a knee-jerk libertarian. ” All hat and no cattle”.
Ending rent control would affect 180,000 units. That’s alot of units even if only 10% of those were affected/freed up/ re-leased etc….
Can you share your source for the 180k number?
180K seems low for # of rent controlled units. I thought there are 500K units, with 65% being rental and 85% of rental being rent control = 276,000 rent controlled units. Socketsite should have the real number
The actual number of units in the city is closer to 385,000 with 170,000 units under rent control.
of those 385,000 units, about half, IIRC are SFH
There are roughly 121,000 single-family homes in San Francisco.
You are correct.
San Francisco is in California, a big state with its own set of laws.
Turning now – or REturning, really – to the actual issue – height limits: what is the theoretical justification for this proposal?
Height limits presumably serve a number of purposes – preserving light and air, preventing overcrowding, preserving scale, etc. – which one may or may not agree with, but which have nothing at all to do with how affordable things are. How does allowing even MORE housing advance these goals? Are the proponents claiming these aren’t important, or that restricting height doesn’t advance them or simply that cramming more and more people in is such a good thing it overrides everything else?
Exactly. I agree completely. Height increases have zero to do with increasing so called affordable housing.
This is fail miserably at the ballot box.
How does building more affordable housing affect the amount of affordable housing we have?
I suspect it will be difficult to explain.
Not true, at all. If we allow taller buildings that provide more units than a shorter building, and all of those units are affordable, it won’t increase the number of affordable units created versus the shorter building. It’s simple math, not difficult to explain at all.
But you’re assuming that developers will take the bait, I mean so called “incentive” to provide for more affordable housing , in exchange for the increased height limit.
They won’t. Developers want to make a profit, and that’s their right, and I support that right.
Wait, what you are describing sounds an awful lot like a ‘poison pill’ if you will. Are you telling me that the city is dragging its feet on this? You mean there aren’t benevolent multi-multi-millionaires just waiting to build less profitable housing that can be tied up in bureaucratic red tape for months if not years after construction?
Ask your question again without sarcasm and snark and I’ll respond.
That is not what is going to the ballot. You’re describing the part that isn’t going to the ballot (more height for a higher percentage affordable). What is going to the ballot is “If the building is 100% affordable can it be a few stories taller: Yes or No”. There isn’t a take the the bait component because this isn’t for developers it’s for tax funded projects.
And I’ll be voting no.
@Futurist – That’s my move. I’m agreeing with you though, I don’t see developers lining up to build 100% affordable projects because the city has decided to acknowledge the intent of the existing state bonus density law. Maybe this expands the potential for off-site units, or combines the off-site requirements for multiple 100% market rate projects, either way I doubt it works or passes.
Yes, this ballot measure is a choice between two things of value. Presumably “preserving light and air, preventing overcrowding, preserving scale, etc.” is achieved by height limits, so that’s one thing (or grouping of things) of value. And presumably the availability of more affordable housing is achieved by allowing developers to build more affordable housing, so that’s the other thing of value.
You’re confused in your implicit suggestion that the two things have to have to something to do with one another, let alone that change to height limits has to “advance the goals” of height limits. They don’t. This ballot measure presents the question of which we value MORE, to the extent they conflict: preserving light and air, preventing overcrowding, preserving scale, etc.; OR developing affordable housing.
Thank you TGNTOG; but I’m not confused: I asked which of the three arguments they were making, and it appears you think the answer is the third one (cramming more and more people in is such a good thing it overrides everything else); so long as proponents are honest in admitting this – or at least the possibility of such – I’m fine with that…indeed the tradeoffs of allowing more-and-more people to enjoy a shadowed, crowed, overscaled city lie at the center of most discussions on here.
Thank you for the cordial reply, but I admit, now I’m confused. Why even pose the question about what higher height limits has to do with the benefits of low height limits? Isn’t it obvious that supporters of greater height either think the sacrifice to livability is small, worth it, or some combo of both? Even as a rhetorical flourish your “Which is it?” question doesn’t seem to land, but I’m relatively new to SocketSite’s discussions so perhaps I’m missing something.
In contrast, I understand the rhetorical flourish of saying “overrides everything else” — it’s a overstatement that paints those who support adding 2 floors as being in favor of adding 20 or 200. A bit melodramatic, no? The height bonus isn’t an unlimited proposal, so it doesn’t override everything else. It overrides some things, but far from all of them.
The point I was making – and I went about it by asking a(n admittedly rather loaded) rhetorical question rather than making an accusatory statement – was that I think this is a rather disingenuous stealth strategy to increase density.
Not stealth in the sense that they’re denying they want to increase density – presumably anyone can see more stories = more units – but in the sense that they’re avoiding any discussion of what greater density entails.
Various concerns led to a certain height limit to be set, now there is a call to revise the limit w/o much – or any – discussion of why it was set in the first place; or perhaps there IS discussion – I haven’t seen the actual ballot measure – so in that sense the question is non-rhetorical.
San Francisco is in California. California already has a density height bonus law which applies to San Francisco. All of these hysterics are useless. Regardless of what SF enacts or does not enact, the State’s affordable density bonus law applies
DC > Sacramento > SF
Yeah, but wasn’t SF trying / thinking about suing the state over this?
The states density bonus law has already been brought before the states supreme court – there is no chance SF would be successful if they tried to sue the state
No, the City is, however, doing it’s best to ignore the State Bonus Density and possibly attempt to exclude itself from many of its provisions because a number the City’s NIMBY-supported and/or idelogically-driven politicians and other so-called “activists” think SF’s so very “special” and deserves to be excepted.
Its also about power, i.e., the rights of certain locals and homeowners vs. the greater good, i.e., the provision of adequate amounts of housing in order to stabilize prices for the young, newly arrived and others of modest means.
It strikes me that the people that are against the local AHBP or rail against the supposed “unfairness” of the State Bonus Density are either:
1. Those wanting to keep SF largely as it is in perpetuity,
2. Homeowners wanting to stifle demand and, thereby, continue to enjoy double-digit % increases in equity or
3. The economically ignorant (often renters in either rent controlled or otherwise subsidized units) — who somehow feel that their “sticking it to the man” — while in actuality what their really doing is sticking it to the desperate/struggling low and middle-income classes.
Note to developers: the City is getting very nervous that you are leaving for greener pastures elsewhere. Yet they have no idea how to fix the problem and everything they do is leading to the opposite result.
Seattle has no rent control. Thousands of new rental apartments have been or are currently under construction. Rents keep rising. Median rent is now $1,55/mo.
But still a lot less than SF — because, Seattle is at least attempting to do something.
no, that’s not why. It is because Seattle started off much lower in the first place.
When was “in the first place” — 1980? 1940? 1880?
Defining terms matters.
If the BOS doesn’t pass a “full-strength” version of Mayor Lee and Sup. Tang’s (local) Affordable Housing Bonus Program (AHBP) that is robust enough to entice housing developers to utilize it then developers will simply invoke the State Bonus Density Law.
Doing the latter will create far, far fewer subsidized units than the AHBP.
(FYI, there are already 12 State Bonus Density Bonus projects in the Planning Dept pipeline and most certainly this number will increase dramatically if the AHBP fails to pass.)
If Peskin, Mar, Campos, Avalos, et al are able to water down the AHBP (e.g. via Peskin’s bogus “Density Done Right” alternative) or otherwise “neutralize” it — it’ll actually be worse with regard their supposed agenda, i.e. the creation of the maximum amount of subsidized housing.
Far fewer (to perhaps zero) subsidized units will be created under the Peskin plan as it has absolutely no funding mechanism attach to it that would supply the billion$ necessary to fund his “100% subsidized” housing projects.
People that are young, newly-arrived or of modest means will be the ones most hurt if a “full-strength” version of the AHBP does not get implemented. Anyone truly interested in stabilizing the cost of housing in SF while simultaneously creating the maximum amount of subsidized units should be vigorously supporting the AHBP.
For those that are renters — aspiring to live or remain in SF — opposing the AHBP is analogous to being a turkey celebrating Thanksgiving.
I’ve worked in real estate in California for 25+ years. Have never seen an increase in development in an overheated market bring prices down. Have seen recessions, riots, civil unrest, local regulatory policies and earthquakes/acts of God bring prices down. Question whether or not crowding more housing units into an already overtaxed transportation and infrastructure in SF is the answer to the existing dilemma. Sure, it lines a lot of pockets and increases the property tax revenue for the City. Sure, this helps the City and State with its bloated pension problem. However, the existing SF homeowners who pay property taxes are the ones immediately affected. They are currently pissed off. Those who live here, along with long time renters, are the ones who are left to cleanup the localized mess resulting from massing in more people without building out an expanded infrastructure. Effectively, you are limiting resources and increasing crowding. Try this in a fish bowl or hamster cage and see what happens. Recipe for disaster.
What’s different now over years’ past re: “affordable housing” and “residents being pushed out”? Its not only in SF or CA this time, although that is what this discussion and fight is about. It’s also happening in Seattle, Vegas, Denver, Portland, and any other attractive gateway city. I’d guess it’s the recent tidal wave of outside (foreign and national) investment and its speculation in housing stock. Used to be that apartment investors and two to four unit + SFH landlords were regional – used to be solely ‘mom and pop’ or local real estate realtor/investors. Another recent development (no pun intended) in the past 4 years is local VC money overinflating the value of aspiring “unicorns” and, concurrently, the cost of living in SF. I welcome any other insights readers can offer.
I’m also very interested in why, how and when we started commodifying U.S. residential/workforce housing. As an investment class. And encouraging foreign investment money to purchase workforce and residential housing to the detriment of the existing population. This fascinates me. It seems like we are “eating our young”. Is this a viable model? Again, I welcome any reader comments.
Finally, I am interested in why many of my well paid and earnest neighbors who rent cannot meet or match the ‘all cash’ offers for both condos and single family homes. They can put up 20% or more down, and are subject to the ‘know your client’ and Patriot Act limitations and disclosure regulations and investigations by lenders. Yet, their “competition” can put up 100% cash, and never has to disclose where a dime of that money came from. How much money in San Francisco residential real estate in the past 10 years is from foreign capital looking for safe flight? How does that affect the recent spate of Ellis evictions or lack of affordable housing build in tall, shiny new glass towers?
Let’s start asking real questions required to get to the core of the affordability issue, instead of pissing around the edges, or posting for marketing personal or professional investment positions.
Are you talking about REITs? Those have been around for two decades if not more. Real Estate Investment Trusts were created to allow for additional investment capital to make more acquisitions of larger projects nationally and internationally. Same reason as to why a company goes public.
Preach it – as to the overbuilding/overcrowding in SF.
At one time local investors were prominent in the the SFH and 4 or so multi-unit rentals market. That changed because of prices going through the roof (mom and pop can barely afford a home of their own here let alone investment property) and City regulations which make it very hard to be a small time landlord. The grief is not worth it. I am a small time RE investor and all my rental SFH(s) are out of state. A great property manager and the internet make owning rental property away from where one lives not the problem it once was.
VC money and foreign money have pushed up prices. As to foreign money some countries limit RE purchases by foreign nationals. Canada for one. The US does not.
The inflow of stimulus money over the past years has accelerated the commodification of RE. Though it has always been such on a smaller scale for as long as there have ben landlords.
Why some can put down all cash and others can’t has a lot of answers. My SFH neighborhood has many illegal in-laws rented by young tech workers who can no way purchase a home here and are looking to relocate. Yet a 30 something tech couple bought a home a year ago down the street for 1.250 million all-cash. Maybe their family helped but most families don’t have the money it would take to provide cash to a son or daughter to buy a condo here.
“How much money in San Francisco residential real estate in the past 10 years is from foreign capital looking for safe flight?” my guess is that it is a very low number , below 5%. the idea that forign investors are buying up huge #s of condos in SF is a boogeyman argument.
I spoke with a banker in SF to ask about foreign Chinese investors. He stated that most prefer to buy in the South Bay in Silicon Valley because the potential resale value is much higher. Not all of the investors are actually in tech. Also, some want to send their kids to Stanford.
@motomayhem – Five percent seems very low.
@amewsed – Please help me understand how owning a residence in the Bay Area guarantees a spot at Stanford?
@Amewswed and @moto mayhem: Another reference point: How and Why Buyers From China Are Snatching Up Bay Area Homes
I disagree that is is below 5% for the period between 2011 and 2015. Would love to have someone with true realtor numbers help us understand what the real % is.
@moto mayhem: Wealthy foreigners bought $100 billion in US real estate
I’d posted a few real estate specific links in my first posting, but they didn’t come through. Possibly because of Socketsite’s policy to exclude other industry specific links.
[Editor’s Note: We don’t have a policy prohibiting reference links to other sites as long as you provide a summary or at least a reference quote, but we do take exception to links to other site’s which have cribbed one of our original reports without credit.]
No. I’m not talking about REITS. Kind of surprised you would post such a response? Are you local? What’s your interest in SF residential real estate?
Do REITS allow foreign and offshore investors an anonymous investment vehicle that aggregates capital into an LLC, which in turn, can purchase SFH and duplexes in San Francisco and other gateway cities, such that, then:
$ foreign investment capital in REITS buys up traditionally (non-apartment) residential housing property in the Ü.S. And, their goal is not to benefit the community by providing reasonable rental rates, but rather to hike rental rates beyond what the local population can afford in order to maximize the unrealistic ‘rates of return’ being pursued by the investors? Please, educate me.
Take a look at the Ellis Eviction Map. Extrapolate. Tell us, how does this type of investment build and support a community? How does it support teachers and children? Please provide examples. If within a REIT, please help the investors understand how their investment builds, rather than tears down, the existing community and infrastructure in each of the REIT’s development or investment communities?
UPDATE: Bonus Height Program for Affordable Developments Approved, and as such the ballot measure has been withdrawn.
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