Broad Community Support Shown for Inclusionary Housing Changes

by Alexa Tondreau on July 13, 2006

Wednesday afternoon the Land Use and Economic Development Committee listened to the findings from official studies conducted by both the San Francisco Planning Department and the Office of the Controller on proposed amendments to the Inclusionary Housing Program in San Francisco. The legislation would increase the percentage of affordable housing required for all residential developments of 10 units or more. In addition, it would adjust the way that median income is calculated. And finally, one proposed amendment would require that the off-site affordable units be located within one mile of the principal project. Though the items were ultimately continued until next week, there were some interesting conclusions drawn from the studies along with a passionate show of support from the public.

Currently there are three available options to project sponsors who must meet the requirements of the Inclusionary Housing Program. They may choose to provide on-site units as a part of the principal project, to build the units off-site at an increased percentage, or to pay an in-lieu fee to the Mayor’s Office of Housing.

The San Francisco Planning Department in conjunction with a Technical Advisory Committee concluded that the proposed changes to the existing program would not be feasible under current market conditions for the housing prototypes that they studied. These prototypes included low rise-wood frame, mid-rise, high rise up to 240’, and high rise over 240.’

The study read, “Even the most financially desirable alternative, payment of an in-lieu fee, does not result in prototype projects within an acceptable return range.”

The Planning Department made it clear that it is vital to consider the profitability of a project because if market-rate housing is not being produced then inclusionary units aren’t either.

The amendment to increase the required inclusionary percentages to 15% onsite and 20% offsite was considered by the Planning Department to have the greatest financial impact, making the prototypes unworkable across the board.

In contrast, the adjustment to the area medium income would impact the feasibility of the project types in only a minor way.

In regards to the one mile radius requirement, the study said that the staff had “determined that the factors of permitted heights and land costs would make the construction of off-site housing more difficult within a one-mile radius of most principal projects.”

Therefore, the amendment would render the off-site option the least attractive option for developers which may be exactly what the public wants, based on commentary from San Franciscans who are fighting against having to leave their neighborhoods because of rising costs.

There was such enormous support for the legislation from the public – including many children and families – that the room had to be cleared of the dozens of people standing along the walls because of safety concerns.

Chris Daly was heated in his reaction to this finding saying, “I find it insulting.” After some debate with the speaker, Daly secured a promise that the Office would review and re-issue its findings.

The item will continue next week before the Land Use and Economic Development Committee.

The Office of the Controller also presented its conclusions of a study that analyzed a separate piece of legislation aimed at reforming the inclusionary housing legislation by expanding the program from buildings of ten or more units to buildings of five or more.

The study said that the effects of this ordinance would be economically insignificant “due to the small number of projects and units currently in the development pipeline.” It gauged the ordinance’s impact as being in the range of neutral to mildly adverse on housing growth.

This piece of legislation, forwarded by Supervisor McGoldrick, was approved, and now goes before the Board of Supervisors.

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