As the region-wide affordable housing crisis continues, new conflicting solutions are being decided upon as soon as this week.

In February, the Planning Commission approved a proposal by District 4 Supervisor Katy Tang to reward developers who create more affordable housing by letting them build taller, denser buildings than would otherwise be allowed.

After passing a committee vote last week, a first chunk of the two-year-old Affordable Housing Bonus Program is going up in front of the full board of supervisors for a vote this Tuesday.

But before her plan came up for a vote last week, a rival strategy called "Density Done Right" was put forth by Sups. Aaron Peskin (District 3) and Eric Mar (District 1) that would make bonuses available only for 100% affordable projects.



Core elements of Sup. Katy Tang's AHBP proposal. | SF PLANNING

On Tuesday, the full Board of Supervisors will vote up or down on part of Tang's AHBP, but it's entirely possible that our local drama will be interrupted by some deus ex machina in the form of Gov. Jerry Brown's Streamlining Affordable Housing Approvals bill, which would would let developers build projects with affordable housing "by-right."

Today, we'll take a closer look at the competing local proposals, the statewide legislation and where things might be headed.

Elements of the Peskin/Mar alternative AHBP proposal.

What Is The Affordable Housing Bonus Plan?



To create more housing for people like schoolteachers, construction workers and baristas — and to bring San Francisco into compliance with state law — Tang sponsored the Affordable Housing Bonus Plan (AHBP) with backing from Mayor Ed Lee.



If implemented, the AHBP would let developers add more units in exchange for building 100% affordable units or for adding housing for medium-, low- and very-low income residents to market-rate projects. (For a comprehensive look at what AHBP entails, read our past coverage.)

After a detailed financial analysis by the Planning Department, contentious public meetings and marathon Planning Commission hearings, the AHBP was referred to the Board of Supervisors' Land Use and Transportation Committee, which consists of Peskin, Scott Wiener (District 8) and Malia Cohen (District 10) for a vote last week.

San Francisco Affordable Housing Programs | DATA: PLANNING DEPARTMENT

Amendments Protect Existing Housing Stock, Commercial Tenants

Initially, the committee was to vote on both the AHBP's 100% affordable and mixed-income programs, but because of the Peskin/Mar plan, Tang asked the body to vote only on proposed bonuses for 100% affordable projects and the language for the General Plan Amendment. The portion of the the AHBP that relates to mixed-income housing developments will be taken up again by the three-member committee.

Several amendments were attached to the 100% affordable AHBP program: parcels with existing residential units were made ineligible for bonuses, and commercial tenants are required to receive at least 18 months' notification of new construction.

For mixed-income developments, Tang submitted amendments to prohibit the demolition of residential units, require conditional use authorization, and direct the city to explore creating a fund to help relocating businesses displaced by construction.

An additional amendment would put merchants first in line to return to their neighborhoods after AHBP projects are completed. Tang also asked Planning to study the feasibility of guaranteeing businesses the same amount of square footage "so that it's not encouraging formula retail to come in on the ground floor," she said.

D3 Supervisor Aaron Peskin (L) discusses AHBP at a District 3 town hall. (PHOTO: GERI KOEPPEL/HOODLINE)

"I know there's much more that could be done about the small business side of things with preservation," Tang told Hoodline. "We're not trying to punt this off to future studies or so forth," she said, but more analysis is legally required.

Peskin spoke out against the mixed-income sections of Tang's AHBP at last week's hearing and tried unsuccessfully to get his colleagues to replace sections with language from his "Density Done Right" proposal, but did not have the votes.

"The general plan amendment that is before this body has been done in a way that is too broad and needs to be more narrowly tailored," said Peskin, who characterized Tang's amendments as a "set of asterisks that is not the right way of going about it."

"I don't support Sup. Peskin trying to gut and amend what I've been working on for over two years now," Tang told us. "If he had wanted to work on this with me truly, he could have reached out and we could have worked things out, but he decided that he would just introduce legislation on his own."

But 100%-only supporters don't see it that way.

Deepa Varma of the San Francisco Tenants Union told the committee last week that the proposal under consideration lacked appropriate community input.

"We haven't heard a single thing about what the sites are," said Varma, during the public comment period. "Are we upzoning the entire city?" Varma recommended that Planning go "back to the drawing board" and come up with a new plan that better represents community interests, "and you need to include us."

#100AffordableHousing program, one more tool of many in a citywide effort to do density right! pic.twitter.com/LNrJ9Sqr6t — Aaron Peskin (@AaronPeskin) May 17, 2016

What's In Peskin/Mar's "Density Done Right" Proposal?

Besides restricting density bonuses to 100% affordable projects, Peskin/Mar's plan calls for a conditional use review for each AHBP project. (In February, both Supervisors voted to approve a measure that waived CU reviews for 100% affordable projects.)

Additionally, eligibility to rent or buy affordable units would be determined using a neighborhood-based AMI.

Although few for-profit builders are interested in building 100% affordable housing, "all of these non-profits make money on these deals," Peskin told Hoodline, referring to community housing organizations like Mission Economic Development Agency and Chinatown Community Development Center.

"It probably isn't as lucrative as building $2200 per square foot luxury housing that costs $850/square foot to build, but the non-profits that build these, all of their employees get paid, all of their infrastructure is sustained," Peskin said.

"People ain't getting hugely wealthy off of it, but the reality is, there's room in that world for people to make money," he added.

"Some people's job is social worker," said Sonja Trauss of the SF Bay Area Renters' Federation, a pro-development advocacy group. "Building non-profit housing takes a specialized set of skills, because getting the funding is complicated," she said. "If you're a for-profit developer, you could decide to go into that business, but no one is going to work for free."

In Tang's Outer Sunset district, which added a total of 10 affordable units between 2006 and 2015, non-profits have created "zero" new units, she said. "The City only produces about one or two 100% affordable housing developments each year, given the heavy public subsidies that are required for these types of projects."

"The Peskin/Mar proposal does not address market-rate development, it only addresses the 100% affordable housing component," Tang told us. "Supervisor Peskin does not believe that we need a mixed-income program to satisfy the state density bonus law requirement," said Tang. "I do not believe that's true," she said. "I believe we need all of it."

Peskin countered to us the City has "a number of ways to catalyze" the creation of affordable housing, including a $310 million bond that can be used to purchase soft sites and the Affordable Housing Trust Fund.





Area Median Income Vs. Neighborhood AMI



Many critics say AHBP eligibility, which is determined using Area Median Income, subsidizes high earners at the expense of people who are struggling financially. Initially, AHBP applied to residents earning as much as 120% of AMI ($85,000/year) for a rental and 140% of AMI ($99,990/year) who planned to buy affordable unit. In February, staff proposed converting some of those units to 100% and 120%, respectively.



Peskin said using an AMI formula that encompasses Marin, San Mateo and San Francisco counties keeps housing out of reach for too many San Franciscans.



"If we could actually create a geographically-based neighborhood area median income scheme, we could preserve the economic and and financial diversity of our city," he told us.

This second core part of the 100%-only solution was of special interest to some of the groups fighting the AHBP last week.

"With gentrification and displacement still galloping forward in large parts of the city, it's urgent that the 100% affordable element become a reality," Kathy Lipscomb, a Senior Disability Action board member, told the committee. "Real affordability must be connected to neighborhood median income."

In February, Kate Hartley, Deputy Director of the Mayor's Office of Housing and Community Development, told the Planning Commission that City AMI is 10% higher than the 3-county regional number, which means "there's no reason for dueling charts."



Peskin acknowledged that gentrification has already driven up average neighborhood incomes, "but that doesn't mean we shouldn't try to preserve the best of the rest." He added there's no specific formula or process for calculating neighborhood AMI today, "just because we are still in the planning stages," and couldn't say how frequently the metric would be updated.



Tang said using neighborhood AMI "actually promotes segregation in our communities," and is "completely irrelevant for the 100% affordable projects," which usually follow federal income guidelines.

"We're in discussions with the Mayor's office and are hopeful that this is a good path for the production of housing that real San Franciscans will be able to live in," Peskin said.



Trauss said she agreed with AHBP opponents who assailed the fact that a 2-person household making 120% of AMI could qualify for affordable housing.

Only a small subset of the 30,500 parcels in the program area are eligible for density bonuses. (VIA SF PLANNING)

"It's totally inappropriate," she said. "There's no world where people making that much money should be receiving subsidies," Trauss added. "If you're subsiding people at this level, your land use regime is just too tight."

"I imagine this would create much confusion around who gets to qualify for which units in which neighborhoods," said Tang. "I also imagine that residents from many neighborhoods would lose out on opportunities to access affordable housing units," she added, noting that her constituents are already at "the bottom of the lottery" because "no development occurs in District 4."

Neighborhood AMI "sounds great, but it doesn't work," said Tang. "People move around and things happen in a neighborhood, so you can't just base it on ZIP code. It's completely arbitrary."



Peskin said hyperlocal income averages are "the meat of the [alternative] proposal," adding that Planning has already endorsed the idea. "We're hopeful that it will be embraced by a majority of the Board," he said.



Last week, Kearstin Dischinger, a policy planner with the Planning Department, said her staff had "just started" evaluating ways to calculate neighborhood AMI. Before analysts can make a final recommendation, she said they'll spend several months studying "the intended or unintended consequences of using that kind of methodology."

Let's build affordable housing the right way: https://t.co/EfNsXkrFWu — Katy Tang (@SupervisorTang) May 29, 2016

Intervention From Sacramento Could Render AHBP Debate Moot



Local squabbling over AHBP may become a quaint memory, as the last state budget deal includes language that sidesteps local review for housing developments near transit lines that meet local zoning standards and set 5% of on-site units for very-low income tenants, or 10% for low-income.

Widely opposed by environmental groups and local governments, the measure would eliminate project reviews under the California Environmental Quality Act. Unsurprisingly, many real estate developers applauded the measure, which was attached to $400 million in funding for affordable housing.

Although the budget passed, the money won't be released until "by-right" language is agreed upon, August at the earliest.

In his press conference announcing his streamlining plan, Brown said it cost $500,000 to build one unit of affordable housing in San Francisco. According to Matt Schwartz, president of California Housing Partnership, that number is closer to $350,000 in the rest of the state.



What's Happening Next: Full Board Votes On Tuesday



On Tuesday, the full Board of Supervisors will vote on the 100% affordable bonuses and the recommendation to amend the General Plan with new zoning guidelines.

There's no official polling on how popular the current AHBP is among residents, but Peskin said he believes opposition spreads "from the Daly City border to the Ferry Building and from the Dogpatch to the Marina."



Despite what he perceives as widespread community support, Peskin said he doesn't know whether the alternative he put forth with Mar will get traction. "I'm new to the Board, so it's early for me to give really good readings," he said. "Give me another six months before I claim to know how my colleagues vote."

Tang said she's also unsure about its prospects for passage. "I don’t know at this point," she said, but she said she'll keep trying to find carrots for developers who build middle-class housing.

"I know that sounds bad to some people," she said. "Why should we give any kind of incentive or bonus to developers? Because it's not going to happen otherwise, or you're going to get less affordable housing units."

We'll be covering the vote and beyond as the plans play out on the board.