Amendments to state bill could make it harder for the city to demand reasonable affordability levels from developers

The San Francisco supes approved new rules for affordable housing today – but a move by state Sen. Scott Wiener almost derailed the carefully negotiated compromise and could still impact the city’s ability to require a reasonable level of affordable housing.

The affordable housing rules that the city is putting in place require what should be a minor tweak in state law, and all of the parties to the negotiations agreed that the deal would fall apart without that chance. Assemblymember Phil Ting got a bill through the Assembly without much dissent.

But when it came to the Senate, Wiener insisted on amendments that could have – and still might – dramatically reduce the amount of affordable housing that the city can require.

The state has a rule that allows a developer to get a “density bonus” – that is, the right to build more housing than existing zoning allows on a site – in exchange for adding a very small amount of affordable housing.

Ting’s AB 915 would allow San Francisco to apply its own, higher, affordable housing requirements to all new units, including units only allowed under the state density bonus law.

It’s called a “district bill,” which means it applies only to one city – and typically, these bills only pass if all of the legislators from that district are in favor.

Without this bill, the percentage of affordable housing that the city will require developers to build could drop from the compromise level – 18 percent, rising to 22 percent by 2019 – to just 13 percent. That’s a lot of lost affordable housing.

So: All was going along fine, and the two sides on the Board of Supes were all on board, and so was the mayor.

Then Wiener got involved.

Wiener proposed an amendment that would make it impossible for San Francisco to enforce its new affordable housing rules. The original plan would allow the city to enforce its own rules only

after there has been an affirmative declaration made by the Department of Housing & Community Development that the affordable housing minimum percentage required is broadly feasible for density bonus projects. The feasibility assessment shall include, but not be limited to, confirmation that the minimum percentage will not reduce the amount of total housing produced pursuant to the density bonus, and will not reduce the amount of affordable housing produced pursuant to the density bonus.

Here’s what that means: A state agency would have to agree that there’s absolutely no chance that a requirement of 18 percent affordability could convince a developer not to build a project.

There is no way to prove that, one way or the other. The city’s local planning would be pre-empted by the state, which requires far less affordable housing.

John Elberling, president of Todco, notes on Facebook that

AB915 has been endorsed by the City’s Board of Supervisor and Mayor Ed Lee. So instead of outright opposition, Senator Weiner has proposed to amend it with a condition that he knows full well would doom it as a practical matter. This is called a “poison pill.” if the State Department of Housing (not the local Mayor’s Office of Housing) determined it might result in ANY less market-rate housing at all, it will become void — possibly as soon as next spring. That would mean that for every 1000 housing units that result from the State Density Bonus, 180+ Affordable Inclusionary Housing units will NOT be built, and that opportunity is lost forever.

I asked Wiener why he was pushing an amendment that would damage the city’s ability to require a higher level of affordable housing. He told me:

“AB 915 is about state housing policy, and as always, I am committed to making good housing policy.”

The deeper issue here is the “feasibility” of building housing developments with reasonable affordability requirements. Several San Francisco developers have already agreed to 25 percent, and the city has already done its own feasibility study that concluded that the current 18 percent law would work. But critics say that if the requirements are too high, the market-rate housing won’t “pencil out,” and nothing will be built at all.

The folks who think that building more market-rate housing will get San Francisco out of this crisis say that inclusionary rates could be self-defeating. On the other hand, the city’s own studies show that inclusionary below 20 percent actually makes the housing crisis worse.

And the more reasonable housing developers in SF have signed on to the 18 percent deal.

Ting urged Wiener to accept some changes, and Wiener agreed to back off – a little. His new version deals with the problem that the state agency might not act in a timely manner, leaving San Francisco unable to enforce its own housing laws. Wiener has agreed to allow a one-year grace period if the state fails to act. Here’s the version that passed out of the Senate Transportation and Housing Committee today:

after there has been an affirmative declaration made by the Department of Housing & Community Development that the affordable housing minimum percentage required is broadly feasible for density bonus projects, which must be completed by June 30, 2018. The feasibility assessment shall include, but not be limited to, confirmation that the minimum percentage will not reduce the amount of total housing produced pursuant to the density bonus, and will not reduce the amount of affordable housing produced pursuant to the density bonus. Any affirmative declaration by the Department will expire on June 30 of the following calendar year, at which point it may be reauthorized by the Department for one year if the department continues to find the arrangement feasible, as defined above. This reauthorization shall be sent with the department’s response to the City and County of San Francisco’s annual production report, outlined in Section 65400(a)(2) of the Government Code. If the Department fails to issue an affirmative or negative declaration to reauthorize by June 30 of the following calendar year, the City and County is permitted to apply that ordinance to development for a one-time, one-year grace period, at which point the authorization lapses until the department issues an affirmative declaration.

Even with the changes, Wiener is using state law to make it harder for San Francisco to mandate affordable housing. It’s pretty stunning.

The reality is that what developers tend to want, more than anything, is market stability – they want to know what the rules are. And if the state is in a position to change those rules once a year, it’s going to be a mess.

I don’t know what Wiener is thinking.