Mayor Lee has a plan to get housing built for S.F.’s middle class

San Francisco Mayor Ed Lee.

San Francisco Mayor Ed Lee. Photo: Russell Yip, The Chronicle Photo: Russell Yip, The Chronicle Image 1 of / 1 Caption Close Mayor Lee has a plan to get housing built for S.F.’s middle class 1 / 1 Back to Gallery

Help San Francisco’s long-struggling middle class find housing and end the city’s chronic poverty 500 families at a time.

Sounds simple, right?

San Francisco leaders have faced those problems for decades. Tackling them is the task Mayor Ed Lee is assigning himself as he enters his fifth year helming a city that has seen soaring economic growth and heady employment in his tenure. It’s also a city that has seen families, seniors and low-income residents driven out by shocking housing prices and the overall cost of living.

The mayor will outline his plans to deal with the issues in his State of the City address, which he’ll deliver at 10 a.m. Thursday at the San Francisco Wholesale Produce Market in the Bayview.

The city’s housing affordability crisis dominated Lee’s stated agenda last year, when he set the goal of building or rehabilitating 30,000 housing units by 2020, and it will again factor heavily in the coming year.

4,000 units this year

San Francisco added about 4,000 housing units last year, the highest annual total in at least a decade but still short of the 5,000-a-year average needed to meet Lee’s overall housing goal, which will require building at a pace unmatched in the city’s modern history. About 25 percent of those new units last year were below market rate, city housing officials said, which also is short of Lee’s goal of having more than half of the new housing being affordable to low- or middle-income residents.

'Tough nut to crack’

“Have we done enough? By no means. Not yet,” Lee said Wednesday as he laid out aspects of his latest effort to boost production of housing within reach of not only the working poor, but also the middle class. Lee described the latter as “a tough nut to crack.”

The vast majority of state or federal tax breaks apply only for housing built for those making up to 60 percent of the area median income, or less than $60,000 a year for a family of four in San Francisco.

That leaves little incentive for developers to build housing affordable to those in the middle class, particularly in San Francisco, where the median home price hit $1 million in June, well out of reach for many in a city where the median income for a family of four is $97,100 a year.

Among Lee’s proposals:

•Partner with the city’s Retirement Board, which oversees oversees a $20 billion investment portfolio, to add $100 million over 10 years to an existing city fund that loans first-time home buyers up to $200,000 for a down payment.

•Put a housing bond on the November 2015 ballot for a yet-to-be determined amount, perhaps from $200 million to $250 million, to construct homes for a range of income levels.

•Create a new investment fund through partnerships with philanthropic donors, banks and other private lenders to allow nonprofits to act quickly to purchase land for affordable housing or buildings to be kept permanently affordable.

•Amend the state Ellis Act, which allows property owners to evict tenants if the building is removed from the rental market, to prevent speculators from buying properties, evicting everyone and flipping the building for quick resale.

Questions remain, however.

Needs $100 million

While city officials said the down payment assistance program has helped more than 3,000 people buy a home in recent years — Lee described it as “remarkably successful” — the $100 million over 10 years still has to materialize.

An affordable housing bond measure would require two-thirds voter approval, a high bar. Earlier efforts to pass them came up short in 2002 and 2004, although the 2004 bond came very close with 65 percent of the vote.

While the new investment fund would be similar to programs in New York and Los Angeles, San Francisco does not yet have commitments from philanthropic donors, who would be key to funding housing affordable to the middle class, since there are no tax-break incentives.

State Sen. Mark Leno, at Lee’s request, tried to amend the Ellis Act last year and failed in the face of opposition from real estate interests.

'Short on detail’

“This mayor is very prolific with his goals, but short on detail,” said former Mayor Art Agnos, a progressive opponent of the business-friendly Lee in a city where all major political fights are between factions of the Democratic Party.

“My general impression is this is election-year, lightweight eyewash,” Agnos said. “Some of it could be useful, but as is his practice, there is too much ambiguity.”

'War room’ strategy

Lee also said he plans to introduce “war-room” strategy to get at chronic poverty 500 families at a time, bringing in staffers from all related departments to “kick over silos” and figure out how to boost families already on social assistance up the economic ladder.

“How do we really end poverty in San Francisco?” said Lee, who lived in public housing in Seattle as a child before eventually assuming San Francisco’s highest city office. “We’re going to do that family by family.”

John Coté is a San Francisco Chronicle staff writer. E-mail: jcote@sfchronicle.com Twitter: @johnwcote