Planning Commission sides with mayor on cutting fees for affordable housing

By an entirely predictable 4-2 vote, the Planning Commission just endorsed a plan to cut dramatically the amount of affordable housing the luxury developers are required to build.

The measure now goes to the Board of Supes, where it’s almost certain to win approval.

Commissioners Kathrin Moore and Gilbert Williams, members appointed by the supes who are leaving the panel at the end of the month, voted No. As is typical, all the mayor appointees voted yes.

The legislation would cut to 5 percent the “inclusionary” requirements, in what supporters say is an effort to get more market-rate housing moving.

But the Controller’s Office has already reported that even at zero inclusionary, no project currently makes financial sense. It’s not the modest affordability requirements (or zoning) holding back developers; it’s the cost of materials, labor, and most important, investment capital.

The cut would last for three years—so if the market changes, and more projects get underway, the city will have lost a significant source of funding for below-market housing.

The cut is part of a deal that the Mayor Daniel Lurie and Supervisor Myrna Melgar have offered: In exchange for reducing these fees, Melgar and Lurie are backing a November City Charter amendment that would guarantee a stable source of city funding for affordable housing.

Moore noted that the inclusionary money is already local law, and the current level of 12 percent could be extended until after November, when we know whether the Charter amendment has passed.

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“It took my breath away what we are giving away,” she said. “You can be really excited about going skydiving, but what if the parachute doesn’t open?”

Williams noted that the state housing requirements call for San Francisco to approve and fund 57 percent of its new housing at below market rate. But the state legislation, by Sen. Scott Wiener and his allies, includes no funding for that mandate.

If the city doesn’t issue permits for tens of thousands of new market-rate units, it can lose state funding—but if it fails to meet the affordable housing goals, nothing happens.

Housing activist Calvin Welch pointed out in testimony that when the city’s affordability requirements were at their highest, in 2017, developers built twice as much housing as they’ve build since those mandates were reduced.

Another speaker cited the city’s own nexus study showing that every unit of luxury housing creates a demand for affordable housing. If you mandate less that 25-40 percent affordable units, you actually make the crisis worse than it would be with no new housing at all.

None of that impressed the four mayoral-appointed commissioners, who bought into the argument that cutting obstacles to luxury housing will eventually bring prices down.

Meanwhile, in a remarkable victory, mayor has withdrawn a proposal that would have increased by a factor of five the cost of putting an argument in the city’s ballot handbook.

At the Budget and Appropriations Committee meeting Wednesday, a Lurie staffer announced that, after discussing the issue with a range of activists, the mayor wanted to table the issue, for now.

It might come back, but for now, the handbook will remain an affordable source of campaign information. In times like these, we take the wins we can get.

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