In a surreal hearing, supes move to cut affordable housing requirements

A Board of Supes committee voted this week to approve a dramatic cut in the amount of affordable housing developers have to provide when they build luxury units—although nobody gave any evidence that this would jump start new housing.

In fact, city officials admit that affordability requirements aren’t holding back new housing right now, and if economic conditions improve, developers will be making money with various state and local incentives, but not helping with the affordability crisis.

It was, as is often the case with housing policy in San Francisco, almost surreal watching the discussion. Jacob Bintliff, the economic recovery director at the Mayor’s Office of Housing and Economic Development, told the Government Audit and Oversight Committee that a detailed study showed no housing project is feasible in this city today—even if the affordable requirements were eliminated entirely.

The costs of construction materials, labor—and most important, investment capital (much of which is now diverted from housing into data centers for AI)—makes new housing at any level impossible, and all the upzoning and developer giveaways aren’t seeming to change that.

San Francisco is betting its future on AI—and according to the NY Times, damaging any effort to build new housing, here and elsewhere. There’s only so much investment capital in the world, and when it all goes to one place, others are cut out:

Start with housing. New homes that could ease the affordability crisis aren’t getting built, as land that could be used for houses is sold instead to data center developers. Consider Prince William County in Northern Virginia, a region that suffers from an estimated shortage of more than 75,000 homes. A residential developer who had purchased land there for just over $50 million, with plans to build homes, ultimately sold a portion of that land to Amazon for $700 million.

Land costs are higher — at times more than 17 times as high as they were even three years ago in pockets near Dallas. Scott Finfer, a local residential land developer, told The Wall Street Journal that for home builders, “there’s no possible way you can make those numbers work.” The financiers who help decide how much new housing gets built and where it goes are shifting their money away from homes and into the data center rush.

Ending affordability requirements isn’t going to change that.

Sup. Jackie Fielder, who is back from medical leave, made the point nicely: “If macroeconomics is the culprit, why are we reducing inclusionary housing?”

The cuts in inclusionary housing fees are part of a grand bargain that the mayor and the more conservative supes have made: In exchange for adding what will be as much as $100 million a year to the Affordable Housing Trust Fund, the supes will give the luxury housing developers and their investors more profits.

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The problem, as Fielder noted: The Trust Fund is a charter amendment that needs voter approval. If it fails in November, then the city will have given away that money and won nothing in return. She suggested that this ordinance could wait until after November.

More significant: The entire plan ignores the history and future of displacement in neighborhoods like the Mission. “We have lost 12,000 Latino families since 2000,” Fielder said. Planners and community activists have had “a clear bargain,” she said. “More height and density in exchange for high affordability.”

This deal “breaks that bargain.”

Sups. Bilal Mahmood and Stephen Sherrill voted to send the proposal to the full board with a positive recommendation. Fielder voted No.

Fielder is going to offer amendments when the proposal gets to the full board Tuesday/14.

The Planning Commission is slated Thursday/9 to consider the next step in a profound, century-long struggle for cheap, environmentally sound public power in San Francisco. The commission will consider the final environmental impact report on the Power Asset Acquisition Project—the city’s move to take, by eminent domain, PG&E’s local distribution system.

That’s the final and crucial step towards creating a public utility that would use the city’s own Hetch Hetchy hydropower and potentially a broad range of renewable projects to meet residential and business needs in a city so badly served, at such great expense, by PG&E.

The move is fairly technical, and involves no major policy decisions. The EIR has been through its public comment period, and while it’s dense and complex, the planning staff recommends that the commission approve it.

That would pave the way for the Public Utilities Commission to issue revenue bonds (not paid for through property taxes) and the City Attorney’s Office to file eminent domain proceedings. PG&E will resist, and the court battle will take some time—but in the end, and I have run these numbers many times over the years, the city will be able to cut electric rates, pay the interest on the bonds, hire every local PG&E employee at existing union wages with existing benefits, and still clear hundreds of millions a year in revenue that can go to other city services.

But the commission vote will be an important political symbol. Former Mayor London Breed openly and actively supported public power, and SFPUC director Dennis Herrera has been an advocate. Mayor Daniel Lurie has not yet taken a position, and Herrera is about to retire.

If Lurie wants to slow this process down, he has a path, thanks to Board of Supe President Rafael Mandelman.

Three of the commissioners are appointed by the board president. Four are appointed by the mayor. The three board appointed members were termed out this month, and Mandelman hasn’t nominated replacements.

That means the Planning Commission has only four members, barely enough for a quorum to do business. One missing member, or one No vote, would undermine the entire public power effort.

That’s going to be a problem for months now, since Mandelman’s nominees will have to go to the Rules Committee then the full board for approval—and the board typically goes into recess in August.

Sup. Matt Dorsey’s proposal to block city funding for supportive housing that isn’t “drug free” goes to the Public Safety and Neighborhood Services Committee Thursday/9. The measure has been amended since it was first introduced, but it still represents a radical change in city policy: For many years, San Francisco followed the national model, based on decades of study, called “housing first.” The idea is to get people off the streets, then deal with substance use and mental health issues.

The measure has enough cosponsors to pass the full board. The hearing starts at 10am.

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