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Risky Business: Inclusionary Zoning Compromise Good Politics or Good Policy?


June 05, 2017  |  By Jack Segal




After a protracted fight on the Board of Supervisors over setting new on-site affordable housing requirements, Supervisors Breed and Safai have joined forces with their former adversaries, Supervisors Kim and Peskin. The resulting legislation is several pages longer, far more complex, and represents a fairly solid compromise between the two sides. However, the City might be a casualty in this treaty. 
 
According to a report issued by the Controller’s Office in February of this year, the percentage of affordable housing mandated by this latest proposal lies firmly in the ‘risky’ zone for larger projects, with the potential to drive developers out of town in the face of rising costs. Remember, every unit a developer sells at below market rate is a unit that cuts into the rest of the development. Set that number too high, and the incentive to build disappears, as developers try and fail to pass on the increased project costs.
 
Here’s the compromise section by section, with percentages colored yellow to indicate risk. (Click the table to see a larger image.)
 

This latest proposal is extremely complex, and could pose a substantial threat to new projects, given that the required percentages are about a hair’s-width away from the danger zone.
 
One less obvious aspect of these proposals is geography-specific. Each of the requirement percentages listed above is 10% higher in the Mission, Chinatown, Richmond, and Western SOMA neighborhoods. 
 
Here’s those figures, with the red indicating potentially harmful values (as per the Controller’s Report). ​(Click the table to see a larger image.)
 

That’s a lot of red. In their efforts to ensure housing for low-income residents, these Supervisors may well be on the path to halting development in these neighborhoods entirely, and perhaps in the city as a whole.

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Photograph courtesy of Mikkel Schmidt
 

Reader Comments
By Howard Epstein on 06/09/2017
The elected officials who hide behind the "progressive" label to obfuscate their true ideology want to stop al housing development in S.F. The non-subsidised units will be unafordable for people who aren't subsidized. As usual, the extreme left-wingers in charge have no concept of how the private sector works.
By Kraus on 06/05/2017
Setting the subsidized housing (aka BMR) percentages so high in the Mission, Chinatown, Richmond and Western SoMa areas is a massive policy mistake. It will only serve to exacerbate the housing shortage, increase unaffordability (except for a micro-minority of "housing-lottery-winners") and accelerate the wholesale displacement of the lower and middle-classes -- not only from these areas -- but from the City overall.

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