Mayor Fears that the Current Ballot Initiative Would Slow Down Construction of Housing Too Much

Two weeks ago, we wrote about an initiative measure placed on the ballot by four Supervisors and sponsored by Supervisor Kim that would require market rate housing to go through a longer and more expensive approval process if the citywide ratio of affordable housing to market rate housing falls below 30%.¹ This week's article concerns the response of Mayor Ed Lee. On the same day that Supervisor Kim filed her "Housing Balance" initiative measure, Mayor Lee submitted an initiative measure which would block the additional procedures proposed by Kim's measure and other similar procedures from taking effect. Mayor Lee's measure would not allow new approval procedures tied to maintaining a ratio of affordable housing in locations within certain geographic areas of the City. Both Mayor Lee and Supervisor Kim have the option of withdrawing their measures by August 1st and/or possibly placing a new measure on the ballot. Submitting a new measure at this point would require a vote of six members of the Board of Supervisors.

To be clear, Mayor Lee’s ordinance would prohibit adding additional land use procedures for projects in areas subject to Area Plans or in Redevelopment Plan Areas. These additional land use procedures include conditional use permit authorizations, variances, design review and automatic discretionary review hearings when the only reason these procedures are triggered is to maintain a so-called housing balance or a particular ratio of affordable housing across the City or within a certain district. Mayor Lee’s rationale is that the Area Plans and Redevelopment Plan Areas have already been through an extensive community input process and incorporate robust land use regulation, and that projects proposed within those areas are already subject to “Inclusionary Housing” rules that require more affordable housing than in some other parts of the City. "Inclusionary Housing” rules are those that require that a percentage of new market rate units be built on-site or off-site as affordable (or that require a fee paid to the City to subsidize affordable housing elsewhere). The 

Mayor believes that additional regulations such as those proposed by Supervisor Kim will only exacerbate the housing shortage.

The Mayor's proposed ordinance would not apply to (1) a land use regulation within a specific housing project, (2) a regulation adopted through a community planning process, (3) projects on City owned property, or (4) projects subject to a Development Agreement under California Government Code section 65864. 

In addition, the Mayor’s initiative measure would establish policies and goals to further the Mayor's commitment to construct at least 30,000 new housing units by 2020 (with a majority accessible to low and middle income households). The measure states several means by which to achieve that goal, including:

• A funding strategy developed by the Mayor and Board of Supervisors to drive a range of housing initiatives including rehabilitation of public housing, acquisition and rehabilitation of existing rent control units in "at risk" neighborhoods and construction of new affordable housing.
• A new Revenue Plan that will pursue new revenue sources to build new housing and provide down payments for middle income households.
• An economic nexus analysis undertaken by the Planning Department to study whether luxury housing development creates a negative impact on "demand for" middle income housing. The phrase "demand for" should likely have been drafted to state "construction of".

In defense of its measure, the Mayor's Office has reported that as of July 1, 2014, more than $50 million in Inclusionary Housing fees paid by market rate housing developers has been deposited into the Citywide Affordable Housing Fund, and more than $13 million in interest has been earned on the Citywide Affordable Housing Fund.

 

¹ See article from June 25th 2014: San Francisco Ballot Measure Proposes to Slow Down Development of Market Rate Housing When Not Enough Affordable Housing Is Being Built