May 2004

Planning

Copyright by American Planning Association

Voters Reject San Francisco Plan to Encourage Workforce Housing

By James B. Goodno

San Francisco voters have soundly rejected a proposal by the city's business leadership that would have committed developers to construction of middle-income owner-occupied "workforce housing." In return, the city would have relaxed height and density restrictions, expedited permit review and planning commission hearings, and provided exemptions from the standard conditional-use process.

The ballot initiative, which applied to the city's downtown and central waterfront districts, went down by a 116,686 to 49,948 margin when voters went to the polls on March 2.

Despite the outcome, the debate surrounding Proposition J focused fresh attention on the housing shortage for households earning 80 percent to 120 percent of the area median income and the role land-use and planning codes play in the city's housing market. In the wake of the election, both proponents and opponents of the measure are working on reforms to planning and zoning codes to encourage more housing development for moderate-income households.

'Temporary setback'

"Tonight's result, while disappointing, is only a temporary setback," Chamber of Commerce senior vice president Roberta Achtenberg, a former supervisor and federal housing official and principal advocate of the measure, told the San Francisco Chronicle on election day. "Starting tomorrow, supporters of workforce housing will continue advocating for it until it becomes policy."

Achtenberg called the city's failure to produce housing for middle-income people "a shame." Opponents of the measure agree that the city is failing middle-income households, but argue that Proposition J targeted too narrow and too affluent a portion of the workforce.

"They say they want to house people earning 80 to 120 percent of the median income, but if you read the measure, it really favors people earning 120 percent," argues Fernando Mart, an architect and planner with Mission Housing Development Corporation, a nonprofit developer in the low-income Mission District. "Their analysis is true. Nobody is building for people in the 80 percent to 120 percent group. So you have to admit a need, but you have to find a better way to address it."

New proposals coming

Mart is trying to do just that. He's working with a group of activists, planners, and housing professionals on an ordinance that would systematize land-use incentives for low- and middle-income housing. This work-in-progress — advocates call it a "public-benefits initiative" — would offer a menu of upzoning options matched to particular commitments for affordable housing and other public benefits.

The proposal would take development decision making out of private offices in City Hall and create a system where zoning establishes land values, neighborhood planning provides real guidelines and a setting for hammering out differences, and incentives and benefits are clearly defined in public policy.

San Francisco faces a particularly acute housing crisis. According to the Draft Housing Element, a recent planning department document, 80 percent of the population cannot reasonably afford the average rent for a two-bedroom apartment; 89 percent of households can't afford to buy the average, $540,000 three-bedroom house. With 40 percent of the city's households making less than 80 percent of the area median income (26 percent earn less than 50 percent), the challenge of housing the poor and very poor is particularly difficult.

But they're not the only ones squeezed. For example, the median income for a three-person household last year was $82,350, according to the U.S. Department of Housing and Urban Development. The planning department says the average rent for a two-bedroom apartment stood at $2,057, meaning a family of three would have to earn $98,400 to keep rental payments within the federally recommended 30 percent of monthly income.

Too little construction

Housing construction has not kept up with need. Between 1990 and 2000, the city's population grew by 52,800 (to 776,733) and the number of jobs increased by 55,250 (to 634,430), but only 10,800 housing units were added. The deficit appears at all income levels, but is greatest in the middle-income group, which is served by neither the market nor public programs.

Affluent people — particularly those without children — are willing to pay top dollar. The city also has a strong contingent of affordable housing developers and an inclusionary-housing ordinance that requires developers to build or finance housing affordable to people earning less than 80 percent of the median.

The overall production shortage reflects obstacles presented by the planning process and the political climate. "San Francisco is a fully developed city," says George Williams, former deputy planning director, now head of the housing committee at the San Francisco Planning and Urban Research Association (SPUR), an influential business-supported civic organization. "People are attached to the existing fabric and don't want change."

Incentives to build

Proposition J would have addressed the need through several steps: It would have provided height and density incentives and time lines for qualifying projects in the two workforce housing districts. It would also have removed floor-area-ratio limits on residential projects in downtown office districts. It would have advanced $2 million from the general fund to pay for environmental review for the two districts and other neighborhood planning areas and required repayment by developers. And it would have encouraged the planning department to redo its central waterfront plan to provide for at least 4,000 new units.

The proposal, however, was politically flawed and probably doomed from the beginning. Drafted by the Chamber of Commerce and endorsed by Mayor Gavin Newsom and other local powerhouses, Proposition J was conceived behind closed doors in a fashion that excluded housing advocates and neighborhood groups.

Its focus on home ownership failed to attract tenant advocates and progressives in a city where 65 percent of residents are renters. Its poorly drawn lines — the downtown district included a slice of Chinatown — and possible precedents raised the ire of homeowners, neighborhood groups, and NIMBYs. And opponents succeeded in raising concerns about the proposition's impact on ongoing planning efforts, including the general plan's housing element, the eastern neighborhood's planning process, and the pilot Better Neighborhoods program in the central waterfront.

Even SPUR ended up making no endorsement on the proposition, although it had a hand in drafting it and approved of many of its elements. The organization's board had concerns about the drafting process, says deputy director Gabriel Metcalf, and was unable to justify support for the measure in view of its general opposition to ballot-box planning.

"Ultimately, SPUR is simply unable to sign on to a measure that enacts such diverse and complicated zoning and planning changes at the ballot," Metcalf says. "As an organization that believes in good planning, we could not support this process, no matter how worthy the goals."

James Goodno, a frequent contributor to Planning, writes about politics, policy, and urban affairs.