City Controller’s Draft Report Finds New Affordable Housing Requirements May Be Economically Infeasible

Originally posted to Unfamiliar Terrain

Publication of the much-anticipated feasibility study of the City’s new, heightened affordable housing requirements, originally due on July 31st, has been delayed until September. Nonetheless, on August 22nd the City Controller released draft recommendations concluding that increasing the new affordable housing set-aside to twenty five percent would reduce total housing production by twenty two percent as compared to the prior set-aside of twelve percent.

The draft states that an eighteen percent on-site set aside for apartments and a twenty percent on-site set aside for condos mark the upper bounds of economic feasibility.

The City adopted the increased affordable housing requirements in June with the passage of Prop C, a ballot measure to amend the City’s Charter and update affordable housing requirements. In May, the Board adopted trailing legislation (contingent on voter approval of the ballot measure) implementing Prop C.  Among other things, it required a feasibility study to assess how increasing on-site affordable housing requirements from twelve to twenty five percent, and off-site and in lieu fees from twenty to thirty three percent, will affect housing production in San Francisco. Once released, the report could form the basis for adjustments to the requirements.

The San Francisco Housing Action Coalition estimated that 1,600 units in the approval pipeline would still be subject to Prop C’s requirements, and the report’s delay prolongs the economic uncertainty for many of these projects.