Exclusive: Huge S.F. housing projects in limbo as key study is delayed

In June, voters passed Prop. C, more than doubling San Francisco’s affordable housing requirement to 25 percent of units for new market-rate projects. It was one of the biggest policy shifts in years, but the percentage could be temporary.

The Board of Supervisors passed trailing legislation that stated that a feasibility study would be released by July 31, which could lead to a change in the requirement based on the economic analysis.

But the study hasn’t been completed on time, and the target release date is now the end of August, said Ben Rosenfield, the city controller, whose office is overseeing the study.

The delay is bad news for developers who have been awaiting the study’s completion before moving forward with projects worth billions of dollars in potential investment. Now the real estate community will have to wait at least a month longer before it has more economic clarity. The Housing Action Coalition estimated in June that at least 1,600 units in the current pipeline will be hit with Prop. C and many may not get built as a result.

Rosenfield cited the complexity of the study and the time it took to hire firms as reasons for the delay.

“The initial legislative timeline that was established was very aggressive,” said Rosenfield. “The questions that are being asked here are complicated.”
Rosenfield said that his office had been communicating to supervisors that the study could be delayed given its complexity.
“I don’t think this is a surprise to any of the sponsors,” said Rosenfield, referring to the Board of Supervisors members who supported the bill, including Jane Kim and Aaron Peskin.

An eight-member technical advisory committee was established to oversee the study, with the Board of Supervisors and Mayor’s Office each appointing half of the members. A City Hall source said that the Board appointed Whitney Jones of nonprofit affordable developer Chinatown Community Development Center, SoMa activist John Elberling of Todco, Dan Adams of nonprofit developer Bridge Housing and Terence Cordero.

The Mayor appointed Eric Tao of market-rate developer AGI Avant, who also represented market-rate developers in the Prop. C negotiations. The other mayoral appointees include Lydia Tan of Bentall Kennedy, Jesse Blout of market-rate developer Strada Investment Group and Emily Johnstone of AFL-CIO Housing Investment Trust.

Three firms have been hired to perform the study: Century Urban, Rick Jacobus’ Street Level Advisors and Blue Sky Consulting Group. The cost of the study will be absorbed by the Controller’s office budget, said Rosenfield.

The advisory group will meet on August 24, and the study could be released publicly shortly afterwards.

“The deadline was a firm deadline,” said Supervisor Peskin, a co-sponsor of the ballot measure. But he noted that the Board of Supervisors is on recess during the next three weeks and likely wouldn’t have acted on the report until September anyway, so the delay was “no harm, no foul.”

Housing projects proposed before this year have been grandfathered in and will have to provide affordable housing between 13 and 14.5 percent of units, far below 25 percent. But projects proposed this year and later are currently subject to the full 25 percent requirement, which developers have said could make them financially unfeasible.

One of the biggest projects in limbo is the Prado Group and SKS Partners’560-unit redevelopment of the former University of California, San Francisco campus in Laurel Heights. Although the large project has been planned for the site for years, a formal plan wasn’t filed until this year, meaning the project would currently be subject to the full 25 percent affordable housing requirement.

“We will be considering the implications once the study has been completed and the Board has made its policy decision with respect to the study’s findings,” Dan Safier, CEO of the Prado Group, said in June.

One possible change in policy following the study is that different areas of the city could have different affordability requirements: For example, the Excelsior’s affordability requirements could be lower compared to downtown SoMa, given the difference in rents. Earlier this year, Oakland voted to establish affordable housing fees that varied between three zones in the city.

Peskin said that the delay had nothing to do with the other studies that the City Controller’s Office had to complete in recent weeks on potential ballot measures such as the “tech tax” and replacement of industrial space.

Peskin said that the Board could vote on policy changes as soon as September, but depending on the complexity of the conclusions, a decision could come weeks later. “I don’t want it to languish,” he said.

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