Skip to main content

tv   [untitled]    August 24, 2012 9:30pm-10:00pm PDT

9:30 pm
that time. i encourage project sponsor to start working with the neighborhood during the next year to see if we can come up with something that is done to satisfy their demands and create a project that will be a benefit to the city. >> commissioners, the motion on the floor is for disapproval. [roll call vote] the motion passed unanimously. this project has been disapproved. commissioners, you are now on item number 13. this is an informational presentation regarding the proposed charter amendment. the city attorney would like to address you.
9:31 pm
>> i want to remind the commission that our office has distributed our memo on political activity by a city officers and employees to the commission and his staff. the proposed charter amendment on the agenda is a ballot measure that has been approved for the ballot by the board of supervisors. it is pending before the voters. the discussion of the dead -- the charter amendment is an informational item only. in the use of city resources or personnel for political activity is prohibited. the planning commission it may not take a position on a ballot measure pending before the voters. individual planning commissioners and city staff may support or oppose the measure on their own time using their own resources, but should not advocate a position during a public hearing on the item.
9:32 pm
as with the item today, commission may ask staff for information about the impact of the ballot measure on the city. city employees, lawfully use the resources to investigate and evaluate objectively the potential impacts of a ballot measure on city operations. i wanted to remind staff and the commission of these rules about a pending ballot measure. the secretary or i may interrupt if we feel that the discussion is moving towards an advocacy tone as opposed to an objective tone. i ask for your consideration. thank you very much. >> i am here to introduce my colleagues at the mayor's office of housing. to give you a presentation on the content of the ballot measure. a little bit of an introduction. i spoke with you in the past
9:33 pm
about the city's need for housing in general. because we are an area of demand, because we are one of the region's primary sources of jobs, because we have the best nexus of transit in the region, san francisco is projected to grow greater. 90,000 units by 2014. affordability needs and the gap between rental and homeownership prices in our income levels here. this ballot measure is attempting to address those. >> thank you. i do have copies of my presentation.
9:34 pm
i am very pleased to present an outline of the housing trust fund. what i am going to talk about is
9:35 pm
some of the context, some of the rationale for this work. the working group process we went through, it was a collaborative consensus building one. the funding structure, and talk about the components of the housing trust fund itself. what kinds of activities it will find it should it pass in november. new mexico provide a brief summary. -- and then provide a brief summary. i want to focus on the funding landscapes. the gap in affordability that many san franciscans face. a quick snapshot of some trends. this first craft -- graph shows a downward trend in federal funds for affordable housing production.
9:36 pm
over the last three or four years, has been a significant decline in this funding support. even more dramatic is when you add the impact of the disillusion of redevelopment. the red line shows the traditional allocation. a fairly dramatic picture of current funding. why do we build affordable housing?
9:37 pm
there is a gap between what people earn and what people can afford in the city. we are a city of renters primarily. just to give you a sense of where we are, these numbers are slightly out of date. sales price for median home, close to $700,000. translating to a monthly burden of over $3,000. fair market rent, 2-bedroom, $2,000 a month. i want to talk through these, there is a lot of information. a gap between what people earn and what they can afford to rent. this is looking at a rental stock. if you look across the column, we are looking at area median
9:38 pm
incomes. 30% is very low income. 150% being upper income. size of apartments, starting with studios. the market rents are established by hud. a person who makes 30% ami could afford and what they are likely to find in the market. significant gaps for lower income populations and for larger bedroom size buildings. that got -- that gap starts to go away when you get to 80% ami.
9:39 pm
we can see that compresses have come down -- average home prices have come down. the affordability gaps have also come down. one of the benefits of the global economic crisis, few though they may be, it is that the gap in affordability for ownership has come down. however, a that gap still persists across a lot of income levels. if you jump to owning your own home, it continues to be a difficult leap for people to make. looking at our population trend as related to income level, this attempt to show that over a quarter -- about a quarter of the population is the upper income group. our two largest categories are
9:40 pm
lower in, and upper income. that trend has become more pronounced. folks who are leaving the city are in a low income range or moderate income range. we are at risk of becoming a city of the wealthy and the poror should this trend continu. a couple of notes about the important role the house in place in our local economy. new housing units are important source of jobs, both construction and construction- related jobs. these are numbers that come from the national association of home builders. if you look at multifamily building, for every 100 units
9:41 pm
produced, 120 construction and construction-related jobs result. a very significant source of job creation in our city. this is a series of statements from our city and economist related to the role that housing played in our economic competitiveness. labor cost tri-cities competitiveness of a business location. two-thirds of the typical businesses expense is labor costs. housing drives the labor cost. housing costs are about 30% of consumer spending. we have the highest priced housing in the region. housing costs are a major reason why the average bay area wages are higher.
9:42 pm
why san francisco has been a slow growing job center as compared to other jurisdictions in the bay area. what brought us to the table to look at establishing a housing trust fund. we continue to struggle with closing the gap between what people can afford any visible housing -- and the available housing stock. housing production plays an important role in our economy. that is setting the frame for -- as well as the working groups process. we convened a group
9:43 pm
we have focus group meetings. we establish a technical working group and had regular meetings of the course of five months. participation was very broad. these are market-rate and affordable houses as well as community-based organizations. we have a participation of business and labor groups, property owners, lenders, financial intermediaries. it was a very inclusive group. i am proud to say that a broad degree of consensus was reached through the process. the program that i will describe now is a testament to their hard work. quickly, on the front structure -- the fund structure, the allegations come to the general fund, and our -- our baseline general fund revenues. the size of the trust fund, as
9:44 pm
what we call a revenue captured mechanism or set aside was based on the calculation of some current revenue by increases in revenue to the general fund. we correlate the size of the fund to anticipated increases in revenue to the general fund. we are not taking from other programs or existing general fund commitments. quickly, a note about how the fund grows over time. the allegation -- the allocation is $20 million. it then rose by $2.8 million annually and. -- until year 12 -- it then grows by $2.8 million until year 12. it will grow or shrink according to the annual discretionary revenue of the general fund.
9:45 pm
the sizing of those amounts is related to four primary revenue streams. the first is redevelopment tax increment. this is property taxes currently pledged to paying housing bonds that were issued to support affordable housing. with the dissolution of redevelopment, as those bonds have retired, the revenue that is paying that debt service will flow to the general fund, increase general fund revenues, and we are using that increase in general fund revenue as it grows to calculate the size of the housing trust fund, a component of the housing trust fund. we are also including in our allocation 25% of that same revenue stream that supports infrastructure bonds. the infrastructure bonds and housing bonds, because, and i will talk about the program at a
9:46 pm
component of the housing trust fund directed that infrastructure improvement, but because we have that piece as part of the housing trust fund, we are also using in our calculation an assumption about increased revenue to the general fund based on current tax increment that is pledged toward infrastructure bonds. in addition, the board of supervisors has traditionally as a matter of policy allocated approximately $5 million in hotel tax to affordable housing. this goes back to agreements that resulted from the yerba buena project area, and it has been a consistent policy of san francisco. we have included that $5 million in our calculations. finally, there will be on the november ballot a tax measure, and we have included a portion of new revenue that will result
9:47 pm
from that gross receipts tax measure. so it includes the calculation -- the size of the trust fund includes those four components. it is important to note that should the new tax measure not pass, the charter amendment includes as a provision the ability for the mayor to on a onetime basis choose not to implement the housing trust fund if he in consultation with the controller and budget director decide it would have a negative impact. so what with the housing trust fund do? first, it is important to note that primarily, what we're talking about is an amendment to the city charter to establish this revenue capture or set aside in the general fund, but
9:48 pm
one piece of legislation you will be hearing as a follow-up item, so i want to be clear that the program as a whole includes both the charter amendment and associated legislation. our primary goal in establishing the housing trust fund was to help encourage balanced growth in our city. that includes affordable housing production, home ownership and housing programs, as well as to articulate market rate and below market rate stimulus measures. i will go through those in one moment. first, affordable housing, critical to our office, with the support of -- would be support of our existing pipeline. we have currently approximately 9000 units of affordable housing in our pipeline. these include projects in our
9:49 pm
transition-age youth initiative, parcels in our major project areas, certainly implementation of our public housing revitalization program, and the apposition development of new sites throughout the city. -- the acquisition and development of new sites throughout the city. home mortgage programs that we currently have include our downpayment assistance loan program, a city second loan program, police in the community, and teachers next door, which supports down payments for those demographics. the housing trust fund will double the capacity of the mayor's office of housing current downpayment assistance program, and under the trust fund, we would be directing $15 million over the first five years to that effort.
9:50 pm
second, the housing trust fund will fund a series of programs that we are calling housing stabilization programs, similar to programs we have run in the past. we have a lead-remediation program. we recently completed a green retrofit program, and we do housing counseling and foreclosure prevention. the housing trust fund also includes a provision to fund programs such as these, housing stabilization programs, really intended to reduce the risk to current occupants of loss of housing through, again, foreclosure prevention, energy improvements, and the like. finally, the housing trust fund includes a number of provisions that are intended to spur market rate development.
9:51 pm
those are intended to help lower residential production costs, provide increase development, support growth in areas that are zoned for growth, spurred stalled projects, and provide incentives and flexibility for on-site bmr production. the housing trust fund does two things related to lowering production costs, but first, it will lower the on site inclusion area obligation. you can fulfill the obligation either by producing it on site, off site, or paying a fee, and the housing trust fund will reduce the on site obligation by 20%. it also in other legislation -- and this is a piece you will hear later today -- we are proposing the elimination of small developments from the inclusion requirement altogether.
9:52 pm
a bit more on the inclusion very reduction -- in most cases, the 20% reduction would result in a reduction from the current standard of 15% to 12% on-site requirement. it is important to note that products that currently have a 12% on that requirement would receive no additional reduction. we are establishing a floor. as i mentioned, we are also proposing to return the inclusion very threshold to 10 units -- inclusion very -- inclusionary threshold to 10 units. this is because we see the smaller developments as being able to be built throughout the city. they help us meet our in-fill
9:53 pm
housing goals. they generally have a lower per square foot cost, so there is the potential at least to build more affordable housing without subsidy in a small unit development context. we have seen, again -- my colleagues can speak to this -- and planning staff will speak to this in more detail in the next item, but the small developments have very limited potential to produce below-market-rate housing, which is the intent of the program. all right, people are getting rowdy outside, so i will try to move it along. additionally, the housing trust fund intends to provide a modicum of developers certainty. -- of developer certainty. this is to provide certainty that the rules and requirements
9:54 pm
today will be stabilized and consistent over time. the housing trust fund, therefore, fixes or stabilizes existing affordable housing fees and obligations, so those will be increased according to the inflationary indexes -- according to inflationary index, as others are. where value is created through changes in zoning, fixing or stabilizing fees is lifted. so the city and policymakers are able to recognize increased value and reflect that i and impact fees -- in impact fees. quick note about the fee stabilization and the exemption through this provision -- special use district or other project-specific zoning changes
9:55 pm
that significantly increase zoning and development are exempted from this fee cap, and significance is defined as 20% increase in developable residential floor area or 50% increase in density. then, the changes in zoning for areas 40 acres or more -- these would be more like plan areas or zoning changes to a series of districts -- the definition of upzoning or significance is defined outside the charter. a committee will be established by the director of the mayor's office of housing, economic and workforce development, and planning department to establish a threshold of significance to apply when doing larger reasonings -- rezonings and to examine those from these fees. we felt it was not appropriate to articulate that definition in the charter itself.
9:56 pm
finally, the charter will support growth in areas that are zoned for growth but lacks certain infrastructure or public realm amenities -- but lack certain infrastructure or public realm amenities. this would be up to 10% of the fund can be used to support neighborhood improvements, community amenities such as pocket parks come streetscape amenities, pedestrian improvements, community-serving child care, things that are essential for the livability of a neighborhood but may not be in existence in some of the areas where new residential growth will be occurring. the housing trust fund will help to solve projects that have been negatively impacted by the downturn in the economy. additional with have been proposed as part of the package
9:57 pm
of measures, but outside the charter amendment itself, extending the program -- additional developments have been proposed. we intend to pursue again separately and outside of the charter an extension -- a limited extension for high-rise development of the current fee deferral program. within the charter, it is specified that project sponsors who have been entitled but had yet to initiate construction or receive their first construction document may return to this body to request that the reduction in on-site obligation be applied to their project, so they could, if they had chosen to provide their inclusion very requirement on site, they may come back to the planning commission and request a reduction of 20%. or they may come back and modify
9:58 pm
their selection to meeting their obligation on site. again, projects that have already received their building permit will not be eligible for this request for modification to their entitlement. finally, and perhaps most significantly, the reduction in the on-site requirement is intended to stimulate and provide incentives to market rate developers to tuesday on- site requirement. our programs that we manage at the mayor's office and housing are generally targeted at residents who make 60% a mike or below -- 60% ami or below. the inclusion their program is really our primary mechanism for
9:59 pm
creating moderate income housing in san francisco. so the housing trust fund reduces the on-site obligation while maintaining the current levels for the other options -- the fee or the offsite option. we will also again outside of the charter be pursuing a program which will provide us -- when it is usually beneficial to the developer and to the city, the option to purchase additional bmr units, which will be critical for those units that are pursuing state financing, such as tax-exempt bond financing. we can provide further incentives to increase their affordable housing component up to 20%. it is a tool that we hope to have to allow us to increase that -- that bmr