U.S. Mayor Articles

San Francisco: Creating Affordable Housing Opportunities in America's Most Expensive Housing Market


San Francisco is the country's highest cost and tightest housing market. The National Low Income Housing Coalition's report, Out of Reach, estimates that a household would have to earn $28.06 per hour to afford the HUD Fair Market Rent for a two bedroom apartment, putting it out of reach for approximately 56% of San Francisco renters. The challenge for low income renters is heightened by the extremely low vacancy rate, which has hovered around 1% for several years, making it difficult even for Section 8 voucher holders to find housing in the city. With only 35% of San Franciscans owning their own homes and the median sales price of a home or condominium soaring to $500,000, home ownership has become a distant dream for many. San Francisco is also the second densest large city in the United States and is virtually fully built-out, with scarce vacant land available for large-scale housing development and very few abandoned residential properties. And unlike some cities, San Francisco's population continues to grow, increasing competition for existing housing resources. Creating and maintaining affordable housing opportunities against this backdrop is a formidable challenge, but under Mayor Willie L. Brown's leadership, San Francisco has developed some of the nation's most innovative approaches, highlights of which are described below.

Devote substantial local resources to affordable housing
San Francisco devotes almost $100 million a year of local resources to affordable housing, including a portion of the hotel tax for the development housing for seniors and people with disabilities and nearly 50% of the tax increment generated by all redevelopment activities. In 1996, Mayor Brown supported a $100 million affordable housing general obligation bond measure which was adopted by the voters, generating $85 million for development of rental housing and $15 million for downpayment assistance of up to $100,000 per borrower to first-time homebuyers. The city also funds a dozen nonprofit developers that form the backbone of its affordable housing delivery system.

Link affordable housing to development
The city imposes a housing development requirement or linkage fee on the development of commercial offices, and Mayor Brown has proposed legislation adding the development of retail, entertainment, and hotels to the program. In addition, market-rate housing developments of 10 units or more are required to set aside 10% of the units as affordable under the city's Inclusionary Housing Program.

Maximize housing opportunities in large scale development
Mayor Brown negotiated the largest development project in San Francisco history, the 305 acre Mission Bay development. This new San Francisco neighborhood will include a new campus for the University of California at San Francisco, 5 million square feet of commercial office space, retail space, a hotel, open space, a school, a police and fire station, and 6,000 units of housing. The Mission Bay Plan requires 1,700 housing units to be permanently affordable. Under this unique program, the developer will contribute 16 scattered acres for the affordable housing, which will be developed by nonprofits and subsidized by tax increment generated by the entire development. The first 100 family units are under construction, with 140 senior units on the drawing board.

The city is also using military base closures as an opportunity for affordable housing. The former Treasure Island Naval Base is reusing approximately 1100 units of housing, 218 of which are devoted to housing for formerly homeless families and individuals; the city funded 100 units of housing for homeless veterans at The Presidio; and plans are underway for at least 20% of the estimated 1700 units to be developed at the Hunters Point Naval Shipyard to be affordable.

Preserve existing affordable housing
Mayor Brown established the Affordable Housing Preservation Program to save HUD subsidized rental housing at risk of conversion to market rate. To date, the city has assisted in the acquisition of more than 1200 at risk units, leveraging approximately $40 million of local funds to attract over $110 million in private funds to purchase and rehab these units. The city also makes rehab loans available to existing nonprofit owned housing to extend the useful life of this permanently affordable rental housing and to low-income homeowners to preserve affordable homeownership.

Use housing to add social infrastructure to neighborhoods
San Francisco uses affordable housing development to help build communities by including child care centers, job training programs, health clinics, senior programs and other community facilities. For example, in conjunction with development of three new housing developments in an underserved neighborhood, the city funded the development of four new child care centers, a senior center, and a multipurpose community center. In Mission Bay, the proposed senior housing development will include an adult day health center, a new branch library, and 20,000 square feet of nonprofit, neighborhood serving office space. The city has also pioneered new models for addressing housing and service needs, including intergenerational housing for seniors with on-site child care, supportive housing for homeless youth, families and individuals, and supportive housing for people with disabilities, including those with Alzheimers and dementia, HIV/AIDS, and developmental disabilities.

Collaborate with private lenders and investors
The city has partnered with the AFL-CIO Housing Investment Trust on several key affordable housing developments during Mayor Brown's term. In 1999, Mayor Brown and Fannie Mae announced a $16 million housing investment plan called "House Bay Area," under which $2 billion of investment will be dedicated to San Francisco. In 2000, the city also entered into a partnership with private lenders, nonprofit groups and HUD to create the San Francisco Homeownership Center.

Prepared by The Council for Investment in the New American City

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