2016 has started with a bang as the City debates competing affordable housing initiatives proposed for the June 7 election by Mayor Lee and by Supervisor Kim. The Mayor’s proposal would require the Planning Department to conduct an economic feasibility study and make a recommendation to the Board of Supervisors within nine months of the effective date of the legislation, and then no less than every 24 months moving forward. The Kim proposal would increase the affordable housing requirement set by the City Charter from 12% to 25%, with 15% of units required to be affordable to lower income households (for sale units must be affordable to households of 80% AMI; rental units must be affordable to 55% AMI) and 10% of units required to be affordable to middle income households (for sale units must be affordable to households of 140% AMI and rental units must be affordable to 100% AMI). The 25% requirement would be an interim control until new legislation is adopted by the Board.
The development world has been watching closely to determine what affordable housing requirements will be moving forward, and whether a grandfathering provision will be added to allow projects already in the pipeline to proceed under current requirements. Last night, the Board of Supervisors finally debated these questions sitting as a Committee of the Whole.
Debate was intense, but the Board generally agreed on several issues. First, a higher level of affordable housing is appropriate. Second, a feasibility study would help the Board to determine the proper level of affordable housing moving forward. Finally, affordable housing policy should be implemented through Board action and not dictated by City Charter.
However, the Board did not agree as to next steps. Supervisor Kim favors moving forward with a ballot measure to modify the City Charter to require 25% affordable housing, while Supervisor Peskin suggested that the Board come to agreement as to alternate legislation prior to the June election, potentially withdrawing both ballot initiative proposals prior to March 1. Supervisors Yee, Cohen, Wiener and Tang stated that further study is necessary to determine the appropriate level of inclusionary housing and what grandfathering provision should be included.
Supervisors Wiener and Tang also pointed out that while there has been significant publicity about large projects such as 5M providing higher levels of affordable housing - touting 40% as the new 12% - those numbers are misleading. Those projects received some level of public subsidy. In addition, the calculation of affordable units in those projects would not comply with the levels of affordability included in the current proposals, and therefore would not qualify as providing 25% affordable housing.
Supervisor Cohen introduced an amendment to the Kim Charter Amendment that would push any changes to affordable housing off until the Planning Department can study the issue and come up with a recommendation, no later than December 31, 2016. That proposal failed.
In the end, the matter was continued to the March 1 meeting because at least six days must intervene between first hearing and a Board decision to submit an initiative to the voters. The deadline for submitting a Charter Amendment to the Board of Elections for the June 7 election is March 4. There will, no doubt, be considerable behind the scenes negotiations between now and the March 1 hearing, as any ballot initiative will need the support of six of the eleven members of the Board. We will continue to provide updates as this matter unfolds.
Source: Reuben, Junius & Rose, LLP 2016
The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.