San Francisco County’s Plan to Ease Housing Crunch

HuntersPointAerial

An aerial view of Hunters Point (center) and Candlestick Point (bottom left), where the city plans to build about 12,000 housing units over the next few years.

A booming economy is bringing more jobs and people to San Francisco. The county’s current population of nearly 850,000 is projected to increase by 8,000 to 9,000 residents yearly through 2017, according to Pacific Union’s recent San Francisco County Housing and Economic Outlook, authored by John Burns Real Estate Consulting.

But one big question facing San Francisco is where all of these newcomers will live and whether they will be able to afford a home in the city, even on large salaries. The supply of available housing in San Francisco has been severely constrained for the past several years, which has helped fuel large price increases.

Mayor Ed Lee hopes to address affordability and pent-up demand in a plan to introduce 30,000 new and rehabilitated housing units throughout the city. One caveat of Lee’s plan is that at least one-third of these homes would be permanently affordable for low-income (defined as those with a maximum $77,700 median yearly income) and moderate-income ($145,650 annual income) families, meaning that a buyer would pay no more than 43 percent of his or her monthly gross income on a mortgage payment.

NEIGHBORHOODS POISED FOR GROWTH

Approximately 12,000 of the mayor’s planned 30,000 new and rehabilitated units — almost all of which are condominiums — will be built in the city’s southeastern corner, according to Tiffany Bohee, executive director of San Francisco’s Office of Community Investment and Infrastructure. Two sections – the Hilltop of the former Navy shipyard and the Hunters Point – Candlestick Point development – are part of a mixed-use collaboration with Lennar Urban and will include new housing. The project will also include a rebuild of the Alice Griffith public housing development by vertical partner McCormack Baron Salazar.

Lennar will build about 1,500 to 1,600 homes in the shipyard and Candlestick Point by 2020, Bohee says. A ramp-up of the additional 10,500 homes in the area should happen after that, according to Lennar Urban Vice President, Sales & Marketing Sheryl McKibben, who estimates that 88 homes will be completed by spring of this year. The company will complete close to 250 units by the end of 2015 and about 519 by 2016 at the Hilltop location. McKibben said that pricing on the units has yet to be determined.

For developing neighborhoods like Hunters Point, the goal is to apply the best of San Francisco neighborhood planning – walkable streets, plenty of open space, and extensive transportation options – says John Rahaim, planning director for San Francisco city and county, who estimates that 80 percent of development slated for the city will occur on 20 percent of its land.

“The advantage of that is that [residents are] closer to transit, the transit is available, and those services in those neighborhoods will improve because the density will allow for a certain market for a lot of the retail services and so on,” Rahaim says.

Other neighborhoods that will see additional housing – both new and rehabilitated – supply by 2020, include Pier 70, 5M (the section of SoMa centered around 5th Street and Mission Street), Mission Bay, Mission Rock, Park Merced, Transbay Redevelopment and Transit Center, Treasure Island, and Visitacion Valley. The city also hopes to repair public housing in Sunnydale and Potrero Hill.

NAVIGATING SAN FRANCISCO’S DEVELOPMENT HURDLES

The slow buildup in construction is typical for San Francisco, as planning and building regulations, along with collaborations with private developers (and their equity and debt), create more hurdles than in other cities. The mayor’s plan aims to not only spur new construction but also to streamline government processes – including land use, planning, and design processes as well as technical reviews – for the various agencies.

“It was really critical in terms of focusing and leveraging the city’s regulatory process because San Francisco is known for its gauntlet of rules and regulations – put in for good reason – but it’s very complex,” Bohee says. “I think the mayor’s plan certainly facilitated and has accelerated development for affordable housing.”

Rahaim and the planning commission worked with the mayor’s office to set the 30,000 number – a goal that was “reasonable but still aggressive” – through projects in various stages of completion (including those already approved and not yet approved).

“Land use and development in San Francisco is a pretty intense topic, and this is the only city I know where land use is high in people’s consciousness,” Rahaim says. Bohee notes that new developments can take as long as 30 years to play out behind city office doors, adding that plans for Mission Bay have been in the works since 1998.

Other plans by the city to increase affordable housing include a density-bonus concept that would allow builders on certain sites to surpass the size permitted by San Francisco code and to acquire and rehabilitate buildings once earmarked as rental units and turn them into more permanently affordable housing.

Another financial plan the mayor’s office touts is its Down Payment Assistance Loan Program. The 10-year initiative is designed to help first-time, middle-income buyers purchase a home in one of the country’s priciest cities. The mayor hopes to add $100 million dollars to the program.

“We usually fund people to the tune of $100,000 to 200,000 a household,” says Sarah Dennis-Phillips of the Mayor’s Office of Economic & Workforce Development. “It provides people an opportunity to invest in their future because it is through homeownership.”

OPTIMISM SURROUNDS PLAN

Dennis-Phillips acknowledges that while bringing down housing prices in the city is a tall order, the increased supply should eventually help temper appreciation and accomplish the mayor’s goals.

“The more housing we have out there, the less competition there is for each and every unit and the more prices start to level out a little,” Dennis-Phillips says. “I don’t think housing will ever be cheap in San Francisco, but if we can combat this rapid kind of price increase that we’ve seen over the last two years and get prices back to a somewhat reasonable level, then I think those 30,000 units will have done their job.”

Rahaim is similarly upbeat about Lee’s plan, noting that the housing supply and current urban trends toward city living will help drive the city to its goal.

“I have very little doubt that we’ll meet the mayor’s target,” he says. “I think the market is there for it. Even if the economy takes a turn or levels off, there is a big paradigm shift happening in the country … of people being much more interested in cities and in city living.”

(Photo: Flickr/Todd Lappin)

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