by Peter Cohen and Fernando Martí
The future of a huge swath of The City is currently up for grabs, and with it, the future of San Francisco’s approach to affordable housing.
The Public Utilities Commission parking lot next to the City College of San Francisco’s campus on Ocean Avenue may not seem exciting, but it is 17 acres of developable land in our mostly built-out city, and market-rate developers are salivating at the prospect of privatizing this land.
As publically owned land, the Balboa Reservoir represents an indispensable public resource that should be preserved as a public good for this and future generations. This will require not only a commitment of resources, but also visionary leadership by The City, which we have yet to see.
Any “Request for Proposals,” or Board of Supervisors-approved rezoning or development agreement for residential uses on the site, should prioritize maximum housing affordability, at a minimum mandating that at least 50 percent of the site be affordable to low-income households (families earning less than $50,000), and on top of that another portion affordable to moderate-income families (two-earner households earning up to $120,000). And it should do that while still supporting City College’s continued viability by dedicating parking facilities for a fully enrolled CCSF and providing new open space.
The PUC’s Citizens Advisory Committee agrees: Last March, it passed a resolution calling for 50 percent to 100 percent of housing developed on the site to be affordable, for a range of incomes and family sizes, to truly meet the needs of San Franciscans.
The Mayor’s Office of Economic Development, however, argues the best approach for a large 17-acre site like this, even if it is publicly owned, is to privatize it as much as possible. Any affordable units, they argue, should be entirely dependent on market-rate developers willing to “cross-subsidize” some small amount. And most of these so-called affordable units could end up being studios and 1-bedrooms — only affordable to individuals who earn more than $100,000 (140-150 percent of median income). These are called “creative financing” solutions.
The logical and frightening conclusion of The City’s argument for privatizing Balboa Reservoir is that we would never need to invest in affordable housing again — simply let the paltry amount of affordable units we are able to leverage out of “the market” produce all our affordable housing from now on. These are the same arguments that lead to privatizing public schools and community colleges or contracting out critical public services to the lowest bidder. These are the classic arguments of austerity and neoliberalism, based on a model of scarcity of resources that hardly has a base in San Francisco’s booming economy.
Ideology aside, the problem with this model, practical as it may sound, is that it simply continues to exacerbate the imbalance of high-end market-rate housing (the latest numbers are that only 11 percent of The City’s residents can afford the median cost home) compared to housing for the everyday working and middle-class San Franciscans. And according to The City’s own Housing Element goals through 2022, we have already built or entitled more than 106 percent of our market-rate housing goals, and met only 24 percent of our low-income and 13 percent of our moderate-income needs!
We are always playing a game of catch-up with the overproduction of luxury housing.
It is indeed possible to develop the Balboa Reservoir with 100 percent affordable housing and amenities for the neighboring community and City College. And certainly it is without question possible to develop it with a minimum of 50 percent to 60 percent affordable as we suggested above. It is primarily a question of available funds and phasing. A back of the envelope calculation envisions a total city investment of around $100 million for a 250-to-300-unit affordable development — held in the public trust in perpetuity. This would include compensating PUC ratepayers with a fair-market value for the “unserviced” land (subtracting the cost of needed infrastructure such as streets and sewers).
The City argues we don’t have that kind of money lying around, and even much of the Prop A funds from last November are already being dedicated to new affordable housing elsewhere in The City. This would clearly be a major city investment, spread out in phases, but given the willingness shown by voters over the last decade to support funding for affordable housing, such numbers do not appear to be insurmountable, and the payoff would last for generations.
Some say only by relying on market-rate development can we be reasonably assured that development will happen sooner rather than later. This is simply not true. In fact, city-funded development is more stable and reliable than market-drive development. Large market-rate projects rely on the ups-and-downs of the global market of institutional investors, which quickly dry up at the slightest change in the economy. On the other hand, in the downs of the market, it is often only city investment that moves projects forward. In fact, during the Great Recession in 2010, more than 50 percent of the units completed in San Francisco were publicly financed affordable housing.
The model of Octavia Avenue is a perfect case in point: A huge swath of public land (from the Central Freeway teardown) was divided into parcels, and fully half of the new units were dedicated to affordable housing. Most of those parcels are now built out, and everyone agrees the development along Octavia Avenue is wildly successful. It took vision, leadership and perseverance, but public lands are being used exactly as was envisioned by the public.
It is not a question of feasibility or funding that is holding us back, but a lack of bold leadership that truly attempts to face the housing crisis head-on. A short-term trade-off for a handful of privately financed affordable units for people earning $100,000 at Balboa Reservoir is not visionary. A truly visionary plan would seize this rare opportunity with a longer-term strategy that leverages hundreds of affordable units from this major public resource.
On Monday, the Balboa Reservoir CAC will discuss development parameters for the site. Supervisor Norman Yee has requested that the CAC consider a proposal to mandate 50 percent of all housing on the site to be affordable (and the definition of “affordable,” and affordable for whom, is critical). And on Tuesday, the PUC will take their CAC’s resolution regarding affordability and uses for the site into consideration.
Our elected leaders, commissioners and city bureaucracy would do well to begin with a philosophy that prioritizes and preserves public resources for the public good in perpetuity.
(Peter Cohen and Fernando Martí are co-directors of San Francisco’s Council of Community Housing Organizations).
