After many months of work by SPUR and other housing advocates, the Housing Trust Fund, has made its way through San Francisco’s legislative process and been placed on the November ballot. We were very involved in crafting this measure, which would provide a permanent source of funding for affordable housing, encourage the creation of moderate-income housing and stimulate the production of market-rate housing.
This measure is a very big deal for San Francisco, especially now that the State of California has eliminated its redevelopment agencies. Roughly half of all redevelopment funds in San Francisco went to support affordable housing. Without redevelopment, San Francisco’s capacity to produce affordable housing is severely reduced.
The Housing Trust Fund is a general fund set-aside, meaning it would dedicate a portion of San Francisco’s discretionary budget to affordable housing uses. The 30-year fund would receive $20 million in its first year and increasing amounts thereafter, up to $50 million annually. After that, the yearly set-aside would be capped. Over 30 years, the Housing Trust Fund would generate more than $1.2 billion for affordable housing.
Unlike other set-asides, the Housing Trust Fund is largely funded by money that was previously devoted to affordable housing purposes before the state eliminated redevelopment. Under redevelopment, bonds for affordable housing were issued against future gains in property taxes that would result from redevelopment projects, a process known as tax increment financing. As that bond debt is retired, instead of going to a local redevelopment agency, tax increment monies will now flow into San Francisco’s general fund. The Housing Trust Fund recaptures that flow of tax increment that had historically gone to housing, plus roughly 25 percent of the portion that previously went to developing new infrastructure.
San Francisco is unique because it is both a city and a county. Because the tax increment funding not taken by the State of California now flows to the counties, most other cities will not be able to set aside their tax increment money the way San Francisco can.
What will the Housing Trust Fund be used for? The primary purpose of the fund will be to help build new affordable housing. The city typically funds permanently affordable housing for “very low income” and “extremely low income” households (50 percent and 30 percent of Area Median Income, i.e., $51,000 for a family of four and $31,000 for a family of four, respectively). Most of San Francisco’s affordable housing developments have been funded with city money, and the Housing Trust Fund will continue that tradition.
The Housing Trust Fund will also provide down-payment assistance to “moderate-income” families (i.e., a four-person household earning roughly $80,000 to $120,000 per year) and help them stay in their homes by providing foreclosure prevention assistance and funding for upgrades.
Finally, the Housing Trust Fund will help encourage the development of new moderate-income housing. Under San Francisco’s inclusionary housing ordinance, developers of new housing must build a certain percentage of their units as moderate-income housing. Those units can be built within the project itself (called “on-site” housing), or developers also have the option of building the units elsewhere or paying an in-lieu fee. The Housing Trust Fund reduces the on-site inclusionary requirement by 20 percent for most projects, thereby making it more attractive to developers to build the units on site. Additionally, the Housing Trust Fund caps existing affordable housing fees (except for areas benefiting from new upzonings, where new affordable housing fees could be added), making it easier for developers to plan around the existing fee structure.
Many of the groups that have worked on this measure are now turning their efforts toward the campaign to get it passed at the ballot in November. If you are interested in getting involved, please contact SPUR Community Planning Policy Director Tomiquia Moss at email@example.com or Deputy Director Sarah Karlinsky at firstname.lastname@example.org