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SF

Prop

E

Affordable Housing Production Act

Charter Amendment

Affordable Housing: Board of Supervisors

Amends the City Charter to modify the approvals process for certain types of housing developments.

Vote NO

Jump to SPUR’s Recommendation

What the Measure Would Do

Proposition E is a Board of Supervisors-sponsored charter amendment that would defeat Proposition D (Affordable Homes Now), the ballot measure sponsored by SPUR. While Prop. E and Prop. D appear similar, they would have very different outcomes. (Read our analysis of Prop. D.)

Prop. E would remove some of the red tape for city approvals of three types of housing development if they meet the city’s codes[1]: 100% affordable housing projects, mixed-income housing projects with increased affordability, and educator housing projects. The city would have to issue permits for these projects within six months after an application is deemed complete. However, Prop. E would not set time frames for city departments to deem an application complete, and there would be no recourse if the city continues to delay approvals on that basis.

The following three categories of multifamily housing would be eligible for streamlining under Prop. E:

  1. 100% Affordable Housing: Prop. E would partially streamline the approvals process for 100% affordable housing projects by making the timeline for approvals shorter. However, it would still require the Board of Supervisors to approve projects that request significant city funding or that lease city properties, which covers the majority of affordable housing development in San Francisco. Prop. E would limit the streamlining of 100% affordable housing to projects that achieve an average affordability level of 80% of Area Median Income or below. This would duplicate the existing state law governing affordable housing approval (SB 35), which requires that all projects at this income level be approved, fast-tracked and exempt from additional environmental review. Under Prop. E, affordable homeownership projects that serve moderate- and middle-income first-time homebuyers would not be eligible for streamlining.
  2. Increased Affordability Mixed-Income Housing: Projects with 10 or more units would have to provide affordable housing beyond the city’s existing policy by an additional 8% of the total number of units in the project. For rental projects, this would require that the percentage of units reserved for affordable housing be increased from 22% to 30%.[2] Prop. E would also require 50% of the additional affordable units to be two- and three-bedroom units, which is more restrictive than the existing inclusionary housing policy.[3] Contractors for mixed-income projects would need to use “skilled and trained” workers who graduated from specific apprenticeship programs.
  3. Educator Housing: Projects would qualify for streamlining if they designate four-fifths of units for families in which at least one member is an employee of the San Francisco Unified School District or the Community College District.[4] Contractors for educator housing projects would also need to use “skilled and trained” workers who graduated from specific apprenticeship programs.

The Backstory

Under the City Charter, various city boards, commissions and officials — including the Planning Commission, the Board of Appeals, the Historic Preservation Commission, the Arts Commission and the Board of Supervisors — are allowed to make discretionary decisions about housing approvals, even if housing projects meet all of the city’s codes and laws. In San Francisco, this creates layers of bureaucracy and politicizes housing projects, often delaying and blocking projects even when they comply with the city’s existing laws and codes. San Francisco’s discretionary review process has frequently been cited as an obstacle to development in multiple studies and planning documents, including the city’s own housing plan.[5]

In 2014, then-Mayor Ed Lee implemented some internal processes to streamline permitting. However, a complete reform of discretionary review can only be done with a charter amendment, which requires voter approval. That is why both Prop. D and Prop. E are on the ballot.

Mayor London Breed planned to place a housing streamlining measure on the ballot in 2020, but it was postponed due to the onset of the pandemic. Supervisor Ahsha Safai proposed a streamlining charter amendment on the ballot in 2021, but it was tabled by the Rules Committee and never went to the full Board of Supervisors.

In 2022, a coalition of pro-housing advocates (including SPUR) sponsored a voter initiative measure, Prop. D, to streamline multifamily housing development. Mayor Breed also supports Prop. D.

Prop. D was criticized by some members of the Board of Supervisors for proposing to streamline mixed-income housing and to expedite 100% affordable housing that includes units that are affordable to moderate- and middle-income households. To defeat Prop. D, seven members of the Board of Supervisors placed a competing charter amendment, Prop. E, on the ballot. The two ballot measures appear very similar. However, the policy details included in these measures would make a significant difference in the impact each would have on affordable housing production in San Francisco.

Prop. E requires a simple majority (50% plus one vote) to pass. If both Prop. D and Prop. E meet the threshold to pass, the proposition with more votes will prevail.

What’s the Difference Between Prop. D and Prop. E?

Prop. E was put on the ballot to defeat Prop. D. They sound similar but would have very different outcomes.

1. Prop. D would fully streamline 100% affordable projects.

Prop. D would accelerate all 100% affordable projects that conform to existing rules and shield them from nuisance lawsuits. Prop. E would not. Prop. E would require 100% affordable housing projects to have a much lower overall average affordability in order to be eligible for streamlining, so it would apply to fewer projects than Prop. D. In fact, Prop. E’s affordability level replicates existing state law, making it ineffective for encouraging the development of more affordable housing projects. Prop. D would expand streamlining to include 100% affordable projects that serve moderate- and middle-income households, including first-time homebuyers.

2. Prop. E would impose more onerous requirements for mixed-income projects that include affordable units.

Mixed-income projects deliver about 40% of the affordable housing that is built in San Francisco. Prop. D would require a modest increase in the number of affordable units in mixed-income projects. Prop. E would require a much higher percentage of units to be affordable, which would render most mixed-income projects financially infeasible to build. This requirement means that makes Prop. E would be unlikely to speed up the production of affordable housing.

3. Prop. D would do more to deepen the bench of construction workers in the Bay Area.

A lack of local skilled construction workers is a major obstacle to the construction of new housing in San Francisco. Prop. D would require eligible projects to pay middle-class wages, provide health care and offer apprenticeship opportunities to create pathways into middle-class construction jobs. Prop. E would require eligible projects to hire “skilled and trained” workers who have graduated from specific state-certified apprenticeship programs; about one-seventh of California’s construction workforce meets this standard. Prop. E's labor standard would not deepen the bench of construction workers or provide a pathway to bring non-union workers into higher-quality construction jobs.

4. Prop. D would set strict time frames for project approvals.

One serious roadblock to building enough affordable housing in San Francisco is the time frame for the approval and permitting process. Prop. D would speed up approvals by mandating time periods for the city to determine an application’s completeness and eligibility for streamlining. Prop. E would not provide these mandates, which means that many projects could continue to experience significant permitting delays without recourse.

For more details, see SPUR’s July 2022 article, What’s the Real Difference Between San Francisco’s Two Affordable Housing Ballot Measures?

Equity Impacts

Speeding up the construction of certain 100% affordable projects, mixed-income and educator projects would benefit low-income households by increasing the supply of affordable housing in San Francisco. However, this measure would not improve the existing process for streamlining 100% affordable housing projects. It would create new burdens on mixed-income and educator housing that would make it harder for those projects to be financed and built. Consequently, this measure would preserve the status quo for housing approvals and would not advance equity goals in San Francisco.

Pros

  • Prop. E would reduce some of the red tape for the approvals of selected types of housing development.

Cons

  • Prop. E would not truly streamline the approvals process for 100% affordable housing projects. Affordable housing projects that request city funding or that will be built on city property would still require discretionary approval from the Board of Supervisors, leaving these projects vulnerable to unnecessary environmental review and nuisance lawsuits.
  • Prop. E would duplicate existing state law to expedite 100% affordable housing projects with an average affordability level of 80% AMI and would not offer meaningful incentives to build this type of housing.
  • This measure would exclude the possibility of expediting 100% affordable projects that are intended to serve moderate- and middle-income families, which includes many homeownership projects.
  • Prop. E would raise the required inclusionary rate for mixed-income projects so that 30% of the units in new rental housing citywide would need to be reserved for affordable housing. The city’s Housing Affordability Strategies and other studies have repeatedly demonstrated that the existing inclusionary rate (22%) is already challenging for many mixed-income projects.[6] Increasing it to 30% would render most mixed-income projects in San Francisco infeasible, which means that this measure would not be likely to result in the production of more affordable units.
  • Prop. E would require contractors building mixed-income and educator housing to hire “skilled and trained” workers who have graduated from specific state-certified apprenticeship programs. This group of workers only constitutes one-seventh of California’s construction trades workforce. The “skilled and trained” provision would limit the labor pool for housing development and create more construction delays.
 

SPUR's Recommendation

Prop. E is a measure that was designed to block the passage of Prop. D, Affordable Homes Now. It would do nothing to significantly improve the approvals process for housing projects in San Francisco. Unlike Prop. D, Prop. E would maintain the Board of Supervisors’ discretionary approval on 100% affordable housing projects that seek city funding or lease city properties. Maintaining discretionary approvals opens the door to nuisance lawsuits from anti-housing groups to block or delay 100% affordable housing proposals.

Because Prop. E would only allow streamlining on affordable housing projects for residents with incomes up to 80% of AMI, it would prevent streamlining of projects targeted to moderate income first-time homebuyers making up to 140% AMI. Under this measure, mixed-income projects would face onerous requirements that would render most projects infeasible, making it unlikely that Prop. E would produce any additional affordable units.

Finally, the restrictive nature of the workforce requirements on mixed-income and educator housing projects means that contractors would likely have difficulty hiring workers, which would continue to create obstacles for development. San Francisco’s housing affordability crisis demands immediate reforms, and this measure would maintain the status quo.

Vote NO on Prop E - Affordable Housing Production Act
Footnotes

[1] Eligible projects could not be denied their permits by the Planning Commission, Board of Supervisors, Historic Preservation Commission, Art Commission and Board of Appeals if they comply with the objective standards in the code. Eligible projects would be subject to review by the Planning Department and the Department of Building Inspection.

[2] San Francisco’s citywide inclusionary housing policy requires that rental development projects reserve 22% of the units for affordable housing. Ownership projects must reserve 23% of the units for affordable housing. The inclusionary requirement is even higher in some zoning districts.

[3] Of the additional affordable units, 20% would have to be three-bedroom units and 30% would have to be two-bedroom units. If additional affordable units are studios, they could be priced at no more than 80% of AMI.

[4] At least four-fifths of the units in an educator housing project would have to be affordable to households with an income from 30% to 140% of AMI, with an overall average of 100% AMI across all such units. Up to one-fifth of the units could be affordable to families at 160% AMI.

[5] San Francisco Planning Department, Draft Analysis of Governmental and Non-Governmental Constraints, March 2022, https://sfhousingelement.org/draft-analysis-government-and-non-government-constraints-report.

[6] San Francisco Planning Department, Housing Affordability Strategies: Housing Development Feasibility and Costs, white paper, 2020, https://default.sfplanning.org/plans-and-programs/housing/affordability-strategy/HAS_Feasibility_and_Dev_Costs_FInal.pdf.