City Hall promises to scale back price of affordable housing

Soon to be outgoing Mayor of San Francisco Mark Farrell announced ambitions this week to combat the rising cost of affordable housing construction in San Francisco.

Via a Tuesday press release, the mayor’s office announced “the creation of three public-private working groups that will provide recommendations by July 31 to reduce affordable housing construction costs” in the city.

“We cannot provide affordable homes for our families if we cannot afford to build these homes to begin with,” Farrell added.

The San Francisco Business Times reported in April that construction costs in San Francisco have risen an average of ten percent per year by some counts since the beginning of the housing boom, resulting in one of the costliest building environments in the country.

A labor shortage seems to be the major culprit, although other variable contribute as well. A UC Berkeley study paper on housing costs from January specifically singled out troubles in San Francisco:

In 2000, it cost approximately $265,000 per unit to build a 100-unit affordable housing building for families in the city, accounting for inflation. In 2016, a similar sized family building cost closer to $425,000 per unit, not taking into account other development costs (such as fees or the costs of capital) or changes in land values over this time period.

As a result of these cost increases, developers need more subsidy for every unit, at a time when public resources for affordable housing have been dwindling.

UC Berkeley researchers tagged the city’s “lengthy and complex processes” as a big driver for costs, while also noting that “city agencies—such as the planning department—have been chronically understaffed, leading to capacity constraints.

At the same time, Supervisor Hillary Ronen, who convened a City Hall hearing in April questioning city staff why affordable housing in the Mission is perpetually stalled and got few concrete answers, announced new legislation Tuesday that means to “speed up the time it takes the city to build affordable housing.

“My legislation will require city departments to always prioritize permits and approvals for 100 percent affordable housing developments,” Ronen said in a statement.

Ronen also promises that the new law will “[require] that the Board of Supervisors receive quarterly updates on the status of all affordable housing developments.

At Ronen’s April hearing, city departments blamed understaffing and the rigors of the city’s building code for years-long delays on projects that are approved but still unbuilt but also often seemed at a loss themselves to explain the lack of development with new development.

• Costs Killing New Housing [SF Business Times]
• SF Construction Brief [UC Berkeley]
• Why Can’t Anyone Build Mission Housing? [Curbed SF]