Introduced by Supervisor Kim and co-sponsored by Supervisors Avalos, Campos and Mar, a proposed “Housing Balance” ordinance would require new developments of ten or more housing units to obtain special permission from the Planning Commission if the development would cause the overall ratio of affordable housing in Supervisorial District 6 to fall below 30 percent, as measured by the ratio of units constructed since 1993.

According to Kim, “Nothing in this legislation discourages development,” but according to prominent developer Oz Erickson, chairman of the Emerald Fund, “the economics of trying to provide this ratio will eliminate the possibility of building any market rate housing.”

Supervisorial District 6 includes Mid-Market, South of Market, Mission Bay, the Tenderloin and Treasure Island, and within which there are over 17,000 units of housing in the development pipeline, over a third of all the housing in the works in San Francisco.

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Comments from “Plugged-In” Readers

  1. Posted by El-D

    Geez, you’d think we were talking about a city with plenty of market-rate housing or something.

  2. Posted by Joe

    unbelievable. Who advises these clowns?
    It’s as if they get together to figure out how NOT to add housing to supply.

  3. Posted by Wai Yip Tung

    “Nothing in this legislation discourages development”? It requires some development to obtain special permission. That’s by definition discourage development?

  4. Posted by Pfffttt

    Developers don’t “owe” anybody anything, not to Kim, not to any of the crybaby “I can’t afford to live in SF” people, either. Why should they invest THEIR money to provide “affordable” housing to appease the crazy SF communists? What developer is going to do that? Wow, more stupid communistic rules. Where DO they come up with this sh!t?!
    Oh, but wait, affordable housing was determined to be less than $1.3M. It still might work.

  5. Posted by Pfffttt

    I stand corrected. Unaffordable housing in SF is $1.5M. Developers . . . carry on!

  6. Posted by Joseph A

    Its an insane proposal ,
    let the owners of the land develop their lots without having to bribe the sups with gifts to get their projects done !

  7. Posted by MarketSt

    Keeping their voter base stocked up, is what it all comes down to.

  8. Posted by Hitman

    Make no mistake – Comrade Kim is a communist. In her office hours she told me, “People should not be able to make a profit on San Francisco real estate…. I don’t care about other cities.” All this, while she glared at me through her $300 Gucci glasses. Oh the hypocrisy.

  9. Posted by Keepitup

    Uhm…..it cost around $600 bucks a square foot to build housing in SF today.
    Hey Kim, I’ll raise you $200 and bet $200 more that at the end of the day if this passes the cost to build goes up to $1000 bucks a foot.
    Game on…..

  10. Posted by The Milkshake of Despair

    Is it just me or do Treasure and Yerba Buena islands seem shrunken in the map here? I realize that they have been relocated to make the map more compact. But they also seem smaller relative to mainland SF.

  11. Posted by seriously

    I’m not a Republican but all of this just SCREAMS “big government”.
    “You know what we need right now in the middle of a housing crisis? MORE REGULATIONS! Let’s drag these projects OUTTTTTT and keep racking up fees. That sounds like a great plan!”

  12. Posted by suburbanoid

    Building a mix of unit types and sizes yields better results. This isn’t really significantly different from insisting on earthquake safety measures or standards for wiring and pipes.

  13. Posted by seriously

    Earthquake safety and wiring standards have objective measurable goals. Forcing ratios of affordable housing in neighborhood and placing more regulations on developers will only drive up the cost of the project and housing. And it’s not even proven that it works- it’s social engineering and theory. I’m for mixed income neighborhoods- I just don’t think this is the most effective way of achieving it.

  14. Posted by Ray

    One of the reasons that people want to move to San Francisco is that the city has policies such as these. The political culture of the city is as much a reason why there is a demand for housing as the bay, the ocean, the tech industry. It’s the free market of ideas in action. Railing against the liberal policies of the city is trying to kill the goose that is laying golden eggs.
    Landlords, property owners and developers who don’t like it are welcomed to vote with their dollars, feet or shovels and move elsewhere.

  15. Posted by Mickey

    Of all of the bad ideas coming from the City’s far left, this “I failed economics” proposal is one of the worst. I plan to vote with my dollars and volunteer time to toss out anyone who votes for a proposal that will only cause housing prices to go up even faster.

  16. Posted by Fishchum

    “One of the reasons that people want to move to San Francisco is that the city has policies such as these.”
    - I’ve rarely, if ever, heard that. Ironically enough, the ones who do never seem to grasp the connection between these policies and the escalating cost of housing.

  17. Posted by moto mayhem

    Ray, you must be joking. people are moving here because of the jobs and the QOL. THis kind of policy kills jobs and raises market rate housing prices, thereby hurting QOL.
    These supervisors need some classes in economics. If 30% must be affordable housing, then the other 70% will have to be bloated over current market rate (creating a new higher market rate) to support the others. THis is pure socialism. They are in the wrong country.
    just because SF is socially liberal (and we all like that), it doesnt need to be economically liberal and kill the goose that laid the golden egg. And that’s clearly TECH.

  18. Posted by radar

    This all boils down to one equation that permeates in the policy decision process for Board of Stupidvisors :
    Number of voting renters – number of voting owners = pandering to the renters to keep their fool jobs.

  19. Posted by lefty

    So, they basically want to stop developent and then they’ll complain about the lack of housing. Seems about right.

  20. Posted by Wow

    So the plan is for special permission to be required if the neighborhood falls below 30% total. While having permitted tons of new development at a rate much lower than that:
    Here are a few:
    Transbay Block 8:
    “…with approximately 740 units, 27 percent of which must be affordable to qualifying households, and ground-floor retail in multiple building types,”
    Block 9:
    On the site between First and Essex Streets, a 400-foot tower and 85-foot podium will rise with 563 housing units, 25 percent of which will be below market rate
    Block 6:
    In addition to 409 market-rate apartments in the tower… the Transbay Block 6 development includes … 70 units of affordable housing. Another 77 affordable units will be built on the north side of Clementina Alley between Femont and Beale.
    After years of planning and input and a clearly defined neighborhood plan developers have to go site by site to get permission to build to the code.
    If we are just tossing parts of the plans aside, can we also toss out the Western Soma height limits and non-residential areas?

  21. Posted by zzzzzzzzzz

    My understanding was that the lower courts had deemed affordable set-asides as a violation of Costa Hawkins, hence illegal until state law. If the lower court rulings are upheld on appeal, wouldn’t that render this entire discussion moot? SF would have no authority whatsoever to require below-market set asides.

  22. Posted by BTinSF

    I assume the Mayor, who says he wants to boost housing, would veto this–takes 8 votes to override and I don’t see them.

  23. Posted by George

    They get around that law by allowing the developer to pay a fee instead of building onsite affordable. The inclusionary housing fee already increases building cost by at least 15%, leading to higher prices for condo buyers.this will just further increase those costs.

  24. Posted by anon

    “The inclusionary housing fee already increases building cost by at least 15%, leading to higher prices for condo buyers.”
    I see this logical fallacy a lot, a lack of simple Econ 101 comprehension.
    A builder/seller is going to sell for the highest price he can get. It has nothing to do with building costs. The selling price will be the same whether it cost $1 or $1 million to build the place. The demand sets the price, not the production costs.
    Building costs, including these types of fees, do matter, of course. If the costs are so high that the land and construction costs are not likely to be recouped at the expected selling price, the building won’t get built at all (and that indirectly ripples into a lower supply, which moves the price/demand curve). But no builder has reduced the selling price below what the market sets just because his building costs and fees were lower. So in times like these, where there is ample demand, limited supply, and high margins, those added fees will not reduce supply or raise selling prices. They just take money out of the builders’ pocket and put it into the government’s. We can argue whether that is a good or bad policy, but it is not raising selling prices.

  25. Posted by The Milkshake of Despair

    ” The demand sets the price, not the production costs.”
    I’m hardly an economics expert, but doesn’t production cost affect supply? Then the balance of supply and demand affects price. So in your hypothetical example of a $1 production cost, many other players would jump in flood the market with supply, resulting in a lower price. So in this sense production cost is linked to sales price.

  26. Posted by anon

    Um, that’s exactly what I said in my last paragraph.

  27. Posted by Welsh did it

    When I sat on the Western SOMA planning/rezone committee it was good ol Calvin Welsh who at the time brought this number forward (third). I questioned where the number came from and he could not replicate it. Consequently the plan was silent to his request. So look no further to a resident of another district advising “Bed Bugs” Kim

  28. Posted by anon2

    “So in times like these, where there is ample demand, limited supply, and high margins, those added fees will not reduce supply or raise selling prices.”
    I agree with what you wrote above, but I’d add that the real damage from these types of regulations is due to the fact that they are almost never repealed when times are bad. And it’s during bust cycles that added costs turn projects from being financially feasible to non-starters.

  29. Posted by anon

    anon2, agree 100%. We saw that in 2009-2011 — pretty much nothing was built. By the way, I’m generally not in favor of fees for social engineering. On the other hand, I am in favor of builder fees to internalize at least some of the costs that will be inflicted on public infrastructure by the new residents (sewers, public transportation, schools, roads, etc.) In outlying areas, cities force builders to pay for a lot of these costs directly — they must build roads, parks, etc. around the new homes they are building. Builders should not be able to take all the profits but then leave the public with all the costs they inflict. Property taxes on the new construction, of course, cover a lot of the inflicted costs.
    Trying to put a cost on “social” issues, however, is not possible (what is the societal “cost” of gentrifying a neighborhood), and I don’t think it is good policy to impose fees for such purposes even if you “can” from an economic standpoint.

  30. Posted by George

    “It has nothing to do with building costs” – anon
    Anon, You’re simply incorrect. By your logic, if I built 1 million condos in San Francisco (each for $1 as you suggested) you’re saying that would have zero impact on prices? I think you need to stop spending your time writing paragraphs on here and start studying Econ for yourself.

  31. Posted by anon2

    His point is that it’s the supply that affects prices. The price at which the supply is produced is irrelevant.

  32. Posted by anon2

    More clearly: The cost at which the supply is produced is irrelevant.

  33. Posted by Futurist

    Actually, the COST to produce construction is very relevant:
    +land, entitlement, fees
    +labor
    +materials
    +financing
    +reviews and associated delays
    The builder/developer uses these components to establish their selling price AND their desired profit. (It could be called their minimum desired profit. But in our SF heated market, almost everything sells for asking or over, often way over.
    And, quite often with condos, they release them in batches, increasing the price in each phase based on previous sales.

  34. Posted by sf

    Where is Shadow Mayor Lee’s leadership on this issue? Just a few weeks ago he promised to speed up and promote housing development in San Francisco. What a weak, weak man. Vote him out next year!

  35. Posted by Keepitup

    @Ray
    “Landlords, property owners and developers who don’t like it are welcomed to vote with their dollars, feet or shovels and move elsewhere. ”
    Well said there Ray….Oz kinda alluded to that in the BizTimes piece….Uhm like he said he won’t be turning any shovels in SF if this passes.
    As for us landlords and property owners moving….lol, are you kidding?
    Every time comrade Kim and her gang of five introduce these lame brain ideas we jump for joy!
    Bring it on Kim baby….make those rent soar. Keep those regulations a coming as we watch our assets soar in value.
    Move away from SF….oh yea…..LMAO

  36. Posted by anon

    @Futurist – obviously the cost will affect the amount of supply produced, but it’s irrelevant to the price that that supply sells at. By the time the product hits the market you’re way past that point.

  37. Posted by Ivan

    Jane Kim is absolutely clueless. hope we can vote her out as a supervisor soon.

  38. Posted by Keepitup

    Oh…did I mention comrade Kim is trolling for votes. She’s up for reelection. Obviously she’s sucking up to the what’s left of the Daly crowd.
    Anyone remember MAC? Mission Anti-displacement coalition? Well there backkkkkkkkk?

  39. Posted by anon

    “Wow, more stupid communistic rules.”
    If only the SF government would take charge and build communist-style high-density public-housing blocks, then that might actually address the shortage of affordable housing.
    What they’re doing instead, is pretending like legislation trumps economics.

  40. Posted by SFRealist

    It’s unrealistic to expect someone born into a life of privilege and who’s never had a real job to understand basic economics.

  41. Posted by also anon

    As a homeowner and voter in District 6, I am struck, yet again, by how out of touch Supervisor Kim is with her constituents.
    As noted above, market-rate housing developers already are required to either build or contribute to the city’s affordable housing stock. With every new residential — and commercial — development being completed in our neighborhood, it is getting better — and more top-quality projects are in the works. The last thing our neighborhood needs is to put the brakes on this community improvement.
    I think it behooves all of us in District 6 to take a hard look at the other candidates running for Supervisor this year.

  42. Posted by SFRealist

    Like her or not, Kim is unbeatable. There’s way too much Rose Pak money on her side. Is anyone even running against her?

  43. Posted by conifer

    Why does Rose Pak want a leftist like Kim?

  44. Posted by moto mayhem

    because someone so dumb is usually easily manipulated

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