In order to promote the development of Student Housing in San Francisco, the City’s Planning Code provides a big incentive for developers to build for educational institutions.
While new developments with ten or more residential units are currently required to provide 12 percent of the units at below market rates, build an equivalent of 20 percent of the units off-site, or pay into an affordable housing fund, developers are exempted from the City’s Inclusionary Housing requirements if the building will be either be owned or leased to an educational institution with a term of at least five years.
But as newly proposed by Supervisor Wiener, San Francisco’s Planning Code would be amended and the five-year lease term requirement would be shortened to two, “to encourage more partnerships and spur the creation of more student housing.”
UPDATE: Our original report was poorly worded.
To clarify, while Supervisor Wiener’s proposed amendment would shorten the required lease term an educational institution would need to sign in order to maintain a development’s exemption from the City’s Inclusionary Housing Program, any subsequent conversion to non-student housing would then require the building owner to meet the requirements of the Program, either by paying an in lieu fee or providing the requisite number of below market rate units onsite.
Does Scott Wiener sleep?
Industry lobbyists write the legislation, not supes.
As the co-authors of the 2 ordinances that resulted in defining and providing incentives for student housing, we strongly support Sup. Wiener’s proposal and believe it’s a valuable step forward for production of this important housing type. The need to dramatically increase production of student housing in SF is self-evident (estimated 50,000 bed shortfall).
The proposed ordinance makes the master leasing terms more flexible which we believe was a key problem that prevented developers or institutions from taking advantage of the BIG incentives – a waiver of the Inclusionary Ordinance for student housing. Schools are VERY financially risk averse and many view a 5-year lease as a big risk to their balance sheets.
Allowing shorter leases will hopefully result in more master leasing with developers.
Tim Colen
SF Housing Action Coalition
Ok, but what happens in two years when a project with no affordability requirements has to decide between renting to a school and cashing out with 100% market rate housing?
Under the ordinance, if a project that’s being used as student housing reverts to market-rate housing, it immediately becomes subject to Sec. 415 of the Planning Code (i.e., Inclusionary Housing). There are deed restrictions recoded on the housing that run with the property, not the owner.
UPDATE: Our original report was poorly worded.
To clarify, while Supervisor Wiener’s proposed amendment would shorten the required lease term an educational institution would need to sign in order to maintain a development’s exemption from the City’s Inclusionary Housing Program, from five years to two, any subsequent conversion to non-student housing would require the building owner to then meet the requirements of the Program, either by paying the in lieu fee or providing the requisite number of below market rate units on-site.
If it is the case that the obilgation to deed-restrict X number of units survives the ‘student housing’ phase, then this Wiener amendment seems like a whole lot of nothing.
Why would anyone develop a new building, and then expect to let a bunch of students in to put up Bob Marley posters and collect pests in the kitchen, only to change direction after 2 years? Seems silly.
It seems hard to believe that there is simultaneously a mis-match of 50,000 student beds needed in the city, yet schools are leery of signing 5 year leases? Of course, I have never dealt with a student housing manager so I would be interested to understand more.
Are there brokers specializing in the sourcing of student housing?