Upcoming Proposition “C” Could Have Big Effect on San Francisco Housing Development

In a matter of days, San Francisco voters will have the chance to vote on a referendum that could majorly impact the development of housing across the city and, depending who you ask, ease or exacerbate the Bay Area’s need for more affordable housing.

The San Francisco Chronicle reports that on June 7, voters will be able to vote on Proposition C, which will require housing developers to rent an unprecedented amount of its units at prices considered below market value.

Currently, the City Charter mandates that developers sell or rent at least 12 percent of its units at affordable, below-market prices. Proposition C looks to raise that number to 25 percent and give the city’s Board of Supervisors the power to raise or lower the requirement.

Supervisor Aaron Peskin, a co-author of Propsiton C, states that the legislation’s goal “is to push the development community to do as much as is maximally feasible without diminishing new housing starts.”

Many of San Francisco’s elected officials, including Mayor Ed Lee and the entire board, see the initiative as a way to ensure that more affordable housing is built for the city’s residents, who already face the highest rent prices in the United States and have seen home prices skyrocket twelve percent in the last year.

Many housing developers, however, warn that Proposition C will stifle the building of affordable units instead of encouraging it by making building in San Francisco more expensive.

Developer Oz Erickson describes it as “well-intentioned legislation that is not grounded in economic reality.” Erickson says that, using San Francisco’s unionized labor force, he is unsure of how economically feasible meeting Proposition C’s requirements will be.

While the initiative was being crafted by the Board of Supervisors, large numbers of developers visited City Hall to voice their disapproval of the legislation. This did not stop the board unanimously approved the proposition.

However, developers did win a victory after the referendum was already approved to be on the city’s ballot; amendments were passed to exempt current housing projects from the 25 percent threshold. This was to ensure that developments already in progress would not be killed because they were not in accordance with the legislation.

No other city has an affordable unit requirement as high as 25 percent. In New York City, the number is 20 percent and in San Jose it is only 15. Many cities, including Los Angeles, have no requirement at all.

In addition, not one of the city’s developments currently meet the initiative’s requirements. This means that developers will have to seriously change the way they build if voters pass Proposition C.

It is apparent that, good or bad, if Proposition C passes, San Francisco will be heading into uncharted waters. It will soon be up to voters to decide whether or not the city will head into those waters and potentially determine the direction of the city’s housing development for decades.

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