Biz Journals: Mission Moratorium Proposal Progresses, Setting up Next Epic Housing Fight

 A Mission District group that last week publicly floated the idea of a controversial plan to stop new market-rate housing in the neighborhood has put the proposal on paper. The move means the political fight over gentrification will likely move into the Board of Supervisors' chambers this year.

Calle 24, a group of Mission businesses, nonprofits and residents, officially proposed Thursday that the city stop approvals for market-rate housing projects until it can study how to increase the number of affordable units that those projects would subsidize. Supervisor David Campos, who represents the Mission, has said he will soon turn Calle 24's recommendations into legislation.

The group is also calling on the city to fast-track the development of affordable housing projects on public sites in the area and temporarily halt the building of high-end restaurants and the merging of retail space.

"While initially it seems counter-intuitive to seek interim controls on development of new housing, existing development projects do not supply the actual demand of existing and new residents for affordable family homes," reads a statement released by Calle 24. "We see the current climate of development driven purely by the market as a threat to our very existence."

The legislative proposal, which Campos said will likely come in a few weeks, would need to rally six votes to pass the 11-member Board of Supervisors. Pro-development groups such as the San Francisco Housing Action Coalition and the Residential Builders Association have tried to flood supervisors' inboxes with letters of opposition in the past week.

Pro-housing advocates have said that the lack of new market-rate housing in the Mission is what is driving gentrification there. Since 2000, about 1,500 new units of housing has been constructed, according to Planning Department data. The city still expects about 1,400 new units to be built over the next two decades, according to the neighborhood's 2009 rezoning. Mission advocates, meanwhile, point to the fact that the Mission transformed from 50 percent Latino to 39 percent Latino between 2000 and 2010 as low-income residents headed for cheaper neighborhoods.

Campos has already come out in favor of Calle 24's recommendations, saying last week that "the idea would be that our office would try to support whatever the (group's) council comes up with," while it has drawn rebukes from housing advocates of different stripes, including Supervisor Scott Wiener.

Supervisor Jane Kim, who represents an area that includes South of Market and the Tenderloin neighborhoods, has pushed for interim controls before on formula retail in Mid-Market.

Kim said she hasn't seen specific details of the Calle 24 proposal that Campos will adopt, but added: "I do understand the desire to press the pause button and study the area to make sure we have the mechanisms in place to preserve Latino culture. ... The question is the tool they'll use and what hitting the pause button means."

The interim controls would cause the Planning Department to add "an extra piece of review" to new housing proposals, Planning Director John Rahaim said. That's still hazy until Campos proposes legislation.

The part of the Mission in question extends from Mission Street on the west, Potrero Avenue to the east and 22nd Street to the north and Cesar Chavez Street to the south. These southern and eastern parts of the Mission leans more heavily Hispanic than the northern and western parts. Last year, the Board of Supervisors passed a resolution to establish that area as a Latino Cultural District – a mostly symbolic measure.

"What we'd study isn't totally clear," Rahaim said." One of the things we could study are broadly how many housing units can be built there and what if any physical displacement might happen over time."

Finding the Mission's balance

The debate over the temporary moratorium will be rooted in the city's continued grappling with its housing balance, or how much affordable housing is built compared to market-rate housing. Voters last year approved November's Prop. K, which set the citywide goal that one-third of new housing be affordable.

The city may get to that kind of a number by piling affordable units into large redevelopment sites such as Hunters Point Shipyard, Candlestick Point, Parkmerced and Treasure Island. The Mission, meanwhile, has seen about 12 percent of new units built in the last five years be affordable, according to Planning Department data — on pace with zoning rules set under a 2009 city plan.

Calle 24's proposal aims to "find ways to balance out the market-rate housing that's come into the neighborhood because we're just swamped with market-rate and no truly affordable housing," Calle 24 council member Erik Arguello said.

When you look at units that are entitled or under construction in the neighborhood, just 7 percent are affordable. "It's pathetic. That's why folks in the Mission are basically saying we don't even want to talk about new market rate until we talk about how we get to a better balance," said Peter Cohen of the Council of Community Housing Organizations, an advocacy group typically in lockstep with housing balance advocates such as Kim and Campos.

It's not farfetched to think that the Planning Department — and the consultants it hires — should study how feasible it is to require developers to pay for a higher threshold of affordable housing in this area.

Those are the kind of talks underway in neighborhoods like Central SoMa, which is currently being rezoned and could see developers pay to build 20 to 33 percent of developments' housing units as affordable, instead of the Mission's 12 to 20 percent.

"A brief moratorium and examination of possible interim controls are useful mechanisms for planners to look at rapidly changing phenomenon and evaluate whether the goals and objectives that are behind the area's zoning controls are in fact being met," said Thomas Jones, an architecture professor at California Polytechnic State University in San Luis Obispo who sat on the city's inclusionary housing working group last year.

The costs of a moratorium

But a temporary stop could also exacerbate the city's housing supply problem just as San Francisco — particularly the Mission — continues to be a destination for young, high-income workers.

Skyrocketing construction costs and the disappearance of tax-increment financing has developers saying that they wouldn't be able to get financing for development if they had to cut profits by building more affordable housing.

"It's not an ideological question. It's not even a values question. It's math," said Metcalf of SPUR, which has advocated for more development without getting hung up on the ratio of affordable units it provides.

Focusing on a "housing balance" actually reduces housing affordability by constricting supply, SPUR wrote last week.

The post-recession housing project to deliver the most affordable units to the Mission was Vara at 1600 15th Street, which is outside the Calle 24 area. Developer AGI Avant built 20 percent of units in the building as affordable. Still, president Eric Tao said that's because the firm timed the market well, building when construction costs and gentrification fears were low.

"I always say, 'To build in the Mission, you have to give a lot,' " said Tao, who also sat on the city's inclusionary housing working group. "But how can you still give a lot and make money? It's timing."

Halting development would mean that inclusionary units built as a result of market-rate projects don't get to market either.

Several developers, including Lennar Multifamily Communitie s and Axis Development Group, have recently pitched plans to replace warehouses and electricians' shops on the southern edge of the Mission District with hundreds of market-rate housing units. They would pay for about 12 percent of those units to be available for residents making about half the city's median income, or about $50,000 for a family of four.

That's welcome news to Metcalf. "It's true that we have an affordability crisis, but the solutions being proposed in the Mission will make the problem worse," he said. "The evidence is completely clear that the hypergentrification of the Mission was not caused by development, it was caused by, if anything, a lack of development."

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