Work in Progress

As development slows, the city looks for ways to keep affordable housing construction going.

Rising construction costs and a softening market are contributing to a slowdown in San Francisco residential development, according to an article in the San Francisco Chronicle. The slowdown has resulted in less money coming in to support the city’s affordable housing projects.

During the 2015-2016 fiscal year, market-rate housing and office developers paid $111 million in fees that went toward affordable housing. This amount has decreased 70% in the current fiscal year to $35 million. This slowdown won’t impact affordable housing projects currently in construction phases, but it will impact projects in the design and review stages.

To keep affordable housing projects moving, Mayor London Breed proposed a $300 million bond for the November 2019 ballot. San Francisco’s Capital Planning Committee voted in favor of this initiative in February, moving the vote to the San Francisco Board of Supervisors; if at least eight supervisors approve, the final vote will go to city residents this November.

“This housing bond will allow us to
continue expanding our affordable housing stock so that our low- and
middle-income communities can remain in our city,” said Mayor Breed, who is working with city officials, housing experts, developers, and tenant advocates to put together a specific plan.

Pro-development groups are also pushing for ways to keep San Francisco construction going, including lower inclusionary housing requirements and decreasing fees and
onsite requirements.

Homeless Navigation CenterIn early March, Mayor Breed proposed a planned Homeless Navigation Center on the waterfront, at Piers 30/32 and the Bay Bridge, with a potential for 200 beds (making it the largest navigation center in the city). The Port of San Francisco owns the parcels (Seawall lot 330) and would need to be on board with the plan. If they agree to the proposal, the navigation center could be up and running by this summer, and remain open for four years.

According to the city’s press statement, the waterfront navigation center would be open and connect residents with services 24 hours a day, seven days a week and would welcome partners, pets, and belongings. This is the first navigation center proposed during Mayor Breed’s term as San Francisco Mayor.

SFAA Filing Suit Against Ordinance that Qualifies Rent Increases as Tenant Harassment
Legislation prohibiting landlords of single-family homes and condominiums from circumventing eviction controls through rent increases went into effect on January 25.

District Nine Supervisor Hillary Ronen proposed the ordinance last year to decrease “bad faith” rent increases, in which a landlord raises the rent of a unit above market rate to motivate tenants to move out. The ordinance amends the Administrative Code to specify that landlords who impose excessive rent increases intended to “defraud, intimidate or coerce the tenant into vacating such a rental unit” could face a $1,000 fine and up to six months in jail.

As of early March, the San Francisco Apartment Association has filed a lawsuit to strike down the ordinance. “While it is inappropriate to harass tenants, we are wary of the way in which the ordinance construes a rent increase as a form of harassment. Additionally, SFAA believes the ordinance in question violates the rights of property owners under California’s Costa-Hawkins rental housing act. SFAA prefers to work with the San Francisco Board of Supervisors to craft balanced legislation, but we will use litigation when necessary to preserve our members’ rights.”

Governor Newsom Calls for Rent-Stabilization
During his first State of the State address, Gov. Gavin Newsom set legislators on the task of creating legislation to stabilize rents without hurting owners of small rental properties. “We need new rules to stabilize neighborhoods and prevent evictions, without putting small landlords out of business.”

He noted that housing issues are California’s “most overwhelming challenge right now,” and restated his pledge to compromise on rent control. Gov. Newsom was publically against Proposition 10 in the November 2018 election.

Tom Bannon, CEO of the California Apartment Association, responded, “The CAA will oppose efforts to pass strict statewide rent control policies and those that eliminate Costa-Hawkins. CAA will work with Newsom and lawmakers to focus on sensible solutions to the state’s housing shortage, such as removing barriers to residential construction and holding local governments accountable when they fail to build their fair share.”

Definition of “Income” Expanded to Include Section 8 Vouchers
SB 329, written by Senator Holly Mitchell (D-Los Angeles), would make it illegal to deny a tenancy based on the applicant’s participation in the federal Housing Choice voucher program.

Under current law, Section 8 housing vouchers do not legally count as income, so applicants could be denied based on not meeting a minimum income requirement. This proposed ordinance would expand the definition of “income” to include housing subsidies paid by the government directly to landlords.

ADU Backlog Cleared
Six months after Mayor London Breed filed the executive order to accelerate approvals of Accessory Dwelling Units (ADUs), the city has cleared its backlog, according to a statement released by the City and County of San Francisco. The executive order called for city departments to “set clear, objective code standards, and work to improve the application process for people looking to build in-law units.”

The city granted permits for more in-law units during the last six months than it did since the program first launched three years ago. When Mayor Breed first announced the executive order, there were 919 units waiting for approval. When the city released this statement of progress, 439 of the backlogged units had been permitted, while the remaining 480 applications have been reviewed by the relevant city departments and are awaiting further information from the applicants. The additional 206 applications for new units that were filed since the executive order was announced were reviewed within the allotted four-month window. Eighteen of these units have received permits, while the remaining applications have been reviewed by the relevant city departments and are awaiting further information from the applicants.

SFAA February Member Meeting
The February 25th SFAA member meeting was held at the Jewish Community Center in Kanbar Hall. The meeting began with the monthly Legal Q & A, moderated by Dave Wasserman of Wasserman & Stern, followed by a welcome from Chris Bricker, SFAA president.

The meeting covered the state of the San Francisco rental market. After years of high demand and filling vacancies easily, property owners are up against unfamiliar scenarios as the market slows down. San Francisco’s top leasing agents and SFAA associate members Danny Liu of Better Homes, Deborah Brown of J. Wavro Associates, Craig Berendt of Berendt Properties, and Taylor Adams of Rentals in SF gave expert advice on how landlords can find and retain quality tenants. For handouts and minutes from the member meeting and more information on the legislative updates, go to