I think it's not going to kill development."
Yet he also emphasized that the development community is giving all it can: "Fifteen percent was a compromise and we were very reluctant to see it go from 12 to 15 percent."
Welch also said the compromise was painful for housing activists, who were hoping to get more BMR units out of market-rate housing developers and were astonished at the huge profit margins that are expected by developers and those who finance their projects.
"I think we have been successful at coming up with public policy that meets the needs of developers and low-income residents," Welch said at the hearing.
Later he told the Guardian that the inclusionary housing update is designed to promote the kind of housing — BMR units for those making just less than the median income — that is also being created by the controversial practice of evicting tenants from apartments and converting those units into condos.
"What this does is help prevent the rental stock from being converted by [tenancies-in-common]," said Welch.
Developer Mike Burke took issue with the criticism of developers at the hearing. "It's not a guarantee of a 28 percent return. It's a fair return based on a substantial risk."
Yet housing activists note that developers already anticipate delays and other financial risks when constructing their financial models, so many developers actually make more than 28 percent on their projects, a fact that the consultant's report acknowledged.
Eric Quesada of the Mission Anti-Displacement Coalition called on city officials to adopt as tough a standard as possible, using that as a starting point to a broader discussion.
"We need to dig deeper to look at what the goals of San Francisco are for housing," he said. "This is the ceiling of what we need." SFBG
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