Dollars or sense? - Page 4

Few San Franciscans can afford the market-rate homes developers plan to build — so why doesn't the city have a plan to house its workers and low-income residents?

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From 2005 to 2009, there were 3,607 new affordable housing units constructed, mostly for people at the lowest end of the pay scale, MOH reports. But in that same time frame, 3,465 rental units were converted to condominiums. One could argue that the city essentially broke even with its affordable housing stock in a decade where housing prices almost doubled. As San Francisco housing prices skyrocketed, the city's 170,000 rent-controlled units served as the saving grace for the majority who couldn't afford market-rate, and condo conversions continue to threaten the erosion of that very significant housing stock.

Debra Walker, a candidate for District 6 and a tenant representative on the Building Inspection Commission, told the Guardian that she believes a new financing system is needed for affordable housing. "The argument for development is that we get affordable housing money out of it," she said, but "the inclusionary doesn't get us enough housing. We cannot include affordable in those high-rises, because they're so expensive to build."

She has talked up the idea of a real estate transfer tax that would create a dedicated fund that could then be used in partnerships with affordable-housing developers. Shoemaker, for his part, noted that having a dedicated revenue stream for affordable housing would be very helpful. A committee comprised of the San Francisco Planning and Urban Research Association, Welch, developer Oz Erickson, and Shoemaker was formed earlier this year and actually arrived at a deal, but Newsom ultimately rejected it. Other creative solutions, Walker says, might include reusing shuttered commercial properties or building cheaper by design using different building materials. "It's about looking at what it is we need," she said, "and realizing people are in a pinch."

The greatest complicating factor of the current system, in which the city relies on market-rate development to get new affordable housing, is that even though there a some 40,000 new residential units in the pipeline, developers can't secure financing to start building them. For now, in the down economy, they only exist on paper.

"They'll never get built," Welch predicts, and as long as Newsom continues to extend entitlements for those planned projects in hopes that the market will get a jump, "it's freezing September 2008 conditions, evidently forever," limiting opportunities to build something more reasonable.

"They're zombies," Welch added. "Who the fuck is going to pay $2 million for a new condo when they can buy a $4 million building for $1 million in foreclosure?" But if the need for affordable housing began to be addressed, he said, something might start to happen. "If you converted half the pipeline units to rental," he theorized, "they might get built."