PRO & CONS – Prop U – November 8, 2016

PROPOSITION U- AFFORDABLE HOUSING REQUIREMENTS FOR MARKET-RATE DEVELOPMENT PROJECTS

Ordinance

Placed on the ballot by a petition by the City’s registered voters.

Requires a simple majority to pass.

THE QUESTION:

Shall the City increase the income eligibility limit for on-site rental units for all new and existing affordable housing units to make them affordable for households earning up to 110% of the area median income?

BACKGROUND:

Affordable housing measures have been enacted since the 1970s. Starting with the State Density Bonus Law from 1979, which requires cities and counties to offer a bonus and other incentives to housing developments that make housing units available to low income to middle income households. San Francisco created the Affordable Housing Bonus Program to go beyond the Law by incentivizing building affordable housing and mandating, amongst many things, more housing development, of which 30% shall be affordable housing units.

The City generally requires developers of market-rate housing of 10 units or more to provide affordable housing. A developer can meet this requirement in one of three ways: Pay an affordable housing fee; Construct off-site affordable housing; and construct on-site affordable housing.

An on-site rental unit counts as affordable for a “low-income household” if it is affordable for households earning up to 55% of the area median income. An on-site rental unit counts as affordable for a “middle-income household” if it is affordable for households earning up to 100% of the area median income.

The City uses Federal income standards to determine the maximum allowable rent levels for the affordable units. The rent is updated each year. For low-income households, the monthly rent for an on-site one-bedroom affordable housing unit is $1,185 and for a two-bedroom, $1,333.

THE PROPOSAL:

Prop U proposes that the affordable housing requirements for new development projects be adjusted to serve a higher percentage of the population. Currently, one of the three choices for property developers is to make 12% of their housing available for individuals making 55% or less of the median household income. This proposal would make individuals earning 110% of the median income eligible to receive the below market rate housing.

Income Definition:

  1 Person 2 Person 3 Person 4 Person
55% of median $41,450 $47,400 $53,300 $59,250
100% of median $75,400 $86,150 $96,950 $107,700
110% of median $82,950 $94,750 $106,650 $118,450 

A “YES” Vote Means: If you vote “yes,” you want to increase the income eligibility limit for on-site rental units for all new and existing affordable housing units to make them affordable for households earning up to 110% of the area median income.

A “NO” Vote Means: If you vote “no,” you do not want to make these changes.

ARGUMENTS IN FAVOR OF PROP U

  • This measure aims to help the middle class, such as teachers, EMTs, nurses and artists by allowing households that make up to 110% of the area median income to qualify for affordable housing.
  • Proposition U ensures that affordable housing for low-income residents remains attainable by applying this measure to 2% of the below market-rate units. The rest will remain for low-income.

ARGUMENTS AGAINST PROP U:

  • This measure would double the rent that developers and landlords can charge for future and existing affordable housing units.
  • Prop C passed in June 2016 and requires new developments to provide 25% affordable housing of which 10% are for middle-income residents. Prop U will repeal this measure, enable landlords to increase rent on existing affordable homes, and pits middle income against low income renters for affordable housing

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