Affordable Housing in San Francisco: Analyzing the Supply of Affordable Units

By Sarah Garmisa, MPP/MBA 2015

In this paper, I analyze current San Francisco housing policies in addition to two general alternatives. The first alternative is to increase the supply of affordable units and the second is to decrease the reduction in supply. I conclude that policies to incentivize affordable housing development have more long-term impact for vulnerable communities; at the same time, the political mood around housing policy has shifted in the short time since I first wrote this paper (in December 2013). At present, policy changes to limit reductions in affordable units are more politically feasible and may have the added benefit of paving the way for additional policy changes in the near future. I ultimately recommend that the City of San Francisco implement a suite of policy changes in order to remedy this entrenched problem.

Section I – San Francisco Has a Housing Problem

By nearly every account, the lack of affordable housing in San Francisco has become a problem. San Francisco has now officially become the most expensive US city in which to rent an apartment, with a median rent of $3,414 for vacant units in 2013 (Budget and Legislative Analyst). According to the SF Department of Public Health, San Francisco minimum-wage earners (the City’s $10.55 minimum is higher than both California’s $8 and the country’s $7.25) must work between 3.4 and 8.1 full-time jobs (depending on the neighborhood) just to afford an average vacant two-bedroom apartment. Put another way, an adult with one roommate living in one of San Francisco’s cheapest neighborhood would need to work 68 hours a week at the minimum wage level just to afford rent. This does not factor in the additional costs of raising children, and thus we can infer that the cost of living in San Francisco is prohibitively high for low or medium earning families.

Recent changes have been unfavorable to moderate and lower earning residents. “In San Francisco, a household making [the median income] a year can top out buying a home worth about $409,000. 24 percent of the homes for sale in the area were below that threshold last October. Now it’s just 14 percent.”[1] Experts predict continued upward pressure on housing and rent costs, and thus government intervention may be required to preserve housing access for the City’s lower and middle-income residents. The Association of Bay Area Governments projects that “at least 39% of new housing demands will be low and very-low income households (households earning under 80% of area median income), and another 22% affordable from households of moderate means (earning between 80 and 120% of area median income).”[2] A Planning Department report estimates that San Francisco will require about 30,000 new units by 2014. Approximately 60% (18,000) of those will be needed by extremely low, very low, low and moderate income households. To compare that with recent housing production, the ten-year average of 1,500 new units a year slowed to a trickle (just 269 units) in 2010.[3] A fraction of those were affordable (my estimates put that figure around 10%, based on requirements).

Household Income and Housing Price Trends

As San Francisco’s median income has grown over time, the City’s middle-class population has actually shrunk. According to the Mayor’s Office of Housing, between 1990 and 2010 the number of households in San Francisco grew 13% from 305,000 to 346,000. During this growth period, the portion of households with very low incomes (0-50% AMI) increased from 27% to 30%. Also during that period, the portion of the City’s households with very high incomes (greater than 150% AMI) increased from 24% to 28%.[4] This means that as the City grew, the number of the poorest and wealthiest residents increased.

Also in this period, low and moderate-income households (50-120% AMI) declined and above-moderate income households (120-150% AMI) remained about the same.[5] Understood differently, if a worker did not increase their earnings in proportion to the city’s increasing AMI, a moderate earner could have become a low earner without actually lowering their income.

Home prices steadily increased through the recession as well, but increased even more rapidly last year; from August 2012 to August 2013 housing averages rose from 700K to 825k.[6] The City’s median gross rent grew 6% in 2011, and another 4% in 2012, although AMI did not increase proportionally.[7] As a result, most households earning less than $58,000 annually cannot afford an apartment. This exhibit displays the Median Monthly Fair Market Rent Compared to Affordable Rent Levels, from 2011. Considering the fact that a San Francisco minimum wage job will bring in about $20,000, the recent housing trends put many residents at risk of homelessness or displacement.

Why We Need Change

Low and medium income earners are insufficiently protected by existing policies. Though rent control and expanded tenants’ rights help, they don’t increase the supply of housing for very low to moderate income earners. In fact, rent control may arguably decrease the supply of available housing by disincentivizing the supply. Current rules require that developers either include a portion of affordable units in their construction (15%) or pay into a city fund (the equivalent of 20%) for affordable housing. Most (55% of developers) opt not to build. By not building affordable units today, affordable units are delayed several more years – perhaps up to 10. As Christine Falvey, spokesperson for Mayor Ed Lee, explained, “Most of the first projects funded from the recently passed Trust Fund and development fees won’t start breaking ground until 2014 or 2015.”[8] Further delays are possible, depending upon market and political factors.

Existing policies insufficiently address the loss of the City’s middle-income households, and the general drain of talent, families, artists, communities of color, local culture and history. As housing costs increase, workers must spend a higher portion of their wages on housing and therefore must rely more heavily on public services to fill the gaps – which comes at a cost to local, state, and federal government budgets. Ethically and practically, governments have the responsibility to alleviate poverty, and protecting housing access is one method of doing so.

A few explanations for the Housing Supply and Demand Problem:

A) The Recent Area Technology Boom Has Increased the Housing Demand

In addition to the 41,000 new tech jobs in San Francisco, the boom in Silicon Valley also feeds the demand for San Francisco Housing. “In terms of residential demand, it doesn’t matter whether the jobs are in San Francisco or Mountain View. A large part of the employee base — more than a third of Google’s employees, for instance — want to live in San Francisco, even if that means a long commute.  Google, Yahoo, Apple, eBay, Genentech and Facebook operate shuttles that transport more than 14,000 people per day from San Francisco to their corporate campuses on the Peninsula”.[9]

B) San Francisco’s Political Environment has Hindered New Development

Both planning and political challenges inhibit San Francisco’s approval process, incurring new construction delays delays in the pipeline. As a result, the City severely underbuilt housing in recent years, creating under-supply. Current construction and planned development does not meet existing demand

C) A Supply/Demand Imbalance Has Led to Soaring Rent Prices

Over the last 20 years, San Francisco built an average of 1,500 units a year, but needed 3,000-4,000 to keep pace with demand.[10] With the recent technology boom, experts approximate 30,000 new units will be needed in 2014 but only 4,000 are under construction.

D) Evictions Are On the Rise

Evictions City-wide are up 38% from 2010. Ellis Act Evictions are up 170% since last year.[11]

E) Housing Is Increasingly Unreachable For Many San Francisco Residents

When calculating financially vulnerable residents, local context matters. Using federal calculations of the “poverty line” 12.3% of the City are in poverty, however I argue that another indicatory of financial instability is being unable to afford an apartment. Though the national poverty line is $11,490 per year for one person, that same person can earn up to $36,500 without being able to afford a place to live in San Francisco.

Acknowledging Tradeoffs

Housing policy balances a natural tension between the rights of private developers and property owners, and the rights of existing residents and tenants. Though housing market trends directly oppose renters’ needs, “increased levels of affordable housing cannot be achieved without the private development sector, which brings significant funding towards affordable housing and its needed services through tax revenues, inclusionary requirements and other fees.”[12] Therefore, San Francisco should consider how all types of housing contribute to an overall balance of City objectives. This analysis provides a framework to highlight the concerns of the City’s vulnerable residents while acknowledging barriers and balances to those priorities.

Objectives of Government Intervention

The following policy analyses are intended to examine housing alternatives that alleviate a crisis of affordable housing in San Francisco, including conserving existing affordable housing, providing equal housing opportunities to residents, and removing barriers to new construction of affordable units.

A key outcome of any policy change is retaining residents, with an eye toward healthy population diversity. According to the 2010 census, just 13.5% of San Francisco’s population is under 18 – the lowest percentage of any city in the nation. That was three years before the economic boom. “I miss what real diversity is,” said London Breed, a local African American, a group that has seen huge numbers of families leave. “Real diversity is families. Real diversity is kids outside playing and hanging out. Real diversity is poor people, rich people, middle-class people. Everyone feels the difference in San Francisco now.”[13] The outmigration of the City’s black residents relates directly to affordability. Between 1990 and 2010, the City’s black population shrunk 35.7% to 50,768, comprising only 6.4% of the City’s overall population.[14]

This analysis has the following objectives:

1) Retain an economically diverse population within San Francisco,

2) Retain residents who work local low and moderate wage jobs

3) Protect the availability of affordable housing units.

Section II – What Can Be Done

San Francisco is widely regarded as a progressive city, with policies in place to protect low and middle-income residents in the city. However, alternative policies and amendments to existing laws may provide more comprehensive protections for the City’s more vulnerable populations at minimal cost and relative efficiency. Alternative policy alignments could reinforce a structural backbone to the housing sector in order to keep residents within San Francisco.

Summary of Existing Status Quo Policies

San Francisco’s rent control laws restrict rent increases for most units built before 1979. The annual allowable annual increase is based on the Bay Area Consumer Price Index, currently set at 1.9% by the Rent Board.[15] Evictions are classified in two ways: “for cause” for breach-of-lease or non-payment issues, and “no-fault” for: (a) owner move-ins, (b) condo conversions, (c) demolition of rental units, and (d) “Ellis Act evictions”. The 1996 Costa-Hawkins Bill is a related policy, passed primarily to end vacancy rent control in the state. The Costa Bill prohibits San Francisco from extending rent control to post-1979 construction, and permits landlords to raise the rents of formerly rent-controlled vacant units. Therefore, it undercuts rent control’s effectiveness by limiting its ability to keep rents down citywide.

Since 2002, the City has offered developers incentives and mandates to include affordable units, requiring new developments to include 15% affordable units, but in 2010 the City created more leeway for developers by providing an option to pay fees into an “affordable housing fund” rather than actually build the units. “Before that change, 75 percent of new construction projects included affordable units. Now the majority of projects receiving permits, 55 percent, opt out, according to a January report by the city’s budget and legislative analyst.”[16] As stated previously, funds that enter in the affordable housing fund are not currently being placed into action, not yet planned, permitted, or constructed. Additionally, Ellis Act and Owner Move In (OMI) evictions enable landlords to take rental units off the market by either going out of the rental business, or moving themselves or a family member into an existing unit. These “no-fault” evictions are up 38.2% since 2010 and Ellis Act evictions are up 169.8%.[17]

These existing policies do not effectively preserve affordable housing for San Francisco’s middle and lower income households. While there are no direct costs to maintaining the status quo (although a case could be made for indirect costs relating to increased need for social services and dependence upon city agencies), the status quo policies are losing political traction within political circles. The constituents most affected by the status quo housing policies are the City’s dwindling minority groups, working people, families, and those making moderate incomes, but local and national media amplify the volume of this debate.

Increase the Supply of Affordable Housing

One alternative to the status quo set of policies affecting affordable housing in San Francisco is to increase the available supply of affordable housing through a “package” of policy changes, including creating a fast-track pipeline review process for affordable housing projects, incentivizing new affordable production by reducing affordable requirements for new developments, and requiring developers to build rather than opt out of building affordable units. These actions are explained in more detail below.

A) Create a Fast-Track Pipeline Review Process for Affordable Housing Projects

Project completion times range on average from 3 to 4 years, but in certain cases it can take much longer. “The median time to completion for these projects from the first filing was 45 months. Smaller projects less than 10,000 sq ft had a median completion time of 36 months, while those larger than 250,000 sq ft took 72 months to completion.”[18] Because providing clarity and gathering stakeholder feedback is important, the Planning Department implemented a Pre-Application Process for new proposed projects. However, the City could further speed the process by fast-tracking an approval process for affordable housing developments. Neighborhood groups can also delay or prevent planned units from coming into development, which has the effect of lowering investment returns. A fast-tracked approval process would remedy this disincentive to building. Reforms that include of neighborhood feedback without unevenly prioritizing the City’s needs should be pursued.

As an example of major delays, many of City’s largest projects currently or recently constructed were approved as part of the Market-Octavia plan. That plan took nearly 10 years from inception to construction. In 2004 and 2005, over 600 new projects were filed with SF Planning Department, but only approximately half of those projects were approved. Two to three years later in 2007, 25,000 new housing units from those previously approved projects were filed without being approved until 2011. The units won’t be complete until this year. Currently, only 18% of all approved projects—with a net of 4,600 new units—are under construction.[19] As previously stated, this does not correct years of under-development and it is difficult to find numbers reporting how many of these units are actually affordable.

The San Francisco Planning Department should institute a fast-tracked pipelines process for developers with projects that will build affordable units right now. 48,000 new units are in the pipeline, with only 4,580 (10%) in construction and 7,420 (15%) filing building permits. Lengthy stakeholder and evaluation processes increase a project’s vulnerability to market whims. As previously stated, most developers opt to pay into the City fund instead of build affordable units on-site. So we are looking at approximately 300 (15% of 45% of 4,580) new affordable units being built right now. The rest of the approved affordable units are not guaranteed to be build, and those that will get built, will get built in many years.

By instituting a fast-tracked process for projects that guarantee new affordable units, developers could see more immediate returns on investment through faster processing, which could potentially bring over 4,000 new units to San Francisco in a shorter time frame. Though it may face political opposition by neighborhood groups, I believe the political landscape is changing in favor of different policies, and we can further bolder support through community engagement and education. The aforementioned policy changes do not inhibit other types of growth, but do promote developing affordable housing today.

B) Incentivize Production By Reducing Affordable Housing Requirements

In 2012 Mayor Ed Lee proposed a package of changes to spur housing production, including lowering the amount of required affordable housing for developers from 15% to 12% and setting up dedicated funding to provide an additional $20 million out of the city budget for affordable housing this year. So far, $13.8 million of that has been allocated to four projects to offer a combined total of 265 units of affordable housing. Construction is set to begin next year, but it is unclear how many of those projects, and to what degree affordable housing will be built.[20]

This suite of policies is designed to spark additional development through the delay and reduction of new affordable units, but the effectiveness level is low because most developers opt to pay into the fund rather than build. Additionally, it is unclear how much these requirements will directly impact the City’s new development overall. Though it seems contrary to basic supply and demand, I was unable to find evidence suggesting that recent increases in market-rate units are having any effects at all on the availability of affordable units. This is most likely due to the underdevelopment of affordable units Economic costs may be low, but political feasibility is high because he already garnered voter support for the initiative.[21] Even if this influx of construction offsets pent-up demand for high-end housing, where profits lie for developers, I have not found data estimating what portion of those new units will be made affordable on either the short or medium term. Strategies that tie our capacity to build affordable housing to the approval of luxury condos (i.e. the recently rejected 8 Washington Voter Initiative) hold the needs of our low and moderate-income residents hostage to the success of problematic and controversial developments.[22]

Additionally, we have yet to break ground on any project funded through the Affordable Housing Trust. Once any of the projects start planning, it will be many years before construction is complete and the new affordable units are on the market. Location is another unanswered question. Will the new units be placed in existing poor neighborhoods? Will they increase population density and be planned around transit centers? Will neighborhood groups continue to fight their development, further delaying construction? Integrating affordable units into existing projects may have better neighborhood outcomes for the City. While sparking further high-end development may slow the upward trends in high-end housing and median rental prices, it does not effectively remedy a shrinking supply of affordable housing or affect the affordability of existing units for City residents.

C) Require Developers to Build (Rather than Pay Toward) Affordable Housing

Only about two thirds of the $20 million currently in the Affordable Housing Trust Fund of $20 million has been slated for development, though as we’ve already discussed planned developments often do not lead to actual developments. Regardless, we are years away from seeing any of these new proposed affordable units. Said John Eller of the Alliance of California’s for Community Empowerment, there’s enough housing in the pipeline, both approved and in the approval process, that if there was a commitment to build affordable housing, it would begin to make a difference.[23]

On the other hand, requiring developers to build, rather than fund, affordable units will put new units on the affordable market within two years. Without City intervention, developers may opt to build only expensive, small homes and condominiums that maximize profits, leaving a social deficit of affordable housing. The City needs to create structures to develop projects to serve the housing needs of low and middle-income residents. It is worth noting that any new units would not be not subject to San Francisco’s rent control laws because of the Costa Bill that prevents units built after 1979 from being protected from the Rent Control ordinance—so this presents another structural policy concern.

Though this proposal could face political opposition, it could bring 15% of the existing 48,000 approved Pipeline units into existence, or up to 7,200 new affordable units. It also could disincentivize development by decreasing investment returns, so therefore ranks as medium effective.

D) Legalize In-Laws Units

San Francisco’s policy of avoiding in-law (secondary) units has not slowed their construction, and experts estimate between 30,000 and 40,000 existing in-laws in existing across the City. Supervisors Chiu and Wiener have proposed legislation to legalize and promote further construction of in-law units.[24] These units require no new infrastructure (water, power, transit routes) and by increasing population density, they advance the City’s environmental and sustainability goals without significant construction or demolition. In-law units build upon existing low and middle-income neighborhoods without creating new luxury communities in far-away pockets of San Francisco.

Because of their underground status, many of these in-laws are below the average rental rate (specific data is difficult to pin down). It would be reasonable to assume that lower and middle income households occupy many of these units, which may not be up to code because of their semi-legal status. The unofficial policy of ignoring these units endangers not only the 30,000-40,000 households, but their neighbors as well. Wrote Saul Bloom, “A comprehensive program to permit new secondary units, along with a path for code compliance for currently illegal ones, would create thousands of units of affordable housing, hundreds of jobs and make existing ones safer. A prequalification system would ensure the work goes to responsible contractors; policies for parking permits, assessments and control of condo conversions could be crafted to address important neighborhood concerns.”[25] Some of these costs could potentially get passed to tenants, but increasing the supply of (already existing) units may relieve pressure everywhere.

Legalization of in-law units seems high on the scale of political feasibility, with the potential to positively affect the lives of the 30,000 to 40,000 households already living in the in-laws, and many more households if new up-to-code units are constructed. Though it would take additional inspectors and city workers to fast-track new permits and code enforcement, embracing secondary units will increase our affordable housing supply, increase population density which is good for local businesses, and balance the needs of both existing City residents and property owners.

Summative Analysis of Supply-Increasing Policies

In order to tackle the supply problem with San Francisco’s affordable housing, I suggest a package of many of the previous alternatives to correct a structural problem in a comprehensive manner. Of the aforementioned policy options, all but the Mayor’s plan to reduce the affordable housing requirement rank as medium or highly effective to increase the supply of affordable housing for existing San Franciscans. (A) (C) and (D) together will be a comprehensive and effective package of policy changes, with the potential to protect over 30,000 existing units, up to 7,200 affordable units approved in the pipeline, and many more in-law and affordable units from new construction (difficult to quantify). As they also balance the needs of property owners, the suite of policies ranks as highly political feasible and has low barriers to implementation because it could build upon existing city agencies that approve, permit, and inspect new construction units. Implementing these policies would require an increase in city inspectors to evaluate new permits for construction, as well as create the new fast-track pipeline, making it somewhat more of a challenge to implement.

Limit Reductions in the Affordable Housing Supply

Adopted in 1986, the Ellis Act allows “no-fault” evictions when a landlord decides to remove their rental property from the market. If the owner returns the units within five years to the rental market, they must offer those units back to the evicted tenants at the last rental rate, but after those five years, the owner can increase the rent to any level.

2010 2013
Evictions total 1242 1716
% increase   38%
Ellis Act evictions 43 116
% increase   170%

Evictions of all kinds are on the rise, but the highest rate of increase between 2010 and 2013 was for Ellis Act evictions. Between 2010 and 213, evictions increased nearly 40% while Ellis Act evictions rose 170%. Simultaneously, real estate values increased 16% between 2009 and 2013. With over a third of all properties paid for in case, clearly the increase in speculation and/or wealthier residents play a significant factor.[26]

 San Francisco’s Budget and Legislative Analyst office suggests that increasing property values could be driving the increase in Ellis Act evictions, because the incentive for rental property owners to sell the units for condo conversion rises as property values increase. Speculative landlords of long-term tenants (with low rent-controlled monthly rents) might also anticipate being able to make up lost income after the five-year period within a relatively short time, assuming rents stay constant or rise during the next five years. Additionally, it is likely that there are more displaced tenants than the numbers reflect because landlords reportedly offer buyouts to tenants in lieu of eviction. “[H]ousing experts representing both landlords and tenants agree that there are probably two to three buyouts, in which an owner offers a tenant money to leave, for every one eviction.”[27] The following policy changes are designed to decrease the reduction of affordable housing units:

A) Increase Relocation Payments

(UPDATE: A version of this recently passed the San Francisco Board of Supervisors). The legislation tied the payments to two years’ worth of market-rate rent for a similar apartment.

Current Ellis Act relocation payments are capped at $5,105.20 per tenant, up to a maximum of $15,315.56, plus an additional $3,403.45 for tenants who are senior or disabled. (SF Tenant’s Union) Doubling these values ($10,210.40 per tenant, up to a maximum of $30,531.12, plus an additional $6,806.90 for seniors and disabled persons) would make this kind of no-fault eviction less attractive to speculative landlords. It may also decrease the attractiveness of an “off-book” buy-out, helping the City capture the true quantity and cost of pushing tenants out of their apartments.

B) Restrict Future Rents on Ellis Acted Buildings

This would prevent owners from freely increasing rents after the five year Ellis Act period. Future rents would be tied to previous tenants’ rental rates, with maximum allowable increases. This would curb the skyrocketing prices of homes and existing tenants from speculating owners.This may face political or legal feasibility issues because it dives into legislative changes. Because some landlords choose to convert a building to condos rather than return units to the market after a period of time, it may only have limited effectiveness. Due to its specific and complicated rules, this policy may also face political challenges or be misunderstood by the public, and therefore has high challenges to enforcement. This makes it less efficient and with higher implementation costs than other alternatives.

C) Place a Temporary Moratorium on Ellis Act Evictions

Another proposal is to restrict these politically unpopular evictions in order to buy time to sort out a more comprehensive policy that affects the affordable housing supply and protects existing residents. This will help the City ride out what may turn out to be another housing bubble, and protect existing tenants from displacement or leaving the City in the meantime. Though property owners associations will fight any moratorium, it may be politically feasible to enact a 12-month moratorium on new Ellis Act evictions as a temporary holdover until more comprehensive agreements and plans can be reached – especially to see the new affordable units being promised by the Mayor’s Affordable Housing Trust. Politically, this seems plausible with the media highlight it’s been getting. Once passed, implementation will be smooth because there would be limited need for education campaigns.

D) Reverse the limitation on Vacancy Rent Control

When rent controlled units (built before 1979) are vacated, under the state’s Costa Hawkins Rental Housing Act, landlords can raise the rent to any level. Reversing this law would be an immediate solution to skyrocketing rents in San Francisco. As a protection to property owners’ rights, amendments to the Costa Bill would certainly face political opposition, but it would be the most effective policy outlined here, because it would reduce the incentive for landlords to bully, bribe, or evict tenants for the promise of higher rent. It would not reduce the rental housing stock because there are other policy restrictions on removing or converting units from the rental market. This could potentially affect many more households than the documented Ellis Act evictions, because experts predict there are four times as many buy-outs. This number does not account for the additional tenants who are coerced out of their apartments, neither as a buy-out nor a legal eviction.

Summative Analysis of Ellis Act/Costa Bill Alternatives

Of the four policies outlined, Increasing Relocation Payments is the most politically feasible. However, it may have limited effectiveness for decreasing the reduction in affordable units. Changing vacancy control laws is certainly the most effective in this area, immediately stopping the loss of affordable units, but is the least politically feasible. Restricting future rents on Ellis Acted buildings is likely to have limited effectiveness and also faces political opposition, but placing a moratorium on Ellis Act evictions may be very symbolic from a political standpoint, and therefore reasonable effective (if indirectly).

On the other hand, despite the recent 170% uptick, a moratorium on Ellis Act evictions will only affect a small portion of households. During the period from 2010 to 2013, there were 611 no-fault evictions in total, and less than 20% of those (116) were Ellis Act evictions. The rest were owner move-ins, and changing a property owner’s right to move into their property is politically and practically infeasible. “The discrepancy indicates that even if these officials are able to deter Ellis Act evictions, they won’t be able to solve the city’s housing crisis overnight.”[28] Reforming or restricting the Ellis Act may only affect a smaller portion of at-risk tenants in the City, but this increasingly unpopular law carries symbolic weight for City leadership and tenant activists. I propose (A) and (C) only – because of the potential political backlash against changing Vacancy Control laws and restricting the future rents of vacated units. Whereas changing the Ellis Act rules and a temporary moratorium may not affect buy-outs, making the Ellis Act less attractive long-term could signal a changing political tolerance for profit-driven no-fault evictions.

Section III – Final Analysis

These policy alternatives will be evaluated along the following criteria: Effectiveness, Political Feasibility, and Implementation Feasibility.

A) Effectiveness is challenging to quantify in a uniform manner, but through my analysis I have attempted to quantify possible affected households (when possible) or demonstrate other predictions.

B) Political Feasibility, on the other hand, is a major concern because this is such a publicly political issue at this stage in time. Major stakeholders will engage in a public conversation and special interest groups also will weigh in to determine.

C) Implementation/Cost is the third concern, though slightly less important. Agencies and specialized City staff are required to educate, implement, and communicate with the public, and there may also but this should be of a secondary concern to the other two criteria.

The following analysis matrix summarizes a comparison of the previous policy alternatives

  Effectiveness Political Feasibility Implementation Feasibility (lower priority)
No Policy Change Low Low High
Increase Supply of Affordable Units High – 30,000 existing in-law units, up to 7,200 units in the pipeline, and many units from new construction High – balancing needs of property owners and tenants, with an eye toward equity and sustainable construction Medium – would require additional city employee resources to manage the pipeline
Decrease Reduction in Affordable Units Medium – Immediately stop and create longer-term disincentives to Ellis Act evictions (~100 units) High – Significant political momentum for changing this Policy Medium-High – limited requirements to inspect or evaluate Ellis Act eviction appeals

Prediction and Recommendations

As shown in the matrix above, increasing the supply of affordable units in the short and medium term is the best solution because it is the most effective, has high political feasibility, and only marginal implementation challenges or costs. There may be unintended consequences to neighborhood associations who are likely to react against the introduction of affordable units in their neighborhoods, but this is to be expected in a vibrant and diverse city. San Francisco must consider the placement of these units and be careful not only to build high-density affordable projects in poorer neighborhoods, thus increasing the economic stratification of the city. When people live close to where they shop and work, the whole economy is better. Based on the previous analyses, I recommend that the City of San Francisco act to immediately implement a suite of new policies that spur affordable housing growth by (a) developing a fast-track for new developments that build affordable units right now, (b) requiring all developers to build rather than pay toward the Affordable Housing Trust, and (c) legalizing existing and future in-law units.


Sarah Garmisa is an MPP/MBA candidate at Mills College, where she serves as a graduate student representative to the Board of Trustees Educational Policies Committee as well as on the Advisory Committee to the Policy Forum. After graduating from Stanford University (BA Urban Studies & Studio Art) she led technology teams at the California College of the Arts, directing custom digital facilities in fabrication, production, and computing technologies. Sarah also served six years as Board Treasurer to San Francisco Pride at Work, an AFL-CIO affiliate fostering mutual support between the LGBT and labor movements. She is passionate about economic justice and dinner parties.


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[11] San Francisco Budget and Legislative Analyst

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[17] San Francisco Budget and Legislative Analyst

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[21] Lagos and Coté, 11/16/14

[22] Bloom, S. (11/11/13). Legal In-Laws Would Boost Affordable Housing. San Francisco Chronicle. San Francisco. Retrieved from

[23] Lagos, M. (11/25/13). S.F. in-law proposal would make units legal. SFGate. Retrieved December 5, 2013, from

[24] Lagos, M. (11/25/13). S.F. in-law proposal would make units legal. SFGate. Retrieved December 5, 2013, from

[25] Bloom, S. (11/11/13). Legal In-Laws Would Boost Affordable Housing. San Francisco Chronicle. San Francisco. Retrieved from

[26] Ellis, Tim. (4/12/13). Is this another real estate bubble or just a lot of hot air? Redfin Real Estate News & Analysis. Retrieved from

[27] Lagos, M. and Coté, J. (11/14/13) S.F. politicians: Restrict Ellis Act evictions. San Francisco Chronicle. Retrieved from

[28] Lagos, M. and Coté, J. (11/14/13) S.F. politicians: Restrict Ellis Act evictions. San Francisco Chronicle. Retrieved from


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4 thoughts on “Affordable Housing in San Francisco: Analyzing the Supply of Affordable Units

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