Real Estate

Real Estate – John M. Lee

Examining Props A and E

By John M. Lee

My November column has always been about the election and the ballot measures as they relate to real estate. But, if you have looked at your voter pamphlet, you will notice that this year it is actually a manageable size, unlike the “telephone books” we have received in the last few years!

 This election we get to vote on Proposition A titled “Affordable Housing Bond,” which will allow the City to issue up to $600 million in general obligation bonds with a duration of 30 years to be used for the following:

 • $220 million to acquire, build and rehabilitate rental housing for extremely-low and low-income individuals and families;

 • $150 million to repair and rebuild public housing developments;

 • $60 million to acquire and rehabilitate affordable rental housing to prevent the loss of such housing and to assist middle-income city residents and workers to secure permanent housing;

• $20 million to support affordable housing for educators and employees of the San Francisco Unified School District and City College of San Francisco.

 This proposal has been in the works for a while and came about as a result of the mayor working with the Board of Supervisors and housing advocates to come up with a solution to make a dent in our housing affordability crisis.

We have experienced a prolonged appreciation cycle in real estate prices fueled by strong employment and low interest rates. San Francisco currently has the highest median rents and one of the highest median home sale prices in the country. Homelessness is up about 30 percent from two years ago, despite the City putting much money and effort into reducing it.

San Francisco has many different sources of funds for affordable housing. These include the general fund, developer impact fees, federal and state grants and the Housing Trust Fund. 

The last affordable housing bond that was passed was in 2015 at $310 million. This fund and the other sources have been committed to projects and thus our government believes another round of funding is necessary to provide more affordable housing.

A bond is basically a loan that the City will obtain and payment will be through an increase in property taxes. Landlords would be permitted to pass through up to 50 percent of the increase to tenants. 

 If you believe that this is the right direction for the City to go, vote “yes.” If not, vote “no.” This measure will take two-thirds affirmative votes to pass.

 Proposition E also has real estate implications. Currently in public zoning districts, the SF Planning Code allows for the construction of government buildings, public structures, city plazas, parks and other similar uses but not residential buildings. Prop. E, if passed, would allow for affordable housing and educator housing in public zoning districts and expedite City approval of these projects. 

 Under Prop. E, 100 percent affordable housing and educator housing projects:

 • Would be allowed in residential and public zoning districts, except on properties used for parks;

 • Only on lots that are larger than 10,000 square feet;

 • Could not demolish or replace existing residential units;

 • Would be subject to less restrictive rules regarding density, size, ground floor height and other factors;

 • Would allow a limited amount of mixed or commercial use that supports affordable housing, and;

 • Would not be subject to any conditional use restrictions unless the restriction has been adopted by voters.

 The timeline for approval is shortened to 90-180 days depending on the size of the project. The Planning Department could administratively approve these projects without a Planning Commission review. And the Board of Supervisors could amend Prop. E by a two-thirds vote without voter approval.

On the west side of town, passing this measure might impact the educator housing project at the Francis Scott Key Annex in the Outer Sunset. My understanding is that the constraints put on this development has not penciled out for both for-profit and non-profit developers and perhaps this measure, along with other source of funds, like with the passage of Prop. A, can move this project along.

If you agree with these changes, vote “yes” on Prop. E. Otherwise vote “no.”

Whatever you decide to do and whatever your position is,  I urge all of you to vote on Nov. 5.

John M. Lee is a broker at Compass specializing in the Richmond and Sunset districts. For real estate questions, call him at (415) 465-0505 or email john.lee@compass.com.

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