South San Francisco could scale back a ballot initiative aimed at voters in November, seeking to allow the city to own and operate its own subdivisions.
Jurisdictions must seek voter approval before acquiring or building low-income social housing, and the city council earlier this year signaled plans to seek permission to add the equivalent of 1% of its housing stock, or about 225 units, per year over the next 30 years.
But amid concerns about lost property tax revenue and limited funding, city officials agreed to move forward by limiting the timeframe to eight years – reducing the number of units the city city could own about 5,000. The council has until August to decide on a final measure.
“At the end of those 30 years, if we’re a city that has 30% of its homes not participating in property tax, what’s the financial implication of that,” said council member Mark Addiego. “More importantly, what’s going on with the school district that got three times as much money?”
Property tax, the city’s largest source of revenue, would not be levied on public housing.
The city has about 22,437 homes, according to the state’s finance department, and Addiego said the city already has about 1,000 homes owned by nonprofit developers who also don’t pay property tax.
“I’m not comfortable with 30 years, that seems like a stretch,” said Mayor Mark Nagales, who said his main concern was school district funding.
The city expects about $122 million to flow into its affordable housing fund over the next 15 years as fees are collected from commercial developers. City Manager Mike Futrell said $85 million of that is expected over the next four to five years. While the city could use some of that money for public housing, Nagales said, some should be saved for other uses, like acquiring land for apartment buildings with below-rate rent. market.
Addiego estimated that it would cost the city $700,000 per unit to build housing; meaning the initial $85 million would build about 120 units.
“It’s not a prescription for success. It’s not enough for $85 million,” he said.
Traditionally, below-market-rate housing in the city has been built either by non-profit developers or included in larger market-rate projects subsidized by for-profit developers due to inclusive zoning rules from the city. Nell Selander, director of economic and community development, said the newest 456 affordable housing units built in the city cost taxpayers $27,000 per unit.
In the case of city-owned housing, City Attorney Sky Woodruff said that in addition to the city’s Affordable Housing Fund, other sources of public funding available to nonprofit affordable housing developers could be sought. The city, he said, could also ask voters to approve a new tax, as other cities have funded public housing. He stressed that the proposal for the November ballot would not raise taxes.
Planning Commission Chairman Sam Shihadeh, however, said the measure would indirectly cost other residents money anyway.
“Let’s be realistic, no property tax will be paid, someone has to pay for these services that will be provided to residents, so one way or another, residents are going to pay an increase,” he said. .
As a potentially more cost-effective approach, the ballot measure would also allow the city to acquire private buildings to convert into public housing. The city could purchase “naturally affordable” buildings (those with low rents due to aging buildings or other reasons) and place restrictions on deeds to keep rents low.
Restrictions on deeds that keep rents capped and housing reserved for low-income tenants often expire after age 55. In the past, council members have noted the need to preserve these units which may soon return to market rate, displacing tenants.
“There are units on the road that will hit market price, and the majority of people living there are seniors living on fixed incomes,” Nagales said. “Having that financial ability to keep it that affordable is a big chunk as well.”
An eight-year threshold would align with the city’s Regional Housing Needs Allocation, a state law that allocates housing production in eight-year cycles. The city’s next cycle begins in 2023, and by law the city will have to license 1,300 low-income housing units by 2031.
The proposed schedule would allow the city to comfortably fill the allotment with social housing. The annual allowance would be rolled over each year if not used, and the city could still build at the end of the eight years if there was a balance of authorized units remaining.
Planning Commissioner Norm Faria said he expected a social housing scheme to take at least five years before a project could be developed. Planning staff have previously mentioned that the business may require a whole new municipal department.
San Francisco, Berkeley, Moorpark, Stockton and San Diego, in addition to Humboldt and Tuolumne counties, have all put social housing initiatives on the ballot in recent years. South San Francisco would be the first to do so in San Mateo County.