South San Francisco has $122M to spend on housing over subsequent 15 years | Native Information
With $122 million projected to be spent on affordable housing over the next 15 years, South San Francisco officials have begun to figure out how the city’s supply of below-market homes will grow amid deteriorating housing affordability can be best strengthened on the peninsula.
The money is expected to come in via fees the city charges commercial developers looking to build in the city — mostly biotech developments it plans to roll out incrementally over the next few years. Officials said they plan to spend the bulk of the funds for acquiring land for the construction of residential buildings below the market price.
Deanna Talavera
“These funds must be spent to support our ultra-low, very low and middle-income households,” said Deanna Talavera, an analyst with the city’s Department of Economic Development and Housing.
By acquiring land, the city hopes to attract developers who specialize in creating affordable housing by reducing project costs. The city has already begun using surplus city property for this purpose, including last year when it sold a $1 lot to a developer to build 82 affordable senior-citizen units.
“One of the biggest barriers to building and securing housing is securing the land,” Talavera said. “Having enough money to be able to track these sites is an important tool.”
City projections suggest that $16 million could be spent on land acquisitions by 2024 and $60 million by 2027. The funding stream, called Commercial Linkage Fees, charges a fee of $16.55 per square foot for office and biotech projects. The fees were approved by City Council in 2018 to help offset displacement caused by the area’s job and housing imbalance.
The fee is often in the tens of millions for large developments similar to those proposed at several locations east of Highway 101. Unlike traditional impact fees that are earmarked for infrastructure or city services, the money must be used solely for housing construction. According to the city, the fund is currently worth $5.5 million.
Other suggested uses of the money include $15 million through 2027 to provide gap financing in the form of low-interest, long-term loans to support affordable development funding. An additional $5 million was recommended for preserving existing affordable housing, some of which may face the expiry of deed restrictions that would return the units to market price.
The city’s Assistance Housing Program, which provides resources to homeowners to help them build such homes on their lots, could also get $2.5 million. Half a million could flow into the city’s existing rental subsidy program.
Among other issues discussed was the feasibility of building city property and operating housing, which Councilor James Coleman urged last year. Traditionally, below-market projects, while supported by city funds, are owned and operated by non-profit developers who specialize in the task.
Nell Selander, director of the Department of Economic and Community Development, said creating city-owned and operated units would likely cost the city three times as much as units built using the traditional method. The most recent 456 affordable units built in the city cost taxpayers $27,000 per unit, she said.
The staff suggested that going forward, city property should be retained by the city and leased to developers rather than being sold. Selander said such an arrangement, while potentially less attractive to developers, would ensure the properties continue to be used for affordable housing and generate ongoing revenue. Typical charter restrictions that require units to be listed with rents below market price expire after 55 years.
The recommendations have been reviewed by the City Planning Commission and will be submitted to City Council for approval.
According to the cities’ Regional Housing Needs Allocation, a state law that dictates how much housing Bay Area cities must build in eight-year increments, South San Francisco must allow for 2,093 units of affordable housing between 2023 and 2031. Units are required to be divided into three categories, with rents of $1,713, $2,741 and $3,426 or under for a one bedroom unit.
corey@smdailyjournal.com
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