San Francisco has a good problem: too many productive workers want to live there. An economy and population comparable to Dallas must squeeze into an area only an eighth the size, making the tech-hub the second densest city in the United States, behind New York, and stoking tension between highly paid knowledge workers and the lower-income residents they tend to displace. In response to this upward pressure on rents, Mayor Ed Lee recently set an ambitious goal of developing 30,000 new housing units by 2020, one third of which will be permanently below market rate.
Public land for housing development
How can the city build so many apartments meant to be affordable on so little land that is increasingly expensive? One answer is the Public Sites Framework, announced in January of 2014, by which the Mayor’s Office of Housing and Community Development (MOHCD) purchases land from other municipal agencies on which to develop affordable housing. Technically, all departments were supposed to be regularly combing their inventory, anyways, for excess parcels to transfer for a price to MOHCD; in practice, though, the 2005 Surplus City Property Ordinance that codified this requirement yielded only slivers of land even when abided.
How can the city build so many apartments meant to be affordable on so little land that is increasingly expensive?
Now, however, the MOHCD has a mandate to take an active, rather than passive, role in the acquisition of under-utilized land for development. In addition to explicitly widening the real estate market to include municipal property, the Framework also gives the housing agency two bargaining levers for negotiating terms with its sister agencies: First, the MOHCD can exchange land rather than cash. The Public Utilities Commission, for instance, may extract value from land unsuitable for housing, and vice versa. Second, the terms recognize the public value created in addition to the private value. This is critical, because the biggest land-owning departments are subject to the enterprise requirement, meaning that they must sell an asset for fair market price unless they can demonstrate its translation into a public good or service of similar magnitude.
Public value of housing development
When dealing with officials from the transportation, utilities, or port authorities, then, the MOHCD has leverage in proportion to the potential for public value in affordable housing on a certain plot that it can quantify. To lend credibility and transparency to this calculation, the Framework provides for an advisory committee of housing policy-makers and officials from the Department of Children, Youth, and Their Families and the Office of Economic and Workforce Development. The executive office chairs the committee and, when necessary, referees the negotiations to ensure that both the criteria for public value and enterprise are respected. One recent success has been a land swap with the Unified School District for 36,398 square feet at 1950 Mission Street, an abandoned lot that will become affordable and middle-class housing.
Internal politics can still be a problem, of course; some departments resist sweetening a deal even for the Mayor’s Office. More consequential, though, is city politics: since both parties are municipal agencies, the real estate transaction exposes two pressure points for neighborhood activists. The heightened sensitivity can tangle deal-making. Kate Hartley, the deputy director of MOHCD, says the most useful approach to both of these problems is better articulation of the public value inherent to affordable housing. If San Francisco codified and prioritized the benefits from such projects and vested authority to realize those benefits into specific institutions, it would help normalize intra-municipal land exchange and check the politics both inside and outside of City Hall.