there is so much to absorb. and while the amazing you do not want to move out of your house in san francisco to solano county, you may move to oakland, and the person in oakland may move from oakland to solano county, and we are all one housing market with in the bay area, and we're all affected by these trends. so this pattern of san francisco having high housing prices and really accelerating housing prices within the regional average over the past 20 years has had implications of the housing burden. what percentage goes towards housing in the city, and this is breaking it down by five income groups, household income groups, that you will be hearing a lot of during today's presentation. what i am calling extremely low population is households that make less than 50% of a median income, which for four people is less than $50,000 per year. that group expanded very high

percentage of its grip on housing in san francisco, approaching 60% on average, and for the low grid, which is households in the 50% to 80% son, that number is in the 30's, and it has increased during the past 20 years. what i am calling the moderate group from 80% to 100%, they have also seen an increase. and even the upper-income at 150% plus has seen an increase in their housing board, though not nearly as much of an increase as the middle and moderate income groups. these patterns of housing prices and the increasing burden has said implications for the city demographics. another trend that you will hear again today, and supervisor wiener already alluded to it,

san francisco has a small middle class if you think of the moderate or upper moderate, and that has been shrinking over the past 20 years. the groups that have been growing is the extremely low group, despite the house in britain, and i will say more about that in a moment, and also the upper-income group, were particularly the children's population in the upper income group is growing, and they are growing as that average income in the upper-income group has increased over the past 20 years, so it really has been an increase in the top and the bottom and a decrease in the middle-income groups. the fastest-growing income group in san francisco over the past 20 years has been extremely low- income population. it has not been children and the population. the number of children in that group is declining. actually, it is workers, both

u.s. border and immigrant workers that have been growing faster than any other. the reason i make this distinction between u.s.-born and emigrant is because the extremely high housing burden is very atypic;l compared with other cities -- atypical with other cities. maybe it does not seem so bad to an immigrant who is coming from a position where their work prospects were not as strong, and it looks attractive to the emigrant, even though to a u.s. resident or 28 u.s.-born resident to may have some more work opportunities. that does not appear to be what is going on. the number of young in this group is not growing and is actually declining slightly. the fastest-growing group in our extremely varied low-income group is the immigrant workers

over the age of 35. overall, san francisco had a big wave of immigration and the 1980's 90's, and we may see some aging in place in san francisco and not being replaced by immigrants working, at least not in that income category. the other group that seems to be growing, and this is also fairly interesting, is u.s.-born workers below the age of 35, another fast-growing group within the low-income population. i do not have an answer as to why this group would be growing so fast, particularly the working population in this group, given the very high housing bordens that they face. supervisor mar: could they be the children of the immigrant of the 1980's and 1990's? >> it could be if the elected to

stay in san francisco and their work prospects did not improve vis a vis their parents. i suspect, though i do not have the evidence of that, the children have a greater educational attainment and may not be working in the same cohort. i would just like to conclude with having raised the point that the san francisco high housing prices contributed to the high wages that employers face in the senate and are relatively slow relative to the rest of the bay area. i would like to just comment upon what would be involved and perhaps making housing more affordable in san francisco on a grand scale, and reinforce the challenge that is involved to, would just a little bit of and exercise. i looked at the mls listings last year for a 3-bedroom house, thinking that a low-income, four-person household at 80% of

ami, what were they facing in the housing market we have in san francisco today, and when i looked at the mls, assuming they could qualify for a mortgage, they can afford about a $488,000 house, and that would cover a large percentage of the housing on the market, and that is the 80% center awards. and then we looked at different types of ways of making housing more affordable, one of which was a downpayment assistance, and if you give that household $75 thousand, that allows them to buy a bigger house, and that means they can afford about 25% of the three-bedrooms on the market. at weber, we have thousands of households in that category, so the cost of making housing affordable to everyone in that group is an extremely high. it would cost in excess of $4

billion to provide that level of subsidy to every low-income household. it tends to raise the price of housing because there is a flood of money going into housing. the winners they're not people looking for housing with the people selling housing. suddenly, the city could to increase the number of permanently affordable housing units by subsidizing the construction of those units. you will hear from my colleagues that is more expensive. there is the alternative of increasing market rate housing construction which does have an effect on housing prices. the sensitivity there is not extremely strong. the level of housing that you would have to build in order to see a significant increase in affordability for low-income housing is large. i estimate it would take the construction of 100,000 new housing units to make -- have

the same effect of affordability as giving everyone a $75,000 down payment. making a quarter of the market affordable to low-income houses. obviously that would have the advantage of not costing the city $4 billion. $100,000 -- 100,000 housing units is a lot. that is the housing that san francisco has built since the 1920's. we're talking about a significant change in the way we look at housing construction and regulate housing construction in order to have an appreciative effect on diminishing prices in san francisco. i will close reenforcing the challenge. housing is expensive in san francisco. it does have economic consequences. it is the consequences of decisions we have made over a long period of time and is challenging to make significant corrections to that now. either through the subsidy or

increasing construction. i will conclude my comments and i will be around to answer further questions. >> thank you. supervisor wiener: if you would like to make any comments at any point of fell free to do so. right after mr. yarney. >> it is a a pleasure to be here. i will follow-up on tad and my presentation is brief but builds on the information he just shared. i will begin with talking briefly about the effects of high housing costs on job growth. as all of you know the mayor. the priority is to attract jobs

for highly skilled folks to do not have for your degrees. the most immediately -- committee -- immediate effect is high housing costs raise salary and wages and this increases costs for employers. ultimately on some level, this leaves -- leads to a disincentive to hire for low and moderate income workers and it represents a competitive disadvantage for the city especially when we compare san francisco to other labor markets including the outer east bay we can see housing prices are much more affordable. in some cases we have seen of relocation of what was once called back office. large corporate campuses that or at one. located in san francisco with jobs that were middle income. we saw many of those offices move out in the 1980's and 1990's to the far east bay by

pleasanton and other areas where considerable affordable housing made the community -- commit shorter for where the middle class was living. this is a short -- and this is a problem. it is important to emphasize that san francisco's job shed or in housing shed is a regional problem. not everyone who works in san francisco needs to live in san francisco. not everyone who lives in san francisco works in an -- san francisco. i would like to emphasize that part of the solution to our structural housing affordability problem and economic competitiveness is high efficiency low-cost, regional and citywide transit access. this actually boosts the opportunity for businesses to hire middle income workers who may not be able to live in the

city and vice versa. it improves the competitiveness of the city as a central location where access is easy compared to the other suburban locations. i want to get back to the housing affordability issue. i chose the slide because he represents our long term structural problem. it is sisyphiean. this exacerbates the housing burden. this is the difference. i am sure if mr. egan can look back further into the 1980's in 1970's. what you will see is an ever- growing housing burden on the middle class. without expanding production, this burden will likely continue to grow. exacerbating the number of people who need subsidies.

and so as it is we have a small subsidy by and we have primarily the majority that is dedicated toward low-income -- low-income and very low income households. we hear a part -- a cry for that portion of the pie to be directed to middle income. just looking at subsidizing mortgages to increase the possibility of owning a home from 14% to 25% would cost the city of $4.20 billion. we obviously do not expect to see that kind of subsidy any time soon. it begs the question what other policy responses are there to this growing affordability problem? i would like to emphasize that it is not us versus them approach.

often individuals have categorized housing in san francisco as low incumbrances market rate or low-income vs middle income and that is factually incorrect and not politically constructive. there are ways to grow the subsidy by and expand market rate protection that are mutually supportive. consistent higher annual housing production will slow and in some cases reduce the affordability gap for some middle income residents. this will allow the city presumably to focus subsidies on those income levels that can afford market rate products. it is a yes and approach not either-or. what does that mean in terms of policy? it certainly means lowering regulatory barriers to producing housing.

subsidized and market rate. it means that we carefully examined the cumulative financial burden of the impact fees on housing production supervisor wiener mentioned at the beginning of his presentation. it means we continue to capture a portion of the net economic benefit generated by market rate housing to grow the subsidy by for subsidized or below market rate housing production. i should reemphasize and say we can do this but there are smart ways to do it. and some ways to do it. the smart ways do not discourage housing production. the dome weighs do. finally and i think this point is not set enough, we need to build regional partnerships and

strategies to address what is a regional housing supply problem. it would be exciting for san francisco to take the lead in such an effort since our problems do not and that our city boundaries. with that i will pass the partnerships and presentation of to the mayor's office of housing. thank you. >> thank you. would you like to say something? >> i wanted to tell you we're at the table on this issue. it is not just while we think a lot of issues there are things that can be done to help this discussion and we're working with the mayor is of to housing office. i want to say that we are working very strongly on the job side of this equation. i do think that we are trying to look at the whole pie here.

we will be happy to work with the department to figure out what is in our long-range planning work and the code we can do to address this issue that is a reasonable approach. that is all have to say for now. thank you. supervisor wiener: thank you. we're joined by supervisor christina olague. the mayor's office of housing. >> i will go back to the powerpoint. >> maybe once they finish their presentation if you would like to add anything, that would be great. >> we will talk about who are

the middle income residents that we're speaking about. we will talk about how our house -- what our housing study found. we will draw some conclusions about the housing needs and at the end, our director will lead a policy discussion about how we might better serve residents of these different income levels. because we will run through a lot of data, we wanted to give you a preview of the conclusions so people can get a sense of where we will be leading you to. for very low-income households, we will reach the conclusion that for this population, virtually all rental apartments are out of reach in terms of affordable rentals. this population is the target for deed restricted rentals. those rental units where the city had put some dollars in and can restrict the rental price. for low income households, 50 percent -- 50% to 80% ami, there

is a gap. we are producing fewer deed restricted units to serve the population. for the moderate incomes, 80% to 120% ami, most for sale homes are not affordable. this is the city focus for the affordable ownership program. for the above moderate incomes, 120% to 150% ami, there is an affordability gap but smaller. let's talk about definitions. we talk about households, all the people who occupy housing unit. it does not be -- need to be a family. in san francisco, we have about 781,000 residents who live in households and of those, 781,000

residents, there are 346,000 households. that is 346,000 households. that is area median income. we're talking about the midpoint. half of the population is below and the other half above. the income comes from all the people in the household. in the last time -- study over the five-year average, the median household income for san francisco was about $71,000. that is the median. when we talk about very low and low-income, we wanted to put a human face on it. very low income, 0% to 50% sigami. low income, 50% to 80% ami, one makes $45,000 and the other

works as a waitress, bringing in tens and dollars. for moderate income, a single man earning $67,000 might be moderate in, or two flat mates, . above, 122150. a married couple with two children. what makes 85,000 and the other one make 65,000. a single woman making 100,000 could be above moderate. for the upper income, 150% or above, that could be a married couple without children. a police officer making some 5000 and nurse making 100,000. that gives you an example. when we talk about ami, it gets complicated.

the area median income depends on how many people there are in those households. it can see a chart with those median incomes and you can see the highlighted areas are where each of those people we describe fall on that chart. >supervisor wiener: just some context here. i know in the last week the speaker of the state assembly put out a proposal statewide for state college tuition. anyone with a household income of $150,000 would qualify for a dramatic reduction in state college tuition. 100 tricky thousand dollars in modesto or fresno or other

parts of the state would translate to a significantly higher equivalent standard of living. in terms of justice a note, with respect to these different categories according to the speaker of the assembly, $150,000 is -- for households statewide is some sort of our rule of thumb or indicator of people who are struggling financially require assistance. just to put that out there. >> this tells you in san francisco who falls within these categories. as supervisor wiener said. we can always cut this chart up in different slices. what we chose was 050, 50 to 80,

82120 at about. the largest part of 27% falls below that 50% ami. 44% fall between 50-150% ami. the largest is 29%. in terms of the 345,000 households, that means that within the 120 to the 150% ami, there are 135,000 households. there is the representation of where we are. >> according to the airport, the growth is in the very extremely

and very low population. that population boomed and there is growth also in the upper income category as well. >> you will see in the next slide what you stated. that is the visual representation. you can see on the left-hand side those households with less than 150% amnd over 150% have grown. moderate is constant with a little bit of an increase. you add this up those three segments in the middle have declined slightly over the past 20 years while the very low and upper has increased. this next slide is the same information that you can see dramatically that the increase

is on the low and the upper and lower. moderate remains flat. we know there are many different factors that can lead to that. it was hard for us to isolate any one factor. some factors are neighborhood preferences, the jobs available. san francisco does not have the same quantity of single-family detached homes as other areas. and the cost of living. san francisco is much more expensive than other sections. what we did was focused on housing affordability and how that might serve to contribute to this trend. we will talk about rental housing and then about ownership. for rental housing, let me set the stage and i apologize for these numbers.

in san francisco, we have 346,000 occupied housing units of rental and ownership. 36% are rentals. we have 36% rental and 64% ownership. -- i'm sorry. 36% ownership, 64% rental. the overall occupancy rate is about 92%. 92% of all of the units in san francisco are occupied. we have 90% on ownership and 94% on rental. when we talk about affordable housing, we are meeting that 30% of our gross annual income is being used for renter ownership. if we're talking about cost

burden that is 40% of their housing costs. we talked about be restricted for housing. here, meaning that we're legally bound to rent or sell the house sold under an -- unit those are units we contributed something to and overall we have 21,000 units of steed restricted affordable housing. here you can see the challenges for rental. for people at the various different ami levels. at 50% we're looking at 50% ami, and what percentage of those rentals would be affordable to people at 50% ami. only 6% of the studios are affordable. when i go up to 80% it goes up to about 54% and 120%, 93% of

all the available rentals are affordable to that population. again you can see at 50% it is very difficult to find almost any affordable rentals. at 80%, it becomes slightly easier. at 120% even for three bedrooms, you've still have 51% of those units available. just as a point of reference in terms of the point about rent burden, in san francisco, 36% of all renters pay 35% or more of their income toward their housing costs. if we're saying rent burden is 30% we know that 36% of renters, 72,000 rental households pay more than 35% of their income. toward their housing cost.