and continues the success of the affordable housing community, creating housing, affordable housing in san francisco. we talked briefly about what this measure may provide as a basis to then leverage outside funding. over the period of redevelopment, about $500 million was spent of local money for affordable housing. that was over 20 years. if this measure is successful, approved by this board and this committee and the full board, and then the voters, we anticipate that the housing trust fund will have approximately $1.2 billion over 30 years to produce affordable housing. the notion of sovereignty for the housing developers it is extremely important because it take so long to plan and

construct and leverage the financing -- the notion of security. when need to know the financing will be there in the future so we can plan out the development of a significant pipeline of affordable housing. dan adams, it was the director of program development for the mayor's office of housing, will what this committee and the public -- will walk this committee and the public through the need statement and talk about how this process was structured and what the key parts of the charter amendment and the associated legislation will be. more importantly, will talk about the program that we both intend to continue. i think that the mayor's office intends to continue the good

worked of the affordable housing community over the past 20 years and continue to build housing for people who cannot afford it, including those people who are not served at all by the private market, including people with special needs or other issues who cannot afford market rate housing. when the mayor started out to convene a housing task force, the mayor was concerned about replacing the redevelopment funding, but the mayor give us another construction which was also great housing for the 100%. when you replace the revenue, tried to provide incentives for the market rate developers. because the residential development housing and san francisco is support for the general health of the city overall. this housing trust fund and the program contains those features.

at this point, i like to turn over the presentation to daniel adams. i like to thank all of the city staff that has worked on this, from the city attorney's office to the controller's office. and the planning department. we are all available to answer any questions after our presentation. thank you. supervisor kim: thank you, mr. lee. >> thank you, supervisors. i'm very excited to be here today to present to you today. it would be a cliche to say it has been a journey. but i am not a poet, i am a bureaucrat, so i will say it has been a journey. we will take these next tips with you and our collaborators, many of whom are here today. i want to walk through the problem statement, what brought us here to confront these challenges, and then the funding and program goals.

there is. it supervisosupervisor kim: do u have copies of the presentation? >> oh, i do, sorry. unfortunately, i have only three copies of the presentation. sorry about that. first, a summary of what i will talk about. first, the context and in need, what are we here today? then the process, the working group. the funding structure, how we will pay for affordable housing production and affordable home ownership programs.

then describe the programmatic components. home ownership and housing stabilization. then assessed market and below market rate. and then we will summarize at the end. first, the context and the need. i want to look at what has happened with funding. talk about the affordability gap. the trend of the population, he was living in san francisco, the importance that housing plays. we will draw on a number of reports that the mayor's office has presented to committee the past few months, including the middle income study, the performance of this that was conducted, and family data. the performance of that was recently conducted. most funding for affordable housing development has decreased since 2006-2007, because of economic and

political uncertainty. the city has collected no more fuel for the ball housing fees due to declines. although it has been stable, dissolution of the redevelopment agency will eliminate the source of funding. we know the redevelopment agency was dissolved. it paints a bleak picture, as to these charts. this is a chart of federal funding resources that are office manages, and we have seen significant declines over the past few years and the support federal source. when you combine the federal sources with the traditional allocation or investment by the redevelopment agency, the middle line, the overall funding picture is really shocking for affordable housing. this is the reality that we are grappling with in terms of funding for affordable housing. to say that san francisco is an

expensive city to live is perhaps a state of the most obvious, but san francisco is an expensive city to live. part of the way we measure that is the gap between what people can afford and what is available on the market. isan francisco is primarily rental households. we are about 2/3 rentals, 1/3 owner occupied. median prices nearing $700,000, with monthly costs of $3,000, and fair market rent of $2,000. very expensive. when we analyze what that looks like for folks at different income levels, and there is a lot on the slide, the column describes different area at media in comes. on the left we have bedroom sizes and median contract went, as described by hud.

when we look at what people who make 30% ami can afford and what the median market rate rent is, there is a gap. income declined, that gap grows. as the bedroom size or housing needed increases, that gap grows as well. if you are a poor family, that is the most challenging situation. were we have some alleviation of that gap, though not for everybody, is at about 150% ami, the market starts to meet folks at that level. for market ownership, the gap is consistent across a much broader spectrum of income level. there is still a gap between what people make and what they can afford. we have seen that gap reduce,

given the decline in the market. it has had one advantage in making some level of housing affordable to folks, but it is still a big leap to move into ownership housing in this city. aanother quick way to look at it is, where is housing more affordable? this is to remind us that san francisco is not one market. is not a single uniform market for housing. we have a lot of sub-markets. the darker hues of the map show greater levels of affordability, folks at 80% ami, and the next lot is 120% ami. darrius some housing stock and land conditions that allow for access to ownership housing in san francisco. other parts of the city, much more challenging.

quickly, what are we seeing over time? what is happening to our population? a couple of quick slides. san francisco it is characterized by a preponderance of very low income households. 27% of our city is characterized by people who make less than 50%. and upper house polls, 25% are people who make over 150% ami. so we are a city that runs the risk of being a place for very low-income and upper income, with a smaller category for low and moderate income. the trend seems to be that situation is being exacerbated. in recent decades, folks at 50%- 80% ami are leaving the city.

from 80-120%, we're seeing a similar trend. this bifurcated population in terms of population is one that we see over time. finally, in terms of the problem statement, i want to talk about the important role that housing place in the local economy. this is market rate housing and affordable housing. this shows in general, multifamily creates about 120 construction-related jobs for every 100 units produced, and in permanent jobs in terms of services and management that range from 30-32 jobs per 100 units. housing production is an important job creator for the city. but we have to have the right kind of housing that people can

afford. affordability is key to the economic competitiveness. the assertion comes from the city economist that labor costs drive the city's competitiveness as a business location. 2/3 of typical business expense is labor. housing drives litt costs. -- housing drives labor costs. san francisco's is the highest in the region. housing costs are a major reason why wages are higher in san francisco and we have the slowest growing job center in the bay area the past 25 years. affordability and affordable housing is not just the quality of life issue but also the key to being competitive and our economic health. last, housing production and new units produced, tax revenue that adds to the general fund. we do that for fiscal analysis.

we looked at the revenue side of new unit production and the cost side, and roughly came up with a figure of that fiscal impact of $2400 per unit with new housing production. a quick summary, funds to support housing production are in steep decline. the initial chart ways that out clearly. we continue to close the gap between what people can afford and what people need. matching housing production to housing needs increases our economic competitiveness, and housing production plays an important role in our local economy. confronted with this, these challenges, we brought together what i would call an unprecedented, diverse group of stakeholders to work on this challenge. it has really been a pleasure to work with such passionate and engaged participants.

i want to applaud their work in this process. what we are presenting today is a consensus position. it recognizes the very strong and put. we had a group meetings, focus group meetings, a technical group meeting to work through the details, and over the past five months, we have reached broad consensus. just a list of all of the organizations that the dissipated -- rba, the housing action coalition, private developers, community-based organizations. we have had active participants and we have benefited from their insights and their vigor. in addition, we reached out and included business groups, property owners, lenders.

the principles that we have followed during this process, first we want to recycle former rda's. we do not want to impact general fund commitments to other programs and need to what the city has. we want to address the loss of redevelopment and support new affordable housing production. we want to stimulate housing across all income levels. quickly, with fund the structures, there are three primary components. we're talking recycled rda's, the hotel tax, and then a new tax, either transfer tax or gross receipts. tax increment. first, we want to capture tax increment. this is redevelopment that currently is pledged to pay off affordable housing bonds. as those are retired, rather than have that go to the general fund, we want to capture that

tax increment that is being used to pay off bonds and dedicated to the housing trust fund. our projections are that in year one this will be approximately $2 million of the fund and it will go to nearly $56 million in year 30, depending on the growth projections that you use. we are also capturing a percentage of funds that are used to being paid for infrastructure bonds, the redevelopment could issue both housing and infrastructure bonds to capture a portion of the debt service. this starts at about 400,000, rose to about $11 million over 30 years. this is primarily the fund of the complete neighborhood grant program for infrastructure improvements in the areas is known for growth but did not have the right level of the infrastructure -- zoned for

growth. there is a portion of the hotel tax that has traditionally gone to affordable housing. this is a traditional allocation. we would capture that as far as the housing trust fund. finally, a new revenue source would be a companion ballot measure, nor can it be referenced directly in the charter. either an increase of the transfer tax or a portion of the incremental revenue through a gross receipts tax bill. either measure we are calculating would generate about $15 billion -- $50 million for the general housing fund. given the priority that the mayor has given to not compromising existing general fund commitments, should a new revenue measure not pass, a housing trust fund amendment includes a one time provision for the mayor.

because these are parallel ballot measures, if it does not pass, there is the option to not a plan that the charter. a graph of how the fund will grow. the top bar is the new revenue, the hotel tax, and the two components of redevelopment tax increments. this graph shows linear growth of the funds, $20 million year one. reaching its full potential, $50 million, $50.8 million, you're 12. that is the allocation as they grow over time. that is a $2.8 million increase in funding, until you're 12, and then the fund is capped and grows according to the general fund, much like other set asides.

what is important that is the importance of the new revenue source and the early years. the redevelopment money grows over time, not currently paying debt obligations. the new source is fundamental in the early years. now the good stuff. programs. i will describe a set of programs, initiatives. they are primarily housed in the charter amendment. but there is companion legislation. really, the primary goal is to achieve balanced growth. for that reason, this package of programs includes affordable housing production, home ownership, and housing stabilization. let's talk about affordable housing production. it will support implementation of are very aggressive pipeline. we have nearly 9000 units of

affordable housing in the pipeline. this includes transitional use, development of affordable housing in the major product areas, implementation of the public housing revitalization initiative. this is a critical funding source and it has moved to new developments. that money for acquisition and development of new permanent affordable housing sites we have yet to identify but will in the future. because i am an architect, i am allowed to show pictures of buildings and every power point to maintain my license. i think it is indicative of the kind of work we do, new housing production, a major rehabilitation center in the tenderloin, visitation valley, south of market. without a housing trust fund, we would be able to do far fewer of

these buildings. over 30 years, it will provide approximately $1.2 billion of affordable housing. we need to recognize that affordable housing leverage is outside funding. either one-to-one or two-to- one basis. when we're looking at the fund, we're talking about a total investment of $3 million of today's money. this will really help us maintain the production levels that we achieve under redevelopment in cooperation with the mayor's office of housing. this is a city that is known as a leader in affordable housing, and this trust fund will allow us to continue to be a leader. it is not just housing production. we are including in this home ownership and stabilization

programs. we have managed a series of home ownership programs, through the down payment assistance loan program, police and the community, teacher next door. a housing trust fund would double the capacity of our career down payment assistance program by providing $15 million in the first five years, to double this revolving fund. it is a revolving fund that sustains itself through repayment upon sale with the share of appreciation that would strengthen the capacity of this resolving source -- revolving source. housing stabilization, a category of programs that can include things like our single- family rehab program that we have managed, a lever to mediation, healthy homes.

we recently finished a green retrofit to increase energy performance. housing counseling foreclosure prevention. these are programs we have managed in the past. a housing trust fund will provide new revenue, totaling $15 million, for housing stabilization programs to continue this work. finally, talk about a series of market rate and below market rate stimulus. though or residential production cost, providing increased development assistance, target growth areas zoned for growth, spur projects that are stalled, and provide for market corrections. a housing trust fund will stimulate production and to waste. first, a 20% reduction in the on site obligation for projects

that could be included. second, elimination of the inclusion reapplication for small agencies. .2% is outside of the charter amendment. it would be provided as companion legislation. the inclusion or reduction would be a city-wide reduction. it would reduce the requirement from 50% to 12%. -- from 15% to 12%. it would be similar to other parts of the city. iwe did sensitivity analysis, ad 20% reduction would stimulate approximately 1400 additional units that would not have been built and $7.5 million of

additional revenue. the projects that have a 12% requirement currently would receive no further funding. that is the floor that we have established in the charter. we were looking at the smaller developments, 5-9, which typically have a lower first floor foot cost. if there is something that could attend to greater affordability without the need for subsidy, it will be the smaller projects. attending to some of the needs of some of the districts that have not seen a lot of production, we feel like the smaller projects have a better chance at that. smaller developments typically have greater participation by local builders and the local work force. and small developments have proved to be a very limited mechanism for producing below market rate housing. we have been successful over

recent years and reducing the risk of lots of additions to avoid this requirement, and there is language in the code that would allow us to prevent that were lower the risk of people subdividing lots to reduce their unit count below the threshold. so, developer certainty. it is often thought of as the holy grail for developers. it provides a greater clarity over time of potential returns, and the housing trust fund will stimulate production by increasing, not guaranteeing, but increasing developer certainty by stabilizing affordable housing obligations. affordable housing fees or obligations will be fixed over 30 years of the charter, the would be increased based on an inflationary index. they would not stay frozen, but they would grow as other impact fees grow over time. it is very important concept

when we're talking about this fee stabilization, housing obligation stabilization, where we are creating value through changing of the zoning, that fee cap is limited. there is a common understanding, a strong consensus around this concept for value is deferred, this cap on fees goes away. ibecause it has been a large pat of our technical session, i think that it warrants some detailed discussion. exemption from the stabilization. special use districts or other projects that significantly increase residential development potential. that would be measured as defined by 20% increase in floor area, and 50% increase in residential benefits. those are the thresholds for defining when these projects would be exempt from the fee cap, where fees could be increased. yet the category is larger area

plants, re-zoning of other areas. up-zoning would be to find outside of the charter, and we have specified a committee, three department heads. we are making a recommendation to the board of supervisors which will become the standard for defining of zoning threshold's. finally, we want to use our tools at the housing trust fund to direct growth, where there is the zoning capacity but conditions are not favorable for the zoning. we see this lower-cost to facilitate the developed. -- to facilitate the development. we're also developing a program modeled after the committee challenge grant, which would

improve existing residential development. this is the peace we have identified, infrastructure tax increment, we would use that to fund this program. the intention is really to be able to do holistic development. neighborhoods are not just comprised of just housing units but other streetscape improvements, pedestrian safety, which are critical. we want to spur stalled projects. we want to provide a limited extension in terms of the kinds of buildings that it intends to. and the deferral. a project can currently defer their fees until certificate of occupancy. we will defer those for high- rises and only for the affordable housing fee. we find these products typically fee out. units because of the high fees,