South San Francisco has $122M to spend on housing over next 15 years

“These funds need to be spent on serving our extremely low, our very low and our moderate income households,” said Deanna Talavera, an analyst with the city’s Economic Development and Housing Department.

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 excess city-owned property for the purpose, including last year when it sold a parcel for $1 to a developer to build 82 affordable units for seniors.

“One of the most significant barriers to building and securing housing is securing the land,” Talavera said. “Having enough money to be able to go after and pursue those sites is an important tool.”

The city’s projections indicate $16 million could be spent on land acquisition by 2024 and $60 million by 2027. The funding stream, called commercial linkage fees, levies a $16.55 per square foot charge on office and biotech projects. The fees were approved by the City Council in 2018 in an effort to offset displacement caused by the region’s jobs to housing imbalance.

The charge is often in the tens of million for large developments, similar to those proposed in multiple locations east of Highway 101. Unlike traditional impact fees earmarked for infrastructure or city services, the money must go exclusively to housing. The fund currently contains $5.5 million, according to the city.

Other recommended uses of the money include $15 million by 2027 to provide gap funding in the form of low-interest, long-term loans to aid in financing affordable developments. Another $5 million was recommended for preserving existing affordable housing, some of which could face deed-restriction expirations that would revert units to market rate.

The city’s accessory dwelling unit program, which provides homeowners with resources to aid in establishing such homes on their lots, could also get $2.5 million. Half a million could go to the city’s existing rental assistance program.

Among other discussion was the feasibility of establishing city owned and operated housing, something Councilmember James Coleman pushed for last year. Traditionally, below-market-rate projects, though aided by city funds, are owned and run by nonprofit developers that specialize in the task.

Nell Selander, Economic and Community Development Department director, said the creation of city-owned and operated units would likely cost the city as much as three times as much as those constructed using the traditional method. The most recent 456 affordable units built in the city have come at a taxpayer cost of $27,000 per unit, she said.

Staff did suggest that, going forward, property owned by the city should be retained by the city and leased to developers instead of being sold. Selander said such an arrangement, though potentially less attractive to developers, would ensure the lands continued use for affordable housing as well as provide continued revenue. Typical deed restrictions requiring units be listed with below-market rate rents expire after 55 years.

The recommendations were reviewed by the city Planning Commission and will head next to the City Council for approval.

According to the cities Regional Housing Needs Allocation, a state law dictating how much housing Bay Area cities will need to build in eight-year increments, South San Francisco will need to permit 2,093 units of affordable housing between 2023 and 2031. The units are required to be divided among three categories, with rents offered at or below $1,713, $2,741 and $3,426 for a one-bedroom unit.

corey@smdailyjournal.com

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