What’s the Real Difference Between San Francisco’s Two Affordable Housing Ballot Measures?

Note: This article was updated on September 26, 2022, to add the official letter names of these propositions.

This November, San Francisco voters will be asked to choose between two competing charter amendments to streamline the creation of new affordable and workforce housing: Prop. D and Prop. E. On the face of it, the two ballot measures appear very similar. But the policy details included in these measures make a significant difference in the impact each would have on affordable housing production in San Francisco.

Prop. D, Affordable Homes Now, is a voter initiative sponsored by SPUR and a coalition of nonprofit groups including Habitat for Humanity Greater Bay Area, Nor Cal Carpenters Union, Mission Housing, GrowSF, Greenbelt Alliance, Housing Action Coalition and YIMBY Action. Prop. D would streamline the approvals process for three different types of projects: 100% affordable housing, mixed-income housing projects with increased affordability, and educator housing. Affordable Homes Now has the support of Mayor London Breed, Supervisor Matt Dorsey and Senator Scott Wiener.

Supervisor Connie Chan introduced a competing charter amendment, Prop. E, the Affordable Housing Production Act. Although Prop. E would also remove some red tape for the approvals of selected types of housing development, it does not fully streamline 100% affordable housing projects, it places additional requirements on mixed-income projects and it has more restrictive labor standards than Affordable Homes Now. Prop. E has been co-sponsored by Supervisors Peskin, Walton, Mar, Ronen, Preston and Safai.

Here’s a summary of the key differences between Prop. D and Prop. E:

1. Prop. D fully streamlines 100% affordable projects.

Under Prop. D, permitting and funding for projects where 100% of the units are affordable to low- and middle-income households would no longer be discretionary. This means proposed projects that conform to existing zoning rules would not be required to undergo additional environmental review under the California Environmental Quality Act (CEQA), and they would be protected from lawsuits under the same law. Prop. E does not remove funding decisions from discretionary review, which means that 100% affordable housing projects seeking city funds would be subject to CEQA review and vulnerable to potential lawsuits. It’s important to note that while CEQA was originally intended to protect the environment from the negative impacts of sprawl, NIMBY groups often use this law to block much-needed housing development in cities. Prop. E would do nothing to stop this abuse of CEQA.

The two charter amendments also differ on what levels of affordability they target. Under existing state law SB 35, low-income housing projects that serve households with incomes below 80% of the area median income (AMI) are already fully streamlined and exempt from CEQA. Prop. D would expand the streamlining to include moderate and middle-income households. A 100% affordable project that provides an average affordability level of 120% of the Area Median Income (AMI) would be eligible for streamlining, compared to 80% AMI Income under state law. Under Prop. D, this would allow 100% affordable housing projects to also include some middle-income units for households making up to 140% of AMI. To ensure that the prices and rents are not set higher than the neighborhood average, the homes would have to be priced 20% below the average for the neighborhood.

Figure 1. What Does AMI Mean? Examples of Affordable Housing Levels in 2020

Encouraging more moderate and middle-income housing is consistent with the city’s existing policy commitment under 2019’s Prop E, which made it easier to build housing for educators earning up to 140% of AMI. Recognizing the need for more affordable housing opportunities for moderate and middle-class families who don’t qualify for existing programs and subsidies, many community groups have sought city support for developing these types of units. For example, MEDA has proposed a new condominium project at 2205 Mission Street that would provide new condominiums affordable to households with incomes between 80% and 130% of AMI.

Prop. E requires that 100% affordable housing projects have a much lower overall average affordability of 80% of AMI to be eligible for streamlining. In this way, Prop. E simply replicates existing state law without the benefit of a CEQA exemption, making it ineffective for encouraging the development of new 100% affordable housing projects. Prop. E would also exclude the possibility of expediting 100% affordable projects that are intended to serve first-time homeowners and moderate income families.

2. Prop. E imposes more onerous requirements for mixed-income projects.

Prop. D requires that streamlined mixed-income projects provide 15% more affordable units than currently required by the city’s existing inclusionary policy. Today, 22% of units in new rental housing projects must be affordable to low- and moderate-income households. Under Prop. D, a 100-unit rental project would require a total of 25 units (22 units + 3 additional units [15% of 22] = 25 units). The additional affordable units would have the same maximum sales prices and rent tiers as those established in the city’s inclusionary policy.

Prop. E requires that mixed-income projects have an increased inclusionary rate of 8% above the existing rate, meaning that the inclusionary requirement for rental housing would be 30%. For a 100-unit rental project, a total of 30 units would be required. The city’s Housing Affordability Strategies and other studies have repeatedly demonstrated that the existing inclusionary rate is already challenging for many mixed-income projects. Increasing it to 30% will render most mixed-income projects in San Francisco infeasible, which means that Prop. E is not likely to increase the production of affordable housing.

Figure 2. Comparison of Affordable Units Required in Mixed-Income Housing Projects

Prop. D uses the city’s existing inclusionary policy to set the sizes of inclusionary units, as well as their rents and sale prices, rather than creating new standards. Prop. E would impose new requirements for mixed-income projects that are more stringent than the existing inclusionary policy. Under Prop. E, 20% of the additional affordable units must be 3-bedroom units, and 30% of the additional affordable units must be 2-bedroom units. If additional affordable units are studios, they can be priced at no more than 80% of AMI.

3. Prop. D does more to deepen the bench of construction workers in the Bay Area.

Under Prop. D, developers of all three types of eligible projects are required to pay all construction workers prevailing wages, provide them with healthcare and provide apprenticeship opportunities to create pathways for more San Franciscans into middle-class construction jobs. As union contracts already meet these standards, Prop. D encourages developers to employ union labor.

Prop. E requires developers to use "skilled and trained" labor on mixed-income and educator housing. To qualify as “skilled and trained,” workers must have graduated from specific state-certified apprenticeship programs. But this group only constitutes one-seventh of California’s construction trades workforce. Using the “skilled and trained” labor standard does not deepen the bench of construction workers or provide a pathway to bring non-union workers into higher quality construction jobs.

4. Prop. D sets strict time frames for project approvals.

One serious roadblock to building enough affordable housing is that the median time frame for the approval and permitting process is 27 months in San Francisco, far longer than any other city in California. Prop. D would expedite approval of eligible projects by mandating clear and limited time periods for the city to determine an application’s completeness and eligibility for streamlining, and by restricting the city’s ability to delay or reject permits for an eligible housing project that complies with the planning and building codes. The planning department would have to approve projects of more than 150 units within 180 days of an application submission. Projects of 150 or fewer units would be approved within 90 days of submission. Other construction permits for things like grading, streets and sewer/water connections would also be accelerated under Prop. D. City departments would be required to use objective standards to determine whether a project complies with existing city code before issuing permits.

Prop. E does not provide any time frames for deeming that an application is completed and eligible for streamlining. This means that many projects could continue to experience significant permitting delays if projects are deemed incomplete, and there would be no recourse.

Figure 3. Comparison of Prop. D and Prop. E

Conclusion

On the face of it, the two charter amendments to streamline housing may look quite similar to voters. But a deeper look at the details of these measures shows that Prop. D is much more likely to result in more affordable housing production than Prop. E.

Prop. E does not fully streamline 100% affordable housing and leaves projects vulnerable to unnecessary environmental reviews and NIMBY lawsuits. Prop. E also places onerous new labor standards and inclusionary requirements on mixed-income projects that will only make it harder to build affordable housing. It provides no deadlines on the approvals process, leaving the door open to more delays and politicization.

Prop. D the SPUR-sponsored measure, fully streamlines affordable housing projects for low-income households. It facilitates the construction of moderate- and middle-income housing for teachers and other working families. It requires projects to be approved within three to six months, and provides prevailing wages and health benefits for all construction workers. Of the two proposals, Prop. D will be more likely to put a dent in San Francisco’s housing shortage by both speeding up the project approval process and addressing the shortage of skilled construction tradespeople.