Bond Measures, Bills and Creativity May Impact Affordability

SAN FRANCISCO—Lack of affordable housing is on the minds of most San Franciscans and Bay Area developers these days. Legislation and legal battles aside, there are some options that can make sense for development, says one expert.

David Cincotta is a partner with Jeffer Mangels Butler & Mitchell, specializing in obtaining land use entitlements for large commercial, mixed-use and residential developments in San Francisco and throughout Northern California. Cincotta's practice focuses on land use, zoning and environmental law, and includes real estate transactions, real estate financing and historic preservation law. He recently discussed the hurdles to housing development and the issues that face the development of below-market rate housing in this exclusive.

GlobeSt.com: What has spurred the housing crisis in San Francisco and California overall?

Cincotta: The housing crisis in California is the result of multiple contributing factors, but there are two major factors that have spurred this more than others. First is the growth of technology industry, this is particularly an issue in the San Francisco Bay Area where housing prices have spiked dramatically.  Second is lack of production, which is attributable to delays and difficulties in the environmental and entitlement approval process, as well as high land costs.

GlobeSt.com: What issues are affordable housing developers currently facing?

Cincotta: Affordable housing developers face a wide variety of issues in San Francisco and throughout California, including the high cost of land and construction costs, as well as diminishing financial resources from federal, state and local levels.

GlobeSt.com: If passed, how might the proposed housing package before the California legislature impact affordable housing in San Francisco and the state?

Cincotta: A great boost would occur with the passage of the large bond measures being considered, particularly with the ability to finance more moderate income housing as well, which is currently in the proposed legislation. Some other measures which could streamline or expedite the CEQA review process and the permit process would be great assets to housing production for all income levels.

GlobeSt.com: Are there any specific proposed bills that stand to make the greatest impact?

Cincotta: The proposals from local legislators have some interesting ideas, including density bonuses, relief from certain environmental reviews for certain types of in-fill housing projects, creation of housing sustainability districts with special incentives, etc. These would all be helpful, however, the biggest impact, I believe will be the additional bond fund to provide financing resources for low and moderate income housing. On both the state and local level, there is recognition that accessory dwelling units (ADUs, also known as “granny flats”) can provide needed rental housing stock, and a number of bills have been introduced to make it easier for homeowners to develop ADUs and to legalize existing units.

GlobeSt.com: What other steps are being taken to provide relief for California?

Cincotta: There are some exciting new modular methodologies for the production of housing. Labor unions are finally getting behind some of these methodologies and beginning to see a role for themselves in it and are not as much of an obstacle as they might have been in the past. There are more housing developers exploring such methodologies which would lower cost by appreciably decreasing the construction time as well as finding technological efficiencies in the production of the housing.