Affordable Housing 101: Recap

In a packed room at the Mission Neighborhood Center on January 23rd, over 50 community members gathered to understand one of San Francisco's most pressing challenges: affordable housing. The event, organized by D9 Neighbors for Housing, brought together experts from across the housing ecosystem to demystify this complex topic. Let's explore what makes affordable housing work in San Francisco, and why it matters for our city's future.

What Makes Housing "Affordable"?

First, it's crucial to understand that "affordable housing" isn't just a descriptive term – it's a specific category of housing with legal restrictions and requirements. When developers and city planners talk about affordable housing, they're referring to units that are "deed-restricted," meaning there's a legally binding document that controls both pricing and who can live there.

These restrictions are tied to Area Median Income (AMI), a measure that helps determine who qualifies for affordable housing. In San Francisco, most affordable housing programs target households making less than 120% of AMI. For context, in 2024, a family of four making 120% AMI would earn about $186,800 annually. While this might sound like a comfortable income, it's often insufficient to afford market-rate housing in San Francisco.

The Different Types of Affordable Housing

San Francisco has developed several approaches to creating affordable housing:
1. Permanent Affordable Housing: Entire buildings where all units are rent-restricted and operated by nonprofit developers
2. Inclusionary Housing: Below-market-rate units integrated into market-rate developments
3. Section 8 Vouchers: Federal subsidies that help low-income residents rent in the private market
4. Social Housing: Government or nonprofit-owned housing that uses mixed-income occupancy to cross-subsidize operations
5. Naturally Occurring Affordable Housing (NOAH): Unsubsidized units that remain affordable due to market conditions

The Real Cost of Building Affordable Housing

One of the most misunderstood aspects of affordable housing is its cost. When people hear that units cost $500,000 to $800,000 to build, they often assume this reflects inefficiency or waste. However, as Sam Moss of Mission Housing Development Corporation explained at the event, this figure encompasses much more than basic construction costs.

Modern affordable housing developments serve as comprehensive community infrastructure, including: • Childcare facilities
• Workforce development centers
• Computer labs and educational spaces
• 24-hour resident services offices
• Healthcare facilities (both mental and physical)
• Community gathering spaces
• Retail spaces designed to serve neighborhood needs

Additionally, these buildings are constructed to last 50-80 years or more, requiring durable materials and thoughtful design that may cost more upfront but save money over time. As Moss noted, "We've failed a majority of our society... Mission Housing wishes it was less expensive to build, but I don't think it's bad to spend what we need to make sure our most in need have what they need."

The Complex World of Financing

Perhaps the most intricate aspect of affordable housing is its financing structure, known as the "capital stack." Unlike market-rate housing, which primarily relies on conventional loans and investor equity, affordable housing requires multiple funding sources:

Federal Support (46%):
• Low Income Housing Tax Credits (LIHTC) serve as the foundation of most affordable housing development
• Created in 1986, this program allows corporations to invest in affordable housing in exchange for tax credits

City Funding (32%):
• The Mayor's Office of Housing and Community Development provides significant local support
• Funds come from various sources, including bonds and development fees

State Programs (13%):
• Various California programs provide additional funding
• These often come with specific requirements around sustainability or population served

Traditional Loans (8%):
• Commercial banks provide a smaller portion of funding
• The San Francisco Housing Accelerator Fund helps bridge funding gaps

Innovation in Development

Recent projects demonstrate how developers are finding ways to build more efficiently while maintaining quality. The 1633 Valencia Street project, for example, employs several innovative approaches:
• Design replication from successful previous projects
• Early design-build contracting to lock in costs
• Streamlined construction methods
• Target completion within three years at about $520,000 per unit

Community Impact and Integration

Successful affordable housing doesn't just provide homes – it strengthens neighborhoods. Projects like Casa Adelante and the Bill Sorro Community show how thoughtful design and programming can enhance the entire area. Ground-floor retail spaces often house local businesses or community services, creating active streetfronts and providing needed amenities.

Looking Ahead

San Francisco faces significant housing challenges, but solutions are emerging. New funding measures, including a $300 million housing bond and potential regional funding through the Bay Area Housing Finance Authority, could help expand affordable housing options. However, success will require continued innovation in design and financing, along with strong community support.

Understanding these complexities helps us move beyond simplified arguments about housing costs and focus on what really matters: creating homes and communities that allow people of all income levels to thrive in San Francisco. As our city continues to evolve, affordable housing will play a crucial role in maintaining the diversity and vitality that makes San Francisco unique.

The event hosted by D9 Neighbors for Housing represented an important step in building this understanding, bringing together experts and community members to engage in meaningful dialogue about our city's future. Through continued education and community engagement, we can work together to create housing solutions that serve all San Franciscans.