Hundreds of below-market-price units sit empty, despite a waiting list of more than 20,000

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A new report from City Hall shows more than 300 below-market homes are empty, thanks to bureaucracy and a pandemic market where market-priced housing has become cheaper.

Due to the city’s inclusive housing laws, even the fanciest new condos and apartment complexes in San Francisco have a certain percentage of units that are below market price. These are ‘set aside’ affordable housing created through a government program to ensure that people earning less than the average median income can still have housing as new construction occurs. These units may not always be in the same building as luxury units, but city law requires developers to create somewhere between 15-21% below market rate (BMR) units. , and sometimes developers will have an even higher percentage to sweeten the deal to earn approval.

Yet, it can be a pointless exercise when these BMR units simply sit idle. The Chronicle reports via a new municipal report that 305 BMR units are habitable but empty in San Francisco, despite a candidate list of 21,000. Developers blame an overly complicated application and review process with the Mayor’s Office for Housing and Community Development (MOHCD).

“Next to PG&E, they are the most inefficient bureaucracy we have to deal with,” Residential Builders Association president Sean Keighran told the Chronicle. “The units remain empty and the process takes forever. It seems the city doesn’t care.

That may be the case to some degree, but the full report from the Office of the Budget and Legislation Analyst points out a few other factors. One of them is an issue we’ve been aware of throughout the pandemic – below-market-rate units may actually be above-market-rate in today’s rental market. Normal units offer perks like free rent and Peloton bikes, etc., whereas a city-run program cannot offer this flexibility.

And while the developer quoted above had a fabulous zinger on PG&E, it could be the owner of the development who “don’t care” to fill it.

According to the Budget and Legislative Analyst’s report, “MOHCD staff reported that often in new buildings, a developer or the landlord’s leasing agent will prioritize renting units at the market rate by compared to BMR units, and if there is only one rental agent, it means that it takes longer for BMR units to be rented.

Mission Economic Development Agency (MEDA) Community Planning Manager Dairo Romero told Mission Local, “There is no incentive for developers to rent these units. They’re more concerned with market-priced units, people paying $4,000 for a studio.

This is a far cry from the years when people rented their BMRs illegally because the housing market was so tight. And as Mission Local points out, many of these empty units are SROs (meaning shared bathrooms). This was not an acceptable living situation for many people before the pandemic, and it is even less the case now – but what about the 21,000 applicants?

It turns out that when some of them pass the process and are offered a unit, they don’t want it.

Mission Housing Development Corporation executive director Sam Moss said qualified applicants reject ORS. “We asked potential tenants why. They say, ‘It’s a 90 square foot room without my own bathroom and without my own kitchen.’

The budget and legislative analyst’s report makes a few recommendations to the oversight board, including quarterly reports on vacancies, additional research, or an attempt at a legislative solution.

Related: ‘Below market rate’ housing units in San Francisco currently sit above market rate [SFist]

Image: Mayor’s Office of Housing and Economic Development

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