SF’s Aaron Peskin pitches financing bill for “missing middle” housing

Supervisor Aaron Peskin has pitched a plan to finance housing development for middle-class residents of San Francisco.

The mayoral candidate and president of the Board of Supervisors will introduce legislation to help create workforce housing financing by issuing tax exempt bonds, the San Francisco Chronicle reported.

The bill, known as the Missing Middle Workforce Housing Act, would authorize the city Office of Public Finance to issue two new tax-exempt housing revenue bonds. It comes as developers, especially those reliant on equity financing, struggle to complete projects during heightened market risk, higher interest rates and rising construction costs. 

They include governmental bonds for publicly owned but privately developed and managed facilities. And 501(c)3 bonds to finance projects owned by qualified nonprofits that serve a governmental purpose. 

Each bond wouldn’t dip into the city’s general fund to pay for homes, according to Peskin.

The proposed legislation aims to “produce and protect” thousands of affordable units using “little to no public funds,” jumpstart stalled housing projects and “bring people to live Downtown and other opportunity sites.”

Government-owned housing, including affordable middle-income housing, are exempt from property taxes. The city would own qualifying properties and enter into management contracts with nonprofit or for-profit developers to build and manage them, according to the Chronicle.

It’s based on rents that are affordable to middle-income households, between 80 percent and 120 percent of area median income, which can support significant debt service, especially if the city can offer cheaper debt and property tax exemptions. 

Peskin’s ordinance would help fund projects targeting this middle income range. It would then cap annual rent increases to make sure the apartments stay affordable at 15 percent below market rate.

The bill would also create a streamlined process for applying for affordable housing projects, including safeguards that cap developer fees. The Chronicle reported the application process for middle-income, below-market-rate housing has resulted in empty apartments. 

Peskin called the city’s housing market “fundamentally broken,” especially for the city’s essential workers such as teachers, healthcare workers, bus drivers and more.

“The private market builds housing only in economic boom times and only for the wealthiest, while the public and nonprofit system struggles to keep pace, building low-income housing dependent on matching local and federal tax-credit subsidies with little or no debt,” Peskin told the Chronicle, adding that when times are down, private developers “struggle to secure debt financing and equity partners.”

“Meanwhile, there is no housing system that responds to the needs of our middle-class working families and our essential workers,” he added.

— Dana Bartholomew

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