San Francisco County Grand Jury • 2013-2014

Under Pressure and Challenged to Preserve Diversity June 2014 City and County of San Francisco Civil Grand Jury

Published: June 22, 2014 68 pages
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Findings and Recommendations 11 findings

F1
Housing development in the last decade has fallen far short of regional need targets. New production overwhelmingly delivered market rate units despite housing need targets for a broader income spectrum. This has reduced the number of housing opportunities affordable to the majority of citizens.
Related Recommendations (1)
R1
The Jury recommends the Board of Supervisors convene a hearing this calendar year to review the final report from the Mayor’s Housing Task Force and ensure that policy recommendations improve the relationship between Market Rate and Affordable Housing to reflect the economic diversity of the City, and include annual monitoring of regional housing achievement numbers as defined by the Regional Housing Needs Allocation and the Housing Element.
F2
Housing construction for Middle Income households is not meeting regional housing targets. Local government programs to address the situation are limited. Household includes all of the people who occupy a housing unit, family related, unrelated or single. Briefing Book, slide 17 46 Briefing Book, slide 54 47 http://www.sfgate.com/bayarea/article/Families-exodus-leaves-S-F-whiter-less-diverse-3393637.php 48 Other factors include urban density, safety, schools, and open space. Please see Appendix 4 for a listing of various proposals found in the literature to increase housing supply. 17
Related Recommendations (1)
R2
The Jury recommends that MOHCD articulate strategies to improve achievement of regional housing targets for Middle Income households and establish incremental targets by year. The Jury also recommends that MOHCD report annually to the Board of Supervisors on progress in achieving these targets and include best practice research from other municipalities about Middle Income policy solutions. 18 2. The Housing Trust Fund The Housing Trust Fund (HTF) resulted from passage of Proposition C in 2012 with approval by 65% of the voters. The HTF receives appropriations from the City’s General Fund meant to provide a stable source of funding “established … to support creating, acquiring and rehabilitating Affordable Housing and promoting affordable home ownership programs in the City.”50 The HTF is expected to provide $1.33B over 20 years in support of this objective.51 The first year allocation (FY 2013/14) is for $20M, and the initial budget was structured such that MOHCD will use 70 percent of HTF monies to provide local financing for the construction and major rehabilitation of affordable multifamily housing.52 It is also a Charter requirement that MOHCD dedicate $15 million in the first five years of the Housing Trust Fund to “Housing Stabilization” and “Downpayment Loan Assistance” programs. The projected expenditures from the HTF for the current and next fiscal years are: SF Housing Trust Fund - Proposed FY2013-14 & FY2014-15 Budget Projected FY Projected FY Program Area 2013-14 Uses 2014-15 Uses $M $M Downpayment Assistance Loan Programs $2.0 $3.0 Housing Stabilization $2.8 $3.1 Complete Neighborhood Infrastructure $0.2 $1.0 Affordable Housing Development $13.8 $14.5 Program Delivery $1.2 $1.2 TOTAL HTF $20.0 $22.8 Source: MOHCD, HTF Budget Final Public Version POST HEARING, Oct, 2013 Table 4 - HTF Budget It is important to note that the passage of Proposition C was for “the creation, acquisition, and rehabilitation of rental and ownership housing affordable to households earning up to 120% of the Area Median Income.”53 The Redevelopment Agency funding stream it was meant to replace was, in general, restricted to developments up to 80% of AMI. The HTF is more flexible and can be used to provide financing for projects supporting moderate income populations. SF Charter, Sec 16.110 51 Refer to
F3
Housing Authority properties may require stabilization funds or other gap financing measures to successfully enable the public-private partnership strategy agreed to by stakeholders in the Re-envisioning plan. The City’s Housing Trust Fund could be used to provide funding resources to help support the Re-envisioning plan.
Related Recommendations (1)
R3
The Jury recommends that as Housing Trust Fund (HTF) funds are allocated to Housing Authority properties, MOHCD and the Mayor document a funding analysis for the allocation and the impact these disbursements may have on MOHCD Affordable Housing goals and programs to the Board of Supervisors and the public in the year of encumbrance. Reports should include annual updates on repayment. Re-envisioning; pg 17 55 San Francisco Charter, Section 16.110.d.1. – Housing Trust Fund - Uses of the Housing Trust Fund 56 Administrative Code Section 1.60 20 3. Affordable Housing Documents and Data Availability The process of developing a single Affordable Housing unit depends on a series of decisions impacted by regional growth objectives, choices and availability of funding, and local neighborhood considerations that often lead to passionate housing policy debates. The interest of the public in San Francisco to increase funding for Affordable Housing development was evident with the passage of Prop C, the Housing Trust Fund Ordinance. The Jury feels that the public is best served when easy access to strategy, goals and progress data is provided. Transparency will help assure that the Affordable Housing development agenda is on track and help provide the foundation for orderly discussions about policy. The Mayor’s Office of Housing and Community Development has a good record for managing the delivery of new development and Inclusionary units, including comparative achievement with other regional municipalities.57 Not only has the Housing Division been a leader in creating Affordable Housing stock, the Community Development Division provides grants and support services to disadvantaged populations in the City. During this investigation, however, the Jury found deficiencies in the availability of public documentation, including policy, strategy and program information, and performance measures. This lack of attention to public communications can potentially sidetrack the overall MOHCD agenda and erode public confidence. As MOHCD steps up to their expanded role, what follows are public transparency and communication issues that cause the Jury concern. Website With increasing public focus on housing, the MOHCD website needs significant improvement in navigation and content management. The agency has over 50 staff positions and should be capable of resourcing this task.
F4
Public information on the City’s Affordable Housing strategy and operations is difficult to find on the MOHCD website. News, reports and documents related to Agency responsibilities are scattered or posted under obscure sections. Many documents and links are outdated and the site is poorly organized for seeking portfolio, project activity and operational reporting information. Budget Analyst Affordable Housing Report 2012, pg.19 21
Related Recommendations (3)
R4
The general public In addition to certified income statements required by MOHCD, the developer partner can review and deny lottery winners based on developer partner property management criteria.72 All denials have to be reviewed and approved by MOHCD. The property manager’s list of criteria for denial can include:  Inappropriate Household Size  Insufficient Income to Pay Rent  Credit/Bankruptcy History  Eviction History  Criminal History Some of these criteria have implications for fair housing. As the number of high-end inclusionary rental projects increased, there were instances of stricter rejection criteria used by property managers beyond those prescribed by BMR Program guidelines.73 Federal fair housing laws require that all applicants (for both market rate and BMR units) be regarded equally in terms of the right to occupancy. However, agents using more stringent screening criteria, such as an applicant’s credit history, have created situations restricting access to BMR units in populations MOHCD would consider “qualified”. Unequal access may also be compounded by marketing deficiencies of affordable opportunities to disadvantaged populations and neighborhoods. This includes poor advertising outreach and impediments in the application process, such as language and accessibility. The burden presented by language issues has been placed on developer partners. Their effectiveness in providing interpretive services is too often constrained by budget and priorities. Recently MOHCD began working with nonprofit and other housing support agencies to make key consumer documents available in several languages. A recent report by MOHCD74 indicates a distribution of ethnic groups in BMR rental units that differs significantly from citywide percentages of similar low income populations. Procedures Manual, pp. 52-53. Lagos, Marisa, “San Francisco housing dreams haunted by debt,” San Francisco Chronicle, 5 December 2013. 74 2013-2018 Analysis of Impediments to Fair Housing Choice, 2013 32 “Alongside a decline in African American and white low-income populations, the City has seen a slight increase in the population of low-income Asian renters and a large increase in low- income Latino residents. Considering the overall growth in low-income Latino residents, the significant under-representation of Latino households in new affordable housing developments warrants concern. 14% of the City’s very low-income households are Latino/Hispanic but only 7% of the residents in new MOH housing are Latino/Hispanic” 75 Certain actions are being undertaken by MOHCD to address this issue. In addition to monitoring developer partner compliance where possible, MOHCD is playing an advocacy role to relax screening criteria that contributes to equalizing BMR participation among various disadvantaged groups. For example, the office is working with partners to encourage a more flexible approach to looking at criminal and eviction histories, including sunset periods for consideration of negative events. Recently passed criminal history nondisclosure legislation (“Ban The Box”) by the Board of Supervisors may also help to facilitate access for certain otherwise qualified individuals.76 Continuing progress also requires MOHCD staffing levels adequate for training and consistent monitoring. Sensitivity toward fair access to BMR rental housing is not adequately conveyed to project partners in the Procedures Manual. Awareness training for developer partners is another key strategy to improving qualification fairness and the ethnic occupancy statistics for BMR rentals. A similar access problem exists with BMR Ownership housing. African Americans were particularly underrepresented and in explaining this underrepresentation of African Americans in BMR housing, and declining representation in affordable housing, one stakeholder states, “There is a general lack of knowledge about how to apply for housing and a perception that the lottery system will not benefit African Americans because they are such a small part of the population. Credit issues are another large barrier to applying for housing to the point where people assume they won’t pass the credit test before they even try. Past criminal histories are also a barrier no matter how long ago the crime was committed.” 77 Ownership programs have down payment percentage requirements. These thresholds may also be a contributing factor. One consideration for MOHCD would be to subsidize down payment requirements to a lower threshold for applicants that is in alignment with the Federal Housing Authority standard of 3%. Ibid, pg. 145 76 http://www.jacksonlewis.com/resources.php?NewsID=4762 77 Impediments, pg. 153. 33
R4a
To keep the public and the Board of Supervisors informed on a timely basis, the Jury recommends that the MOHCD website be made much more user friendly with improved navigation and better public access to content.
R4b
The Jury recommends that MOHCD immediately designate a website manager responsible for technical design and ease-of-use, plus content management including timely posting of documents and metrics reports that are in the public interest. Public Reports The current MOHCD 5-year Consolidated Plan 2010-2014 58 is over 200 pages long. Required by HUD, the document is a valuable resource for housing experts and is comprehensive in explaining strategic goals and objectives of local housing policy, program objectives and challenges, along with specific goal metrics. Other policy presentations found on the website, like the 2012 Briefing Book59, further analyze and discuss policy detail. These materials, however, are lengthy and technically oriented. There are few documents that are accessible or readable by the general public. The Agency needs to create “public friendly” summaries that help the public understand the goals, objectives and the complex environment of Affordable Housing production and public assistance program management. The Jury contrasts this lack of easily understood public material to the efforts of New York City. The New York New Marketplace Plan 2003-201460 covers the complex effort that produced 167,000 units of affordable housing during the Bloomberg administration. The Jury found this document to be a straightforward analysis of the NYC Affordable Housing program with simplified housing policy, strategy and program explanations, including funding details for specific projects. MOHCD has not published an Annual Report since 2009. Although the Jury was told that one was being prepared for publication in Spring of this year, a draft was not available to the Jury in time for review. MOHCD needs to make their Annual Report a routine annual communication to the public and assure it is easily accessed on the website. The New York Report is an excellent template for improving the MOHCD Annual Report on Affordable Housing. There is also a lack of numbers on Affordable Housing plans, production and goal accomplishment on the MOHCD website. MOHCD works with the Planning Department to provide Affordable Housing construction numbers for the annual San Francisco Housing 58 http://sf-moh.org/Modules/ShowDocument.aspx?documentid=4605 59 http://sf-moh.org/modules/showdocument.aspx?documentid=6977 60 http://www.nyc.gov/html/hpd/downloads/pdf/HPD-Annual-2013-FINAL.pdf 22 Inventory. However, the 2012 Report was a year late due to staffing issues at Planning, and there was no good data source for Affordable Housing numbers other than making a direct request to MOHCD staff. Citywide housing construction forecasts are in the Quarterly Pipeline Report also published by the Planning Department. However, Affordable Housing data is not a separate part of this report and an Affordable Housing pipeline spreadsheet had to be requested from MOHCD personnel in order to view new construction and Inclusionary forecasts. Chicago produces a comprehensive quarterly Pipeline Progress Report on affordable housing.61 It includes project updates on affordable rental units, including rehabilitation and new construction, homeownership fairs, and policy and legislative issues, with detailed data reporting every three months.
F5
MOHCD has not provided consistent, timely, or easy-to-read documentation on the City’s Affordable Housing strategy, goals and progress, and has not published an Annual Report since 2009.
Related Recommendations (2)
R5a
The Jury recommends MOHCD publish an Annual Report on their website by March of each year. This report should be oriented to a general audience and include information highlights and measures that communicate achievement towards City Affordable Housing program goals.
R5b
The Jury recommends MOHCD publish a quarterly Affordable Housing Pipeline Report within a month of each quarter’s closing. This may be done within the Planning Department’s Quarterly Pipeline Report, but should also include quarterly Affordable Housing program progress highlights. Metrics and Leverage Reporting The lack of consistently available factual data on Affordable Housing progress and forecasts has contributed to erroneous reporting in press articles62 that end up eroding public confidence in the performance of both MOHCD and the Planning Department. 61 “2009-2013 Affordable Housing Plan, 2013 Third Quarter Progress Report”; http://www.cityofchicago.org/dam/city/depts/dcd/general/FullReport20133.pdf 62 See http://www.sfexaminer.com/sanfrancisco/san-francisco-housing-trends-make-it-difficult-for-modest-earners-to-find-a- place-to-live/Content?oid=2629169 Per MOHCD “note that this statistic “Number of Affordable Units that Those Fees Could Finance” is inaccurate. MOHCD’s average per unit subsidy for an affordable housing development is between $150,000 to $200,000 per unit. Based on the $200k/unit estimate, $37 million can support the creation of approximately 185 units [not 3,995]. The Chronicle also got this fact incorrect in a recent article.” 23 MOHCD and the Office of Economic and Workforce Development (OEWD) collect and report metrics to HUD in their annual Consolidated Annual Performance and Evaluation Report (CAPER).63 There are many Affordable Housing performance measures that the Jury finds useful and informative in this report that can easily be extracted and repurposed for public reporting.64 A new report mandated by the Board of Supervisors in 2012, known as The Dashboard, is a hybrid of the Housing Inventory and the Pipeline reports meant for policy makers. This report has various challenges including tabulation of the Regional Housing Needs Assessment achievement targets and inclusion of the City defined “Middle Income” category. Production of the report is labor intensive, but new staffing in the Planning Department is expected by NEW YORK CITY’s midyear. MOHCD and Planning must not Financing Leverage defer the commitment to compile this report and update it on a regular schedule. Leverage is a metric that helps illustrate whether public funds are being managed for maximum impact. Leverage is a measure that indicates the capital commitment the City makes to fund a project and depends on the availability of multiple funding sources. This graphic shows the leverage that New York City was able to exercise through their access to local capital markets65. The Jury feels that highlighting the effectiveness of local resources for Affordable Housing by reporting leverage is a good way to get public support. Although this measure has its limitations66, the Jury found leverage calculations already on the Affordable Housing Loan Committee’s Cost Comparison spreadsheets. As each Housing Agency and capital market is different, the Jury is not suggesting that the NYC leverage number is an appropriate target for San Francisco. Rather that this metric should be a standard component of MOHCD’s public reporting. For example on pg. 29 of the 2012-2013 CAPER, “Goal 4: Families and individuals have safe, healthy & affordable housing”, the Jury found many important performance measures worth sharing. See
F6
MOHCD lacks discipline in posting and providing website access to their Affordable Housing metrics and program results reporting.
Related Recommendations (3)
R6a
The Jury recommends MOHCD track and publish metrics with greater frequency using measures based on pipeline and HUD CAPER reporting that help the public to assess the progress of new development and housing support program efforts.
R6b
The Jury recommends MOHCD work with the Planning Department to formulate a Memorandum of Understanding (MOU) specifying timing and responsibility for the preparation and publication of Affordable Housing pipeline data in the Quarterly Pipeline Report. A new report commonly referred to as The Dashboard should be completed. An effort to publish these reports on SF Open Data should be prioritized.
R6c
The Jury recommends MOHCD establish a metric for accounting public contributions per development project. This financing leverage measure should be reported in the MOHCD Annual Report by project type. New Development Project Updates The Jury was interested in looking at multi-family new development project information over the lifecycle of a project. However, case file documents on completed projects, with the exception of Affordable Housing Loan Committee documents, could not be easily produced by MOHCD in response to a request from the Jury. The inability of MOHCD to collect documents was a concern for the Jury. It calls into question internal record keeping procedures for completed projects and public transparency. The Jury was also surprised to find that no routine post-project evaluations were undertaken by MOHCD, a best practice in project management methodology. A good model for project status and document availability is Boston’s website, as illustrated by the screen capture on the following page.67 67 The Boston Redevelopment Authority’s Projects website is organized by project with access to key documents http://www.bostonredevelopmentauthority.org/projects/development-projects 25 Project Status Document Access Figure 4 - Project Page Example
F7
Project phase documentation related to MOHCD new development projects are not readily available for public inspection.
Related Recommendations (1)
R7
The Jury recommends MOHCD use their website to post up-to-date housing development project information and provide access to key milestone documents as is done on the Boston Redevelopment Authority website. Anecdotes relayed to the Jury during our investigation indicate that MOHCD has done a very good job of facilitating projects and has successfully worked to sustain a vibrant Affordable Housing community. The Jury notes that the public is also a stakeholder in defining Affordable Housing policy and the lack of readable public documents and failure to provide easy and timely access to data on their website is a serious deficiency. The recent focus on achieving the 10,000 affordable unit goal and with other responsibilities being taken on by MOHCD, the Jury urges MOHCD to prioritize their efforts to improve their public reporting profile and management of their website. With expanded leadership duties comes increased responsibility. 4. Fair Access to BMR Affordable Housing Opportunities MOHCD’s BMR (Below Market Rate) program offers ownership and rental housing opportunities to qualified applicants. The jury looked into the details of this program to better understand how the process worked for applicants and how fair access to housing opportunities were being managed. The current inventory of BMR properties includes: Table 5- BMR Units by Program BMR PROGRAM Ownership Rental Total BMR Inclusionary Housing (IH) 874 622 1,496 Program BMR Condo Conversion (CC) 318 0 318 Program Former SF Redevelopment Agency 900 850 1,750 BMR (Inclusionary) Program GRAND TOTALS 2,092 1,472 3,564 The current pipeline through 2016 for BMR units is: Table 6 - BMR Pipeline Closing Pipeline Pipeline Closing Service Type Fiscal Year Closing 2015/16 Total 2013/14 2014/15 (Estimates) Resale Units 32 38 40 110 BMR IH, CC, LEP New Ownership Units BMR 100 221 Not available 321 New Rental Units 282 194 100 576 BMR IH Re-Rental Units 15 18 21 54 BMR IH GRAND TOTALS 429 471 161 1,061 The pipeline reflects a 30% increase in the expected number of units in the program with most of the units coming from Inclusionary Housing projects. BMR housing is primarily aimed at middle-income households, reflecting City policy to help maintain a diverse workforce within the City. Properties are targeted toward applicants in the 50- 120% AMI range. It includes both rental and ownership properties. The latter are generally offered to the upper end of this AMI range. As previously discussed, a decrease in middle- income households has accompanied the City’s overall population increase just as more types of housing normally priced toward this category have gone out of reach.68 Inclusionary Housing units are a major component of the BMR Program. This requires working with developers of market rate projects, which can present challenges for MOHCD in enforcing Inclusionary Housing Ordinance compliance69 and ongoing monitoring of the BMR Program. It requires MOHCD to track all new projects and units being constructed under the Inclusionary Ordinance, approve compliance plans, provide regulations training to developer partners, and monitor all aspects of occupancy and BMR implementation. From interviews with staff and housing developers, the Jury learned that the occupancy process for Inclusionary BMR units can take more than six months for a major project. This includes marketing project units, screening applicants, conducting a lottery and final qualification of lottery winners prior to tenant leasing. BMR Occupancy Process The above graphic describes the process for BMR rental projects. Ownership projects will be slightly different, but in terms of marketing, initial application and qualification, they are similar. Figure 5 - BMR Process 68 City & County of San Francisco, Joint Presentation on Housing, 2012 69 Costs for the Inclusionary Housing Program are self-funded; administrative costs in recent years have ranged between $650,000 - $700,000 annually.. Marketing MOHCD works with developers and their property management partners (“developer partners”) to market BMR units in accordance with fair housing policy goals. Project partners are required to submit a marketing plan to MOHCD for approval.70 Submitted plans are evaluated for diverse neighborhood outreach, standardized language describing eligibility criteria for available units, a media plan including at least five diverse local publications, and listing of ownership units on the local Multiple Listing Service. MOHCD offers a “marketing template” to developer partners, offers training to project employees, and requires contracting with Inclusionary Housing consultants. Effectiveness of marketing campaigns are not regularly evaluated by MOHCD. The entire process places a significant time burden and cost on project partners, which can lead to deficiencies in ensuring fair access to affordable housing. Marketing to potential applicants is also done through the MOHCD website using an internal subscription email service. This allows for timely notification, especially for re-rental opportunities. The notice provides basic information about project vacancies, including rent and application criteria, and contact information for submitting applications. Currently there are over 16,000 subscribers to this service.
F8
MOHCD’s current procedures for marketing BMR units places too much responsibility upon developers without sufficient guidance. Additionally, results of marketing campaigns are not regularly evaluated for effectiveness.
Related Recommendations (2)
R8a
The Jury recommends MOHCD provide developer partners with more comprehensive materials in the Marketing template, including model BMR program marketing plans, advertising samples, marketing templates in multiple languages, directories of approved consultant and public agency partners, and training materials including web delivered training videos, to set clearly understood minimum standards for outreach.
R8b
The Jury recommends MOHCD implement regular evaluations of marketing effectiveness and marketing materials by surveying applicants to indicate source of notification by housing opportunity. City And County Of San Francisco, Inclusionary Affordable Housing Program Monitoring And Procedures Manual 2013, Pp 72-74 29 The BMR Application The application process for a BMR rental unit is time-consuming and complex. The MOHCD website does not provide clear instructions for an applicant. Potential applicants who wish to get a detailed understanding of the process are referred to a download of an 80-page Procedures Manual that was written for use by MOHCD staff and developer partners. All BMR program applicants must complete and submit a preliminary application to the property agents of the developer partner. Each project or available unit requires a separate submission that often requires a personal visit to the agent’s office and completion of a paper form to enter the lottery. All application follow ups or inquiries are also done with individual project agents. Compare this process to much more efficient and accurate internet resources available to applicants for Affordable Housing in New York City. New York’s Department of Public Housing utilizes a similar business process, but provides a clearer web-based interface for document submission, application management and status tracking via an Affordable Housing Portal. Figure 6 - NYC Web Portal MOHCD is currently in the planning and design for their own portal website71 that is similar in concept to New York’s. Its implementation will be more user-friendly and efficient for both applicants and developer partners to manage a number of application processing and BMR Program tasks. Creating a database tool becomes even more important given the anticipated 71 “MOHCD Single Family Programs Data Tracking and Administration Business Requirements”; 9/24/13 30 growth of the BMR program and increasing compliance monitoring responsibilities.
F9
The process of applying for an Affordable Housing opportunity is poorly explained and not easily managed on the current MOHCD website. Significant burdens are placed on applicants to manage individual applications for each opening through the process. Similarly, substantial cost and processing burdens are placed on developer partners using inefficient tools to comply with MOHCD procedures. As the portfolio of Affordable Housing properties grows, economies of scale for managing and processing applications will be required.
Related Recommendations (2)
R9a
MOHCD should provide applicants clear, concise materials on the application process, and conduct and evaluate applicant feedback satisfaction surveys after each new major development project comes on-line.
R9b
MOHCD should prioritize the completion of their Single Family Program Data and Administration System. MOHCD should measure and report on the cost effectiveness of process improvements and efficiencies from implementation of this system in their Annual Report. Application Screening To assure fairness in selection, a lottery conducted by MOHCD is used for initial elimination of applicants. Final consideration and qualification occurs only within the pool of lottery winners. Anyone who thinks they meet the eligibility income and residence criteria may enter the lottery with submission of their preliminary application, as vetting a large number of applicants for eligibility prior to the lottery would be cost prohibitive. For one inclusionary project with 49 units, there were over 4,000 applications and similar unit to application ratios for other projects have been reported in the press. The sheer volume of submitted applications is a major issue and is expected to grow. The lottery allows the application process to be split into two stages with associated personal information from applicants: 1. pre-lottery application – preliminary qualification questions and contact details only are recorded for inclusion in the lottery, 2. detailed financial application - for lottery winners, where personal and financial data is verified for final qualification prior to lease signing 31 Lottery entrants are placed into preferential pools based on the following priorities: 1. SF Redevelopment Agency Certificate of Preference (COP) Holders: These are households displaced by Redevelopment Agency activity in the Western Addition and Hunters Point in the 1960’s. 2. Displaced San Francisco Tenant COP Holders: per recent legislation, certain private market households in San Francisco who were evicted under the Ellis Act 3. Persons who either live or work in San Francisco 4. The general public In addition to certified income statements required by MOHCD, the developer partner can review and deny lottery winners based on developer partner property management criteria.72 All denials have to be reviewed and approved by MOHCD. The property manager’s list of criteria for denial can include:  Inappropriate Household Size  Insufficient Income to Pay Rent  Credit/Bankruptcy History  Eviction History  Criminal History Some of these criteria have implications for fair housing. As the number of high-end inclusionary rental projects increased, there were instances of stricter rejection criteria used by property managers beyond those prescribed by BMR Program guidelines.73 Federal fair housing laws require that all applicants (for both market rate and BMR units) be regarded equally in terms of the right to occupancy. However, agents using more stringent screening criteria, such as an applicant’s credit history, have created situations restricting access to BMR units in populations MOHCD would consider “qualified”. Unequal access may also be compounded by marketing deficiencies of affordable opportunities to disadvantaged populations and neighborhoods. This includes poor advertising outreach and impediments in the application process, such as language and accessibility. The burden presented by language issues has been placed on developer partners. Their effectiveness in providing interpretive services is too often constrained by budget and priorities. Recently MOHCD began working with nonprofit and other housing support agencies to make key consumer documents available in several languages. A recent report by MOHCD74 indicates a distribution of ethnic groups in BMR rental units that differs significantly from citywide percentages of similar low income populations. Procedures Manual, pp. 52-53. Lagos, Marisa, “San Francisco housing dreams haunted by debt,” San Francisco Chronicle, 5 December 2013. 74 2013-2018 Analysis of Impediments to Fair Housing Choice, 2013 32 “Alongside a decline in African American and white low-income populations, the City has seen a slight increase in the population of low-income Asian renters and a large increase in low- income Latino residents. Considering the overall growth in low-income Latino residents, the significant under-representation of Latino households in new affordable housing developments warrants concern. 14% of the City’s very low-income households are Latino/Hispanic but only 7% of the residents in new MOH housing are Latino/Hispanic” 75 Certain actions are being undertaken by MOHCD to address this issue. In addition to monitoring developer partner compliance where possible, MOHCD is playing an advocacy role to relax screening criteria that contributes to equalizing BMR participation among various disadvantaged groups. For example, the office is working with partners to encourage a more flexible approach to looking at criminal and eviction histories, including sunset periods for consideration of negative events. Recently passed criminal history nondisclosure legislation (“Ban The Box”) by the Board of Supervisors may also help to facilitate access for certain otherwise qualified individuals.76 Continuing progress also requires MOHCD staffing levels adequate for training and consistent monitoring. Sensitivity toward fair access to BMR rental housing is not adequately conveyed to project partners in the Procedures Manual. Awareness training for developer partners is another key strategy to improving qualification fairness and the ethnic occupancy statistics for BMR rentals. A similar access problem exists with BMR Ownership housing. African Americans were particularly underrepresented and in explaining this underrepresentation of African Americans in BMR housing, and declining representation in affordable housing, one stakeholder states, “There is a general lack of knowledge about how to apply for housing and a perception that the lottery system will not benefit African Americans because they are such a small part of the population. Credit issues are another large barrier to applying for housing to the point where people assume they won’t pass the credit test before they even try. Past criminal histories are also a barrier no matter how long ago the crime was committed.” 77 Ownership programs have down payment percentage requirements. These thresholds may also be a contributing factor. One consideration for MOHCD would be to subsidize down payment requirements to a lower threshold for applicants that is in alignment with the Federal Housing Authority standard of 3%. Ibid, pg. 145 76 http://www.jacksonlewis.com/resources.php?NewsID=4762 77 Impediments, pg. 153. 33
F10
MOHCD does not provide clear and concise expectations to project partners with regard to broad community outreach and the impact of applicant denials to BMR program goals. This can create potential impediments to fair housing choice for underrepresented ethnic groups.
Related Recommendations (2)
R10a
The Jury recommends MOHCD work to improve the ethnic diversity of residents in their BMR programs and monitor progress in mitigating any institutional barriers to fair housing choice. Data on representational statistics should be collected and evaluated at regular intervals, preferably every 2 years. Any statistical disparities should be reported to the Board of Supervisors.
R10b
The Jury recommends MOHCD work with developer partners to standardize criteria used for BMR rental application denials. Strategies to reduce minimum down payment requirement denials for BMR ownership units should be given consideration. Recertification and Monitoring BMR tenants are required to be recertified annually for eligibility in order to have their leases renewed. An existing tenant’s household income is allowed increase up to twice the target AMI over time for the project to accommodate increases from job promotions. The developer partner is required to do recertification, and decisions to deny renewal must be approved by MOHCD.78 Other aspects of qualification, such as increased household size, can also block renewal. In 2012 the Legislative and Budget Analyst Report found that MOHCD had not monitored the ongoing eligibility of residents in certain inclusionary rental units for ten years.79 Efforts improved after personnel shifts occurred at MOHCD, but uneven monitoring extends to other projects as well, including at least one project facing renovation and expansion.80 The 2012 Budget Analyst report also recommended MOHCD work with the Department of Building Inspection to receive notice of entitled units and require project partners to submit monitoring schedules in advance of project completion.81 However, there are bureaucratic obstacles to implementation of such procedures. In fact, getting the list of new projects that come under the Inclusionary program remains difficult and often requires MOHCD staff to manually 78 Procedures Manual, p. 54. Performance Audit, p. 76. Sabatini, Joshua, “Residents concerned about homes, rent as S.F. complex undergoes changes,” San Francisco Examiner, 5 January 2014. Performance Audit, p. 78. 34 cross-reference data from DBI. Last year, several Inclusionary Housing projects were not identified as such by the Planning Department and DBI. MOHCD was able to track down these errors. Had this detailed checking effort not been made, $1.5 million in affordable housing fees could have been overlooked.82 Double checking is time-intensive enough to be unsustainable at current staff levels as City housing project entitlements increase. The Budget Analyst Report also recommended establishment of a nominal per-unit monitoring fee to offset administrative costs to MOHCD. Monitoring fees are not yet in place, but are slated to be included in a future amendment of the Inclusionary Housing Ordinance.
F11
Errors in identifying Inclusionary Housing projects can affect the creation of BMR compliance plans. Issues with data accuracy from the Planning Department and the Department of Building Inspection impact the ability of MOHCD to approach inclusionary developers in a timely manner.
Related Recommendations (1)
R11
The Jury recommends that the Planning Department and the Department of Building Inspection make internal process changes to improve the accuracy of data tagged as a new Affordable Housing project under the Inclusionary Housing Program. MOHCD estimate. 35

Conclusions 1