Windfalls and compromise

Pub date July 12, 2006
SectionPolitics Blog

By Steven T. Jones
For anyone who could sort through the sometimes mind-numbing minutiae of land use economics and regulation, today’s Board of Supervisors Land Use Committee contained some interesting insights. Sup. Chris Daly has been trying to strengthen the city’s inclusionary housing ordinance — which now requires most developers build some below market rate units in their projects (12 percent if done on-site, 17 percent for off-site, or an in-lieu fee) — by increasing the percentages to 20-25, changing who qualifies to buy them and how they’re sold, and a few other tweaks. But a consultant report that came out Friday concluded that developers wouldn’t build at that level because that would drop their take below their minimum required 28 percent profit margin for big high rises (or a profit of around $250 million). Daly and housing activists who worked on the ordinance, including Calvin Welch, expressed astonishment developers required that much profit before they’d build, but they read the political handwriting and lowered their percentages to 15 and 20 percent, which pencil out. “What we were confronted with last Friday was political death,” Welch told me. But now, after that and a change grandfathering in current projects, the ordinance has the support from both the Mayor’s Office and leaders in the development community, although the committee punted it for a week to deal with a few details. There’s lots more to say about all this, but I’ll save most of it for my article in next week’s paper.