San Francisco Considers Not One but Two Bills Legalizing ‘Missing Middle’ Housing Citywide. Both Have Flaws.

The San Francisco Board of Supervisors has begun considering two bills to legalize “missing middle” housing in lower density areas of the city. This could seem like Christmas magic.

Two competing proposals by Supervisors Gordon Mar, Rafael Mandelson and Rafael Mandelson allow construction of 4-unit homes or fourplexes (or quadruples) anywhere in the city. Combining with earlier state reforms that made it simpler to split residential plots into half, the bills could allow for up to eight primary residences.

The two plans also contain micromanagement regulations, which would result in less middle-class housing being built than an easier-to-manage free-market approach.

Mar’s bill allows for up to 4 units in all Residential House zones. Currently, there are only 1 and 3 homes. It sounds like quite a radical reform. However, there is a catch.

Mar’s bill requires that the units be rented or sold at affordable rates to anyone earning 100 percent of the “area median income.” These are the details San Francisco ChronicleThe first report on the bill came from.

Affordable monthly rent for a family making that amount of money would shake out to be $2,664, according to a press release from Mar’s office—$2,000 less than pre-pandemic market-rate rents for a typical two-bedroom apartment.

Mar stated in a press release that “while we have overbuilt luxury housing,” the industry had not been creating enough jobs for its workforce. I propose a new strategy for stabilizing, protecting and growing our middle class.

Mar’s proposal wouldn’t create much luxury housing. Emily Hamilton, an economist at George Mason University’s Mercatus center, said that it wouldn’t likely produce much housing over the long-term.

Hamilton says Hamilton said that requiring monthly rents of $2,000 less than market rate is a “substantial subsidy”. There are reasons. “I imagine that the units being delivered under this bill will be existing housing, which could be broken up or provided by a non-profit homebuilder. Or someone motivated by more than profits.

Look at what has happened in Austin. The city abolished single family-only zoning in 2019 when it established the Affordability Unlimited program. This allows developers to construct larger homes with more units, and less parking. In exchange, the housing will be affordable for lower income people. It allows for up to 8 units of housing construction in single-family-zoned locations. Developers would need to ensure that at least 75 percent of new units are affordable to those with low incomes. They also have to include two-bedroom units and provide tenant protections.

Few Affordability Unlocked projects are built in single-family areas. The city has provided substantial subsidy for those that require it.

Mar’s bill is likely to have similar disappointing results. Another option is “affordability-trolling,” in which new housing permits are granted but strict requirements are placed that prevent units from being constructed.

Looks like Mandelman’s quadruple legalization bill laissez faireIn comparison. This bill allows for the building of fourplexes in cities across the country, and does not require any affordability restrictions.

It would still require that newly-legal fourplexes be built at density levels no greater than the current zoning permits for three-unit houses. Mar’s proposal includes the same restrictions on density. Hamilton says that Mandelman’s bill allows triplexes more than it technically permits.

Mandelman and Mar both propose companion bills that will encourage the construction of fourplexes to get around the restrictions of their respective zoning reform ordinances.

Mandelman introduced in February a bill that required people who want to construct large, single-family homes in San Francisco to obtain special conditional permits. This is a lengthy and expensive procedure in San Francisco. It is hoped that people will stop building McMansions and build affordable multi-developments.

Mandelman, in a July press release stated that “the way most of San Francisco is zoned right now makes it easier for existing housing to be flipped into luxury monster home instead of to build small apartments buildings for working people.”

Mar proposes streamlining permit procedures and giving homeowners financial support for adding units below market rate to their home. Mar said that incentives by “centering homeowners” will help “protected and built homes to satisfy our housing needs, and to stabilize the community.”

Hamilton believes policymakers who are interested in affordability need to consider bolder proposals. These would permit multi-family housing larger in the city’s more populated areas and accelerate the approval process for new building.

This would not only produce more housing, but also more affordable housing.

Without modern zoning restrictions, U.S. cities historically built a lot of  housing affordable to working- and middle-class people, from Baltimore’s rowhouses to New England’s “tripledeckers.”

Hamilton says that they were built “not to encourage missing middle housing, but because it was practical to do so in these locations.”

California is making great progress on state-level zoning reform. California passed one bill to legalize duplexes in almost all of its residential land and another to make it simpler for cities to zone small apartment buildings without going through an environmental review.

Both reforms leave details about this upzoning for cities to determine. We can see that this is the place where the devil is, from both the Mandelman & Mar proposals.