Bridging the Gap: The Imperative of Inclusive Housing in San Francisco

Nov 21

Living in the Bay Area forces everyone to have an eyes-wide-open awareness of housing and how it can marginalize and separate rather than gather and unite communities. The significant income gap here in the City, exponentially wider than elsewhere in the United States, makes affordable and inclusive housing policies imperative.

Development projects that include below-market-rate homes, allowing people to become first-time homeowners, is a tremendous step toward building a stronger community economically as well as socially. And, while there is no perfect solution to San Francisco's - and the Bay Area's - affordability conundrum, inclusionary housing programs pave the way to more equitable and healthy communities.

BMR Housing Bridges the San Francisco Housing Gap

First, it's essential to understand how significant these economic and housing gaps are. According to a new study from Joint Venture Silicon Valley's Institute for Regional Studies:

The gap between high-income and low-income households is much wider ($263,000 compared to $178,000 in the U.S.).
Average incomes among the top five percent of Bay Area households are $473,000, 31.5 times higher than the average incomes in the bottom 20 percent, compared to a difference of just $328,000 in the U.S. overall.
Although income inequality in the Bay Area is comparable to measured inequality in the rest of the state and nation, it has increased much faster in the Bay Area over the last 20 years.

These statistics do not correct themselves. Correcting this level of inequity requires community education and awareness, citizen advocacy, and changes in legislation providing opportunities for low and moderate-income earners. Inclusionary housing programs, like the City's Below-Market-Rate housing programs, are one way to begin closing the divide.

How do BMR Programs Work?

Below-market-rate (BMR) programs are usually overseen by local governments and municipalities. For example, in San Francisco, the program is guided by the city's Planning Commission Code Section 415. This section was created via the joint work of grass-roots social movements as well as entities like the mayor, the board of supervisors, developers, concerned residents, and voters.

The program's mission is to ensure that every new construction development of 10 units or more sets aside a certain percentage of the units to be sold or rented at below-market rates to qualifying applicants. In addition to employment and household income qualifications, prospective BMR buyers must also adhere to stringent guidelines around:

The number of people occupying the unit.
Mortgage approval from MOHCD-approved lenders.
Title changes and inheritance guidelines.
Primary residence restrictions (these units cannot become a second home, investment or rental property, etc.)
Future resale value (future prices are set by the MOHCD rather than the buyer, limiting BMR equity with relation to the real estate market.

Click Here to read about San Francisco's inclusionary housing program specifics. However, there is a distinct leveling-up between being a homeowner vs. being a renter, which is why Bay Area cities with significant income, class, and housing discrepancies continually work towards inclusive housing programs that promote homeownership.

Once residents complete the BMR purchase process, they automatically benefit from:

A reduction in monthly payments over the lifetime of their loan (fixed mortgages are historically less than market rents).
Mortgage interest deductions on taxes (significant bonus when compared with rental credits).
Savings equity as they pay down their mortgage.
Protection from zoning changes that force relocations and housing shortages.
And more.

Community collaboration and investment in supporting inclusive housing opportunities honors our society's responsibility to provide equal housing opportunities for its tax-paying citizens.

Affordable Housing Requirements Benefit Local Communities

Those who oppose - or aren't so sure - about housing funds or provisions subsidies for low-, moderate- and middle-income housing units typically lack clarity on how these programs work.

These are not part of a welfare program, nor do they reward the unemployed. In fact, proof of employment and annual household income are BMR application requirements in most cases. As a result, decades of research findings show that creating real estate options for low, moderate-, and medium-income populations benefits the communities where they purchase their homes.

1. More money is spent in the local economy.

In most cases, the mortgage paid for a BMR unit is equal to or less than the market rent payment. Plus, mortgages don't fluctuate and aren't subject to rental price hikes. As a result, increased financial stability means people can expand their financial resources to include more than their basic needs.

This results in more dollars being spent within the local economy. People who work in San Francisco but cannot afford to purchase a home typically live within stringent budgets that funnel all of their earnings to their landlords rather than local business owners.

Similarly, a significant percentage of applicants that enter BMR property lotteries work in the City but cannot afford to live there; thus, local businesses - and the San Francisco economy - miss out on their dollars as well.

Creating opportunities for these low, moderate, and middle-income earners to become homeowners in the same neighborhoods or communities where they work increases a community's economic strength rather than losing those funds to "elsewhere."

2. Greater diversity across neighborhoods

Any gap between high and low-income populations in the Bay Area is also a sign of a color divide. San Francisco Bay Area prides itself on inclusion, equality, and justice for all. For example, the City of South San Francisco's Mission Statement has language that reinforces its goal of "Recognizing and Respecting diversity and encouraging opinions of the community and workforce."

Similarly, the San Francisco Human Services Agency is committed to "A San Francisco where everyone has the opportunity and support to achieve their full potential through all stages of life." However, neither of those goals is possible without the integration of financially accessible ownership opportunities that bridge the economic/class gap, which inherently bridges the diversity gap.

San Francisco Bay Area has a significant discrepancy in homeownership across white, Asian, Black, and Latino populations. In a recent KQED interview with Montana Hooks, a Black real estate entrepreneur who focuses on first-time buyers and people of color (mostly Black or Latinx), Hooks discusses the importance of equalizing the real estate sector in terms of financial stability and opportunities to build generational wealth. And homeownership is a critical step to generating wealth.

According to U.S. Census data:

From 2011 to 2021, Black homeownership in the Bay Area ranged between 29% and 33%.
Latino ownership rates ranged between 33% and 39%.
Homeownership rates for Asian and white households both hover around 60%.

Any ordinance implementing inclusive housing standards shrinks these gaps automatically, creating positive change in the community for this generation and many generations to follow.

3. Empowerment for future generations

There is no doubt that children bear the brunt of economic inequality. Children who live in low-income homes or whose primary caregivers' spending focuses solely on basic needs often suffer as the result of:

Inadequate nutrition.
Lower-quality education.
Higher crime rates.
Poor access to high-quality healthcare.
Lack of access to transportation and other amenities that improve quality of life and opportunity.

Providing children with greater equity along their future path has exponential societal benefits. This ranges from a better-educated population to greater economic growth in their communities.

A post on commonbond.org cites information gleaned from the research of Mark Rank, who is a professor of social welfare at Washington University. Rank says, "It is estimated that for every dollar spent on reducing childhood poverty, the country would save at least $7 with respect to the economic costs of poverty." This is a significant return on society's investment.

4. Improved government infrastructure

A large majority of the time, inclusive housing projects are developed on empty lots or in defunct industrial areas revitalized by innovative land developers who see a bigger-picture vision for the space. As a result, all of the extra tax dollars created by affordable homeownership options directly improve government infrastructure and public amenities.

Again, commonbond.org reports:

A study from the National Association of Homes found “Building 100 affordable rental homes generates $11.7 million in local income, $2.2 million in taxes and other revenue for local governments, and 161 local jobs in the first year alone.” This increased revenue may mean improved infrastructure, more green space, and other elements of healthy cities that keep its residents healthy and safe.

Also, the majority of these revitalization efforts include mixed-use type buildings, which generate double the revenue via increased property and sales taxes. As a result, San Francisco and other Bay Area communities only benefit by bridging the gap and focusing on ways to make inclusive housing a priority for today and future generations.

The Investors Developing 400 China Basin Actively Bridge the Gap

The investors and team at 400 China Basin believe wholeheartedly in the need for inclusive housing in San Francisco - and the greater Bay Area. We're doing our part to bridge the gap by creating trendsetting waterfront properties in Mission Bay. It offers permanently affordable homeownership to middle-income individuals and families.

This project is part of a broader initiative to build 1,100 affordable housing residences in Mission Bay, including two affordable sites designated for first-time homebuyers. Our office team is always happy to provide information on why options like ours are essential to developing a stronger, more diverse, and more inclusive San Francisco Culture.

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