What is Article 34 of the CA Constitution?
Article 34 of the California Constitution prohibits the creation of low-income affordable housing in a locality without that locality’s voter approval. Passed in 1950 (Proposition 10) by 0.8% with the backing of the state Realtors Association and segregationists, Article 34 intended to keep low-income tenants — especially African-American tenants — in public housing or other affordable housing out of affluent neighborhoods (reference).
Article 34 has worsened segregation and income inequality, and limits our ability to produce affordable housing. As long as Article 34 remains law, localities have to authorize affordable housing at an election. We are joining with the San Francisco Board of Supervisors to ask for your support in clearing this legal obstacle.
Why is Proposition K necessary?
Under Article 34, voters must first authorize units of affordable housing, and then the government has the authority to create those units. An authorization is required even for a pilot program. Voter authorizations have passed many times in past elections in 1976, 1994, and 2012.
However, most of these authorizations have been limited to privately-sponsored affordable housing, and there is no current authority for the City itself to acquire or build housing. Prop K would extend San Francisco’s Article 34 authorizations to include municipally-owned social housing: affordable housing that is owned by the City, and acquired, built, or rehabilitated by the City.
What is "social housing"?
Social housing is a broad umbrella term for housing for society's benefit, not profit, where either the City or a binding regulatory agreement keeps housing affordable in the long run.
It includes nonprofit rental housing, limited-equity cooperatives, community land trusts, and municipal housing. It's deeply affordable and houses a broad range of incomes to financially self-sustain. The newly-proposed SF Social Housing Program Fund would provide funding for housing that is geared towards an average tenant earning below 80% of area median income. So the housing is focused on no-to-low income folks, but broadly accessible.
The focus of Prop K is to unlock municipal social housing, which is currently banned due to Article 34.
How does Prop K relate to the COVID-19 pandemic and economic crisis?
As we head into a recession, it is possible that Wall Street will once again buy real-estate properties at low values in order to turn a large profit. This measure will help protect against real estate speculation by allowing the City to purchase available units instead of private equity. By increasing the stock of permanently affordable housing and allowing the acquisition of existing buildings, the measure will also make it easier for tenants to stay in their homes during current and future economic crises.
How many units of affordable housing are authorized?
Up to 10,000 affordable rental units. Currently, for reference, there are almost 400,000 residential units in San Francisco, and only approximately 34,000 of these are deed-restricted affordable housing units.
Development will initially start as a pilot program, and it will take many years for the full authorization to be fulfilled. If the 10,000-unit authorization is exhausted, voters would need to re-approve an authorization at a future election, unless Article 34 is repealed at the
Does this measure only allow construction?
No, it also allows for the City to buy existing buildings and turn them into affordable housing, similar to the City’s Small Sites Acquisition program.
How will the affordable housing be funded?
There are no new taxes in this measure itself. A real estate transfer tax, which is separately on the November 2020 ballot, would provide funding to the General Fund. A portion of this tax’s funds are intended to go to a Social Housing Program Fund, which would finance a range of affordable housing, including municipal housing as authorized by this measure (see this intent resolution).
How affordable will the social housing be?
Article 34 authorizations are required for “low-rent housing projects”, which typically have at least 50% of units dedicated towards “persons of low income” making below 80% of the median income (tabulated here).
In our case, we expect the affordability percentage to exceed the bare minimum 50%, and the amount could go further depending on the availability of funding.
The legislation isn’t too prescriptive on the final income distribution of housing as that will depend on community input, financial self-sustainability, and funding qualification criteria. For example, the newly-proposed SF Social Housing Program Fund would provide funding for housing that is geared towards an average tenant earning below 80% of area median income. As the funding formulas for affordable housing frequently change at all levels of government, it’s better to not specify a static income distribution in a ballot measure.
Where is this housing going?
The 10,000-unit authorization is for the full City and County of San Francisco, and isn’t limited to any specific neighborhood. Low-income community input, the need for integrated housing, the availability of funds, and subsequent legislation (including for zoning changes) will determine where housing is located.
What are the next steps if this passes and funding is available?
Municipal housing development will start as a pilot program, and this will require subsequent legislation to be approved at the Board of Supervisors. As the program grows through its pilot phase, it may out-grow the capacity of one City department, and may necessitate a dedicated City department, which could be addressed in a Charter Amendment at a future election.
Will jobs created through Prop K be union jobs?
The development and municipal administration jobs created under this program will almost certainly be unionized. Developments in San Francisco are often subject to project labor agreements that stipulate union labor. Similarly, municipal administration jobs are subject to collective bargaining agreements.
Where is the accountability?
The number of units remaining in an Article 34 authorization is tracked by the Mayor’s Office of Housing and Community Development (MOHCD). In addition, each source of funding typically has its own accountability requirements. For example, separate from this ballot measure, a companion piece of legislation for the Social Housing Program Fund would establish an oversight committee for this fund, while the fund itself would be administered by MOHCD.
Will this housing be streamlined?
As the low-rent housing in this measure would be focused on low-income households, it will likely be streamlined through SB 35 if the City isn’t meeting its low-income housing goals.
How do we know the affordable municipal housing will be well-maintained?
We’ve learned a lot from the successes and failures of affordable housing and public housing. One of the key parts of developing affordable housing is planning for long-term financial self-sustainability. We are building a coalition of San Francisco organizations and residents who will work to make sure this happens as part of a pilot program.
But first, we have to clear the legal obstacle of Article 34 authorization, which is required before we can move forward in the development process for even a single unit under a pilot program.
One of the benefits of municipal housing is that, unlike federal public housing, municipal housing would be less affected by the funding fluctuations of Washington D.C. and the presidency. It would also be accountable to your local Supervisor.
Will this housing be built in an environmentally sustainable way?
Our climate crisis is urgent and must be addressed. Real-estate development plays a significant role — in terms of transit-oriented planning, using sustainable development practices, and meeting environmental standards such as LEED.
The municipal housing constructed under this measure would be subject to green building codes, including Chapter 7 of the SF Environment Code. Additional legislation could improve on these requirements, as the focus of this ballot measure is just the Article 34 authorization.