At Wednesday’s Land Use and Economic Development meeting, everything seemed to be going Supervisor Chris Daly’s way. Supervisor Daly and co-sponsor Sophie Maxwell have waited seven long months for their efforts to come to fruition. Through the Inclusionary Affordable Housing Program, they have fought to bring a lagging San Francisco up to speed with the other cities and counties of Northern California. Currently, when any developer builds a set of apartment buildings, 12% of the units of the building have to be reserved for low-income residents (as determined by area medium income). Daly’s new legislation strives to reserve 15% of all new “on-site” units and 20% of all new “off-site” units for affordable housing.

But San Francisco’s neighboring cities have already surpassed the standards this new legislation sets out to achieve. As Marna Schwartz of the Housing Justice Movement noted during public comment, Pleasanton, San Mateo, South San Francisco, and Berkeley have already achieved 20% affordable housing universally. And furthermore, Walnut Creek has established 25% as their base threshold.

Daly acknowledges the proposed reforms are “not going to solve the housing crisis” but nonetheless insists, “smart housing policy is moving forward”. His optimism fell short of individuals like Schwartz; however, who argue the legislation is “a compromise for the community at large”.

The scattered voices of dissent could not damper Daly’s enthusiasm. After a week of waiting the Office of the Controller discredited the findings of the Planning Department. Initially, they had claimed the program would not allow developers an “acceptable return range” on their housing investments. The Controller’s report, however, shared a different story.

The Controller found, “The proposed amendments effectively reduce the projected incremental costs of the Inclusionary Affordable Housing Program” and as a result deemed the legislation “largely neutral in impact to relevant stakeholders”.

One could faintly hear Daly repeating, “I love it, I love it” to himself from his seat when the findings were read. He commented, “It’s incredible how much controversy [there is] for such a ‘neutral’ piece of legislation”.

According to the Controller’s report, the impact on developers should “largely be similar to the status quo”. Though higher inclusionary rates would increase the cost of supplying housing, those costs should be compensated through improved “operating efficiencies” by firms and higher sale prices, compliments of market forces.

The city does have working prototypes of inclusionary housing. But the best-known examples, Rincon Hill and Trinity Plaza, have both had their fair share of obstacles to overcome. Though the reforms are moderate, Daly’s proposals at least ensure an established precedent for affordable housing.

Furthermore, Daly’s program gives developers a choice. If developers fear reduced-price housing units will ultimately make their projects unprofitable, they can opt to pay an “in lieu fee” to city government. This additional revenue would in turn go towards public funding of affordable housing units. Essentially, developers can pursue what they deem to be the most profitable option.

To their credit, several developers did seem to be on board with the plan. Jack Robertston of AFS Development expressed his own personal commitment to building affordable housing in the city. However, along with several other developers, he shared his concerns regarding the requirement that offsite housing be within a one-mile radius of the principal housing complex. Others similarly argued that even a half a mile increase in the radius requirement would give developers more “breathing room” while still allowing the integration of different socioeconomic classes into a single neighborhood.

Supervisor Maxwell lightheartedly remarked “You can tell a compromise [has been reached] when no one is really happy”. That description certainly characterized the mood in the committee meeting. Until recently, San Francisco has been sketching out a tale of two cities, one for the very rich and one for the very poor. Though city government is taking steps in the right direction, it may need to lengthen its stride. The legislation will bring diversity to valued housing units throughout the city but only in modest quantities. This trend needs to be strengthened and amplified.

Wednesday’s meeting concluded with the passage of three new amendments. The amendments established the new percentages would apply to all projects submitting environmental evaluation applications after July 18, 2006. Furthermore, the San Francisco Planning Department is to propose a schedule to monitor inclusionary housing projects over the next ten years and provide updates as to which projects could afford to shoulder greater burdens.

The legislation was moved without objection to the full board meeting next Tuesday.