Proposition P: Competitive Bidding for Some Affordable Housing

This ordinance would require City Hall to solicit more bids and be more transparent in the construction or rehabilitation of affordable housing on city-owned property.

The initiative was placed on the ballot through verified petition signatures. 

Why is this on the ballot?

Projected population growth — 174,000 new residents and 70,000 units by 2030 — “makes the need for more affordable housing critical,” the ballot sponsors say. “Every dollar committed to affordable housing must be stretched to its maximum utility.”

Proposition P’s proponents argue that because of favoritism and a lack of transparency in the bidding process, the construction of certain affordable housing ends up being more expensive than luxury housing.

The proponents claim that projects that tap into the Citywide Affordable Housing Fund, which provides financing to nonprofit and for-profit developers, “are not currently subject to a competitive bidding process, which may lead to wasted City resources and may lead to the use of City funds based on favored relationships instead of merit and cost.”

The Mayor’s Office of Housing and Community Development (MOHCD), which manages the housing fund, calls that statement “factually inaccurate,” saying that all bids are “competitive” and public, and that the initiative’s proposed remedies are standard practice already.

The office says that all project submissions are “thoroughly evaluated for threshold eligibility” and that qualifying proposals are scrutinized by a panel of agency staff, other city agency staff and often “a community representative with subject matter expertise.” Scoring is public record, and publishing the bids, as called for in Proposition P, “is already MOHCD practice.”

Opponents say that this measure could slow or stop much-needed affordable housing projects, and that it might lead to construction of low-quality homes.

The Office of Housing and Community Development, in partnership with another city agency, has been responsible for managing the construction of 22,723 units of affordable rental housing citywide, based on an online housing portfolio that contains data up to the beginning of 2016. More than 1,000 additional units were projected to be built by this year’s end, based on city data from June.

In the last two decades, more than 60 nonprofit and private developers have applied for contracts with the Mayor’s Office of Housing and Community Development to receive funding or work on specific development projects, including affordable housing, the office’s records show. Five companies have received more than 50 percent of those contracts: Tenderloin Neighborhood Development Corp. got the most, followed by Chinatown Community Development Center, Mercy Housing, Bernal Heights Neighborhood Center and Citizens Housing Corp.

What would it do and at what cost?

If passed, Proposition P would require bids or proposals from at least three developers interested in building affordable housing on city land with city funding, or the project could not move forward.

The Mayor’s Office of Housing and Community Development, which manages the fund, would then select the “best value” bid — which would not have to be the lowest. As is currently the case, the mayor’s office would choose the winning bid.

But office Director Olson Lee said in a department analysis that “most solicitations generate more than three bids,” although sometimes, “especially if the proposed project is exceptionally challenging,” only two bids are submitted. Proposition P’s mandated three bids “may indefinitely stall a development opportunity and delay or forgo much-needed affordable housing.”

The bidding criteria:

  • Whether the developers offered realistic budgets and strategies to increase cost-efficiency.
  • Whether community-focused amenities like health clinics are included in their designs.
  • The quality of any ideas for controlling costs “while providing durability and sustainability.”
  • Efforts to involve the public in the design process.

In addition, the ballot measure would force the city to publish project proposals online for public viewing.

But the Housing and Community Development Office says it already uses these criteria to evaluate bids.

Is there a catch?

Proposition P might delay certain affordable housing projects. The city controller says about 40 percent of these projects — “typically projects designed to address the needs of specific populations (e.g., transitional age youth)” — receive fewer than three bids, but they may move forward. Proposition P would not allow this.

“Transitional-age youth” are between 16 and 24 years old and are transitioning from state custody or foster care, and are considered “at-risk.”

Delays in the bidding process could increase the city’s administrative costs and offset potential savings, according to the controller’s analysis.

Despite multiple bids, however, there would be no guarantee that the city would save money from the various funds that provide financing to developers to build or rehabilitate this type of housing on city-owned property.

The measure’s official author says that requiring three bidders per project is supposed to ensure that the city gets the lowest price in every instance. But winning bids would be determined subjectively on “best value,” not lowest cost, raising the possibility of “low-cost but unsuccessful housing” such as older public housing sites around the city that have been or will be torn down and replaced because of their “inferior design and shoddy construction.”

Proposition P might be a fig leaf for NIMBYism — not in my backyard — designed to keep or discourage at-risk youth, low-income residents or transitioning homeless people from settling in certain neighborhoods, or the city itself.

Olson Lee, the housing director, said that if voters approve the measure, his office might receive fewer than three bids for “our special needs housing, including those serving the formerly chronically homeless residents.”

Who officially proposed it?

Wayne Nowak.

Supervisors Mark Farrell and Katy Tang support Proposition P.

Who officially opposes it?

The San Francisco Council of Community Housing Organizations wrote the official opponent argument.

The measure is also opposed by California Sen. Mark Leno, former City Attorney Louise Renne and former Supervisor Bevan Dufty.

Vote threshold to pass

Simple majority — 50 percent plus one

Effective date if passed

Ten days after vote results are certified.

Follow the money

One committee is spending money in support of Proposition P: “Yes on P, Competitive Bidding for City Contracts with Funding by the California Association of Realtors Issues Mobilization PAC and the San Francisco Association of Realtors.”

Two committees are spending money to oppose the measure: “Housing Forward SF, Yes on C & M, No on P & U,” and “Stop the Developer Giveaway, No on P & U.”

Follow the money at the San Francisco Ethics Commission: all Proposition P filings.

Endorsements: our methodology

The Public Press chose to count endorsements from organizations that backed multiple candidates or ballot measures, and that made those endorsements available online. We did not count endorsements from individuals.

If you think we missed an important organization, please tell us. We’d love to hear from you.

Tracked endorsements by organization

Written by: Noah Arroyo, Nadia Mishkin and Zachary Clark

Published: Sept. 30, 2016

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