Daly City planners propose measures to boost below-market-rate housing supply 

click to enlarge A proposed mixed-use development at 6800 Mission St. is part of a Daly City plan to accommodate housing needs for all income levels during the next eight years. - COURTESY DAHLIN GROUP ARCHITECTURE/PLANNING
  • A proposed mixed-use development at 6800 Mission St. is part of a Daly City plan to accommodate housing needs for all income levels during the next eight years.

Daly City's commitment to high-density, mixed-use developments could play an important role in ensuring the availability of below-market-rate housing, but the city should also enact laws that limit rent increases and prevent discrimination against renters with Section 8 vouchers.

That's the word from some housing activists who recently spoke on Daly City's new Housing Element, a state-mandated general-plan document detailing how the city plans to meet current and projected housing needs for the next eight years for residents at all income levels.

City staffers didn't take a position on the idea of placing legal limits on rent increases, but they did suggest policy changes designed to increase the supply of below-market-rate housing units.

In a presentation before the City Council and in conversations with The San Francisco Examiner, City Planner Mike Van Lonkhuysen touched on several key points. He noted that according to the U.S. Census Bureau, Daly City's average vacancy rate for rental units is about 3 percent, below the 5 percent average that economists say is necessary for a city's housing supply to keep pace with demand.

According to a study by rental-market research firm RealFacts, the cost of a studio apartment in Daly City jumped from an average of $1,078 in 2005 to $1,459 in 2013, and three-bedroom apartments increased from $2,397 to $2,962 during that period, Van Lonkhuysen noted.

While housing has become harder to find in the region, falling wages have exacerbated the problem, economists say. Citing data from the Association of Bay Area Governments, Van Lonkhuysen said the inflation-adjusted median income in Daly City dropped from $84,119 in 2000 to $79,743 in 2011, a trend also reflected in countywide and statewide figures. He added that 90 percent of the city's low-wage earners -- defined as households with annual incomes of $35,000 or less -- are believed to be overpaying for housing, with well over one-third of their incomes going to rent.

To help boost the housing supply, the city Planning Division is recommending a change that would make it easier for homeowners to construct and rent out in-law apartments. Under current city code, a single-family home with a secondary in-law unit must have two parking spaces for the main dwelling and two for the in-law unit. But planners have proposed to revise the code so that homeowners would not need additional parking for certain types of small in-laws. Van Lonkhuysen said this would not only encourage the creation of more rentable units, but also reduce the temptation for property owners to covertly build and rent illegal in-laws.

The Planning Division has also suggested increasing the minimum parcel size in commercial and multi-family residential zones to deter developers from breaking up their parcels and using them to construct single-family homes on sites that could otherwise accommodate higher density apartment complexes. The current minimum parcel size in such areas is 2,500 square feet, but the staff has not yet determined how much it should increase.

Housing Leadership Council representative Diana Reddy commended Daly City officials for their track record of encouraging high-density developments that seek to maximize the number of housing units on-site. She warned, however, that simply adding new inventory wouldn't provide much relief to the city's moderate-to-low income renters, because Bay Area tech companies like Facebook are currently building larger office spaces to accommodate thousands of additional employees.

"We would have to build tens of thousands of new units to make a dent in the demand," Reddy noted.

Reddy advocates adopting rent-stabilization laws to control the rate at which Daly City rents increase, but she claims this would not be the same as rent control.

One distinction, Reddy said, is that rent stabilization typically allows landlords to impose larger rent increases than those allowed under the type of rent control that exists in San Francisco.

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