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You're conflating the cost to construct and maintain the landlord's building with the amount of money the landlord can charge to rent the apartments in it. The

You're conflating the cost to construct and maintain the landlord's building with the amount of money the landlord can charge to rent the apartments in it. The construction and maintenance costs just put a floor on the rent below which the landlord would lose money. The market-rate rent is otherwise unconstrained, and the difference is the landlord's profit. Just because the supervisors are saying they want below market rate housing doesn't mean they're saying they want landlords to actually lose money. They're instead saying they want landlords to be willing to make some amount less than the theoretical maximum profit on some number of units (whether 5% or 100% of units in a building) in exchange for being allowed to build a whole lot more of them. That doesn't seem like such an unfair trade-off.

enf 10y ago
"100% affordable" doesn't just mean "less expensive": it has legal significance. It means that it costs a household with 55% to 60% of area median income at most 30% of their income. There is a table of the allowable rents at http://sfmohcd.org/inclusionary-housing-bmr-rental-program-overview http://sfmohcd.org/inclusionary-housing-bmr-rental-program-o.... If you want to build a studio to rent at cost for $1070 a month, you need to be able to build it for around $230,000, which is basically unimaginable with current SF land and construction costs.
- akiselev 10y ago
  Who builds a single studio in San Francisco? You'd build a hundred studios on 10 floors or something which means a maximum of $23 million. The land is a fixed expense since you're still buying x acres for the building and a lot of the costs going into planning and construction (permits, procurement, transportation, labor, etc) have large fixed costs but much smaller marginal costs and great efficiencies of scale. I don't know the cost per sq ft of the average project in SF but at 800 per studio (500 sq ft of space plus 300 for estimating overhead) you can spend almost $300 per sq ft. Assuming that number drops to 650 sq ft if you build a thousand studios you can now spend closer to $400 per sq ft which is in the realm of mid-2000s construction costs in Manhattan [1]. I'm pulling numbers out of my ass for the estimate but it should be clear how the math can still work out for developers. [1] http://therealdeal.com/issues_articles/nycs-construction-craze/ http://therealdeal.com/issues_articles/nycs-construction-cra...

enf 10y ago

"100% affordable" doesn't just mean "less expensive": it has legal significance. It means that it costs a household with 55% to 60% of area median income at most 30% of their income. There is a table of the allowable rents at http://sfmohcd.org/inclusionary-housing-bmr-rental-program-overview http://sfmohcd.org/inclusionary-housing-bmr-rental-program-o.... If you want to build a studio to rent at cost for $1070 a month, you need to be able to build it for around $230,000, which is basically unimaginable with current SF land and construction costs.

akiselev 10y ago
Who builds a single studio in San Francisco? You'd build a hundred studios on 10 floors or something which means a maximum of $23 million. The land is a fixed expense since you're still buying x acres for the building and a lot of the costs going into planning and construction (permits, procurement, transportation, labor, etc) have large fixed costs but much smaller marginal costs and great efficiencies of scale. I don't know the cost per sq ft of the average project in SF but at 800 per studio (500 sq ft of space plus 300 for estimating overhead) you can spend almost $300 per sq ft. Assuming that number drops to 650 sq ft if you build a thousand studios you can now spend closer to $400 per sq ft which is in the realm of mid-2000s construction costs in Manhattan [1]. I'm pulling numbers out of my ass for the estimate but it should be clear how the math can still work out for developers. [1] http://therealdeal.com/issues_articles/nycs-construction-craze/ http://therealdeal.com/issues_articles/nycs-construction-cra...