Scarcity of Affordable Housing Seen in Castro District

by Matthew S. Bajko
Sunday Mar 31, 2013

Tenderloin resident Marcelle Million would like to live closer to the city's gay Castro district.

"I've always loved that neighborhood. It is a really wealthy neighborhood now and I feel like it would be nice to live over there," said Million, a transgender woman. "I feel it is really safe and becoming more diverse. It is not just a gay mecca; it is sort of upper middle class and working class people."

The 23-year-old moved to San Francisco in April 2010 from her hometown of Beaverton, Oregon. She at first stayed in hostels and shelters until finding full-time work, and for the last two years, has been renting a studio apartment for $800 a month.

"I wanted to be in a more cosmopolitan city," said Million, who works for the AIDS Housing Alliance. "I really liked San Francisco. It is a little more international and a little more low-key and less pretentious than New York."

This year she decided to try to move into one of the affordable housing units, known as BMRs or below-market rate, scattered around the city. One in a building near the Civic Center she liked, but Million did not make enough money per month to qualify.

"I think people, when they think affordable housing, think Section 8 or SSI. Often they don't think about people who are gainfully employed, pay their taxes, and want to live in a good, safe neighborhood," she said. "Oftentimes those opportunities are limited to just the Tenderloin area."

As for BMRs available in her ideal neighborhood of the Castro, she is finding out that few exist.

"Right now there haven't been as many options as I thought there would be," Million said.

Those that are available in other parts of town are either two or three bedrooms and don't fit her needs, or have an income requirement she does not meet. She is hopeful that she will land a BMR unit in one of the new developments being built in the upper Market corridor, close to the heart of the gayborhood.

"I feel like San Francisco is a really expensive city to live in and not a lot of low-income people or minorities get a chance to live in a variety of areas," said Million. "Right now I live in the Tenderloin because I wanted to live in a studio and not someone's living room. Having more affordable housing in higher priced neighborhoods allows there to still be a mix."

Beginning this fall, when the first new mixed-use housing developments along the upper Market corridor start leasing or selling their units, the first batch of new BMRs in a generation will be up for grabs near the vicinity of the Castro.

Six of the nine projects already approved will include affordable housing on site, while a seventh will result in a separate building comprised of 23 affordable units built two blocks away on the boundary of Hayes Valley and upper Market. A total of 228 new BMR units will be created along the upper Market corridor due to the new buildings.

It did not come easy, as housing advocates and neighborhood groups pressured developers of the projects to include the BMR units on site and not opt to pay an in-lieu fee, as two of the project sponsors decided to do.

"Site by site, project by project, process by process, we had to go through and convince each developer to include on site housing units. With the exception of two projects, we were successful," said Peter Cohen, the former co-chair of the Duboce Triangle Neighborhood Association's land use committee. "The upshot is we will see in almost all those projects 12 to 15 percent of the units will be affordable units. I think that is a really positive thing for our community, otherwise we would get zero affordable units."

The developments with BMRs on site run the gamut from smaller in-fill projects, such as the 22-unit building under construction at the corner of Market, 15th and Sanchez streets that will have three affordable units, to large redevelopment projects like the former UC Berkeley Extension campus where 110 units of affordable housing for LGBT seniors will be built.

The site a block away from the city's LGBT Community Center will have 460 total units with 50 BMRs included in the property's various residential buildings. Construction is set to begin this fall.

Next door to the LGBT center a 114-unit apartment building is nearing completion. When it opens it will have 17 affordable units for rent on site.

Just down the street from the center, at the corner of Market and Franklin streets, is where the 23-units of BMRs is being built. The off-site affordable housing is to fulfill the requirements stemming from a 118-unit housing project going up at the corner of Market and Buchanan.

Five BMRs will be included in the 35-unit building that will replace the old S&C Ford garage site at 35 Dolores Street just off Market.

And two gas station sites being turned into housing will also include BMRs on site. The old 76 station at 2175 Market Street at 15th will set aside 16 of its 80 rental units as affordable. At the Arco station at 376 Castro Street at Market a 24-unit housing project is slated to be built with four BMRs on site.

Brian Basinger, the founder and executive director of the AIDS Housing Alliance, said having all but two of the approved developments along upper Market include BMRs is "excellent" because having on site inclusionary housing has several benefits.

"First, we want to have diverse, economically mixed communities, and on site inclusionary provides that," said Basinger. "Secondly, I believe that people have a right to live in their communities of origin. This is especially true for LGBT people who deserve to live in neighborhoods wherever we have a sense of being the majority."

The two properties that paid into the city's affordable housing fund overseen by the Mayor's Office of Housing are the 18-unit project dubbed Icon at the corner of 16th, Noe and Market streets, and the 85-unit project that will include a Whole Foods grocery store at 2001 Market Street, at Dolores. It had been the site of the S&C Ford showroom.

Approximately $5.1 million will be generated from those two projects, but the money will likely be used to construct affordable housing elsewhere in the city and not near the Castro district. State law does not permit for there to be restrictions imposed on where the money must be spent.

"The question is, what do we lose by not having those on site units and what does the city gain by having that cash?" asked Cohen, who works at the Council of Community Housing Organizations. "What we lose is the upper Market Castro community does not have those units available for folks in the community, period. What the city gains is $5 million. But it is not spent in upper Market; it is gone."

Olson Lee, director of the Mayor's Office of Housing, acknowledged in an interview with the Bay Area Reporter that his office is not obligated to spend that money in the Castro district. But he pointed out that he has been able to use money from projects elsewhere in the city to help fund the LGBT senior housing that Openhouse will oversee at the former UC campus.

"The in-lieu fees go anywhere in the city. We use it for a variety of housing. It is a function of what projects are available," said Lee, who expects his office will provide additional funding to see that the Openhouse project is built.

That is why Castro neighborhood groups are now focused on trying to convince Greystar, the developer of an 85-unit development slated for a corner lot at Sanchez, Market and 15th streets, next door to the Swedish American Hall, to include the required 10 BMR units on site and not pay an in-lieu fee as they have proposed to do.

City officials, such as former District 8 Supervisor Bevan Dufty, have long eyed the former gas station site as a potential parcel to build affordable housing. But a deal could not be reached with the family that owns the land to sell it to the city or a nonprofit developer of affordable housing.

"In fairness to the community it is something they should do," said Dufty, who now focuses on homelessness issues as the mayor's director of Housing Opportunity, Partnerships and Engagement. "It would be very disappointing. I think it would generate ill will toward the approval process for a project there."

Having worked on crafting zoning plans covering the upper Market area during his two terms as supervisor, Dufty said he is pleased to see that many of the new housing developments do include BMRs on site.

"That was a goal of the upper Market plan, to have on site. It certainly has been my philosophy that is the best and that is really encouraging," he said.

Demand outstrips supply

Yet the BMR units that will be available are nowhere near enough to meet the need for affordable housing in the city's gayborhood. And not everyone will be able to afford them, even at their reduced prices.

"Honestly, the big problem is we are building too much market rate housing. We have the worst public housing policy imaginable," said queer housing activist Tommi Avicolli Mecca. "What people don't understand about the affordable housing fight is it really focuses on the AMI level."

AMI stands for area median income, and even when priced at 50 percent of AMI, many low-income people find BMRs unaffordable, said Mecca.

"The need in the Castro area is for affordable housing for people that make less than 50 percent of AMI," he said. "We have totally fucked over people with AIDS and low-income queers and we are doing nothing for them in District 8."

Mecca argues that the BMRs are also not going to be of help to homeless LGBT youth in the city. He believes those residents who will be able to buy or rent the BMRs will end up not being members of the LGBT community.

"So who is all this development in upper Market about? Who is going to live in upper Market in these units? I don't even think it is going to be queer people," said Mecca. "I think we are looking at the Castro turning into a non-queer neighborhood. And all this development in upper Market is going to aid and abet the de-gayification of upper Market."

Basinger believes it is possible that some of the new BMR units along Market Street will be leased to people living with HIV or AIDS or to low-income LGBT seniors.

"We want to make sure the developers are not discriminating against gay men with AIDS who have a HOPWA rental subsidy or are not discriminating against a lesbian senior who has a Section 8 voucher," he said, referring to the Housing Opportunities for People with AIDS. "We do have the possibility of helping people who have access to one of these rental subsidies to get into one of these units."

Although he concedes that they aren't a "solution for everybody," Cohen argues that the new BMRs in the Castro, which will be priced at 55 percent of the AMI, will provide "deep affordability." To qualify to buy a BMR unit, the income level for a one-person household is $38,950, while for a two-person household it is $44,500.

In terms of BMR rentals, a one bedroom would be priced at $1,113-a-month with utilities included, according to the mayor's housing office. A two-bedroom unit with utilities included would be priced at $1,253-a-month.

The BMRs rentals at the 2175 Market development, which will include 11 one bedrooms and seven two bedrooms, will be priced at 50 percent of AMI. Rents at that level, according to the housing office, would be $1,013 including utilities for a one bedroom, and $1,139 including utilities for a two bedroom

"In upper Market the fact that we will have apartments coming on line at that pricing is hugely beneficial. Nothing comes close to that on the market," said Cohen. "When we start seeing the new developments come on line and we start seeing what the rent is for those apartments, it is going to be astronomical. We are talking market rate rentals 150 percent of AMI or higher. In other words, off the charts expensive."

Center's housing program

To help LGBT people navigate through the process to become eligible for BMR units, the LGBT Community Center launched a housing program two years ago as a pilot project with an outside contractor. Last year it hired a former real estate agent to work in-house and run the programs.

The center offers a course that helps enrollees be approved for a Homebuyer Education Certificate, which is required in order to apply for a BMR unit or the city's first-time homebuyer programs.

Open to anyone, not just LGBT people, the program has seen 13 of its clients close escrow on homes since last July. The center also organizes bus tours of BMR units that have become quite popular.

"Most people coming through this program are interested in the BMRs," said Shannon Way, a financial services specialist who oversees the center's housing programs. "We are having phenomenal success with it."

Rebecca Rolfe, the center's executive director, hopes the owners of the new buildings nearby will work with the center on finding people eligible for the BMR units.

"We want to make sure LGBT folks can make San Francisco their home and that the diversity of San Francisco continues," said Rolfe.

When the BMR units do become available, there is going to a "high demand" for them, warned Way, so the center is encouraging people to enroll in the program now in order to have their paperwork approved.

"We want to help LGBT people get a foot in the door and to be prepared," she said. "It is a lottery so there will be multiple applicants on a unit."

Last summer Adam Eden, 64, a straight man and former city employee, enrolled in the center's program at the recommendation of the mayor's housing office. In the fall he went on one of the BMR bus tours, and by December he had closed escrow on an affordable unit in a downtown building that cost him $359,000.

"It is very difficult to buy in San Francisco. Everything is in the millions of dollars. The BMR worked out for me," said Eden, who retired in January 2011 and had been renting his former apartment in the Tenderloin for 20 years.

He had high praise for the center's program.

"I learned a lot from the program. Even if you don't buy an apartment, the information you are getting from there is still very important for personal use," said Eden.

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