S.F. Housing Projects to Get $29 Million in Carbon Trading Windfall
Two affordable housing projects in San Francisco’s Mission District are getting a $29 million boost thanks to grants from California’s cap-and-trade program, a pollution credit marketplace, the San Francisco Chronicle reports.
Staff at the city’s Strategic Growth Council have recommended that a 157-unit development receive $15 million and a 127-unit project get $14 million. The council must approve the grants, but “has historically gone along with staff recommendations,” the Chronicle says.
Building affordable housing is getting more expensive in an already historically expensive city. At the same time, financing models that affordable housing developers have traditionally relied on are shrinking. The Low-Income Housing Tax Credit, for example, has lost value after Congress’s tax reform bill, which has led to fewer companies competing for and thus driving up the price of the credits.
“We are really battling against increasing construction costs combined with the loss of tax credit equity,” Kate Hartley, director of the San Francisco Mayor’s Office of Housing and Community Development, told the Chronicle. “Getting these funds gives us a little bit of relief.”
The Mission is in some ways ground zero for the waves of gentrification hitting San Francisco. Since the 1940s, as Oscar Perry Abello previously reported for Next CIty, it has welcomed immigrants, especially from Latin America. Since 2000, rising rents have pushed thousands of Latinos — one estimate puts the number at 8,000 — out of the neighborhood. No new affordable development has been created in a decade, the Chronicle said, although 800 units are in the pipeline, including those in the Mission projects in line to receive the new grants.
Mission Economic Development Agency executive director Luis Granados told the Chronicle that the investments were badly needed. “We need an additional 10 projects like this one in the Mission,” Granados said. “We have a strong sense of urgency, and we have the ability to make it happen.” The agency focuses on job training and business development as well as housing in the neighborhood.
The cap-and-trade program is the state’s pioneering pollution-credit marketplace — in which companies buy the right to put carbon into the air. Through 2017 the program has raised $6.5 billion for the state, which is required by law to spend the money on programs that fight climate change, the Los Angeles Times reported. Projects like the developments in the Mission qualify because they are close to transit. It’s also written into the law that 35 percent of the monies raised must be directed to disadvantaged communities, the Chronicle reports.
Strategic Growth Council staff are recommending that more than $200 million go to 17 affordable housing projects elsewhere in the state.
Ironically, companies choosing to emit carbon have bought so many credits on the market, the Times said, that the program might actually lead to more emissions, since companies hoard cheaply priced emissions allowances indefinitely. In the long run, that could lead to more pollution than the state wants. (For what it’s worth, the California Air Resources Board disputes the idea of “oversupply” on the emissions trading markets.) In the short term, though, it means lots of money for projects like these.