San Francisco November 2016

San Francisco
November 2016

Ballot analysis and recommendations

Overview chevron_right Prop P
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Prop P

Competitive Bidding

Competitive Bidding for Affordable Housing Projects on City-Owned Property

Requires a competitive bidding process for selecting developers of affordable housing funded by the City and County of San Francisco on sites owned by the city.

Vote NO

What the Measure Would Do

Proposition P would establish a competitive bidding process for affordable housing projects funded by San Francisco on city property. Specifically, the measure would require the Mayor’s Office of Housing and Community Development (MOHCD) to publish proposed affordable housing projects to the public for open bidding and submission of proposals, receive at least three bids or proposals and accept the proposal with the “best value.”

“Best value” criteria would include:

  • Evidence of a community design process
  • Demonstrated efforts to control cost
  • Inclusion of community-oriented amenities
  • Financial feasibility

Under this measure, the city could not proceed with an affordable housing project if MOHCD received fewer than three proposals.

The Backstory

As of June 2015, San Francisco had approximately 17,500 units of affordable rental housing in its portfolio, not including units created by market-rate developers through the inclusionary housing program.1 The majority of affordable housing financed by the city is developed and managed by nonprofit affordable housing developers in partnership with MOHCD.

While not currently required to do so by law, MOHCD already uses a competitive bidding process to select developers for affordable housing opportunities on city-owned property. (The city also uses competitive bidding to award funding to affordable housing projects on non-city-owned property, though this process would not be impacted by Prop. P.) MOHCD publishes its requests for qualifications and requests for proposals (both of which apply to development opportunities on city-owned land) and notices of funding availability (which apply to projects on non-city-owned land) on its website.

MOHCD also publicly publishes its selection criteria and process.2,3 Currently, it is MOHCD policy to encourage three bids, but the agency can move forward even if it only gets one or two bids, provided they meet the selection criteria. According to MOHCD, nine of the last 10 requests for proposals or qualifications that the office published (between 1999 and 2016) have drawn at least two responses.4 One request for proposals (in 2006) drew one response, six drew two responses and three drew four responses. Prop. P was placed on the ballot through signatures collected by the San Francisco Association of Realtors. It could have been passed legislatively and does not need to be on the ballot. It requires a simple majority (50 percent plus one vote) to pass.

Pros

  • An explicit, voter-mandated bidding process might increase confidence that public funds are being well spent.

Cons

  • From a good government perspective, these types of administrative rules should not be decided at the ballot. This particular measure is not clearly worded, which could create administrative difficulty down the line. If this measure passes, its rules could not be changed without further ballot measures.

  • Given the complex nature of San Francisco affordable housing projects, such as supportive housing for the formerly homeless and the rehabilitation of former public housing, it may be difficult to find three qualified bidders for every opportunity.

  • It’s unclear what problem Prop. P is meant to solve. MOHCD has competitive bid processes in place and is receiving multiple bids for most funding opportunities.

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SPUR’S Recommendation

Prop. P does not clearly solve a problem. MOHCD already has a process in place to ensure competitive bidding on projects funded with public dollars that are built on city-owned land. Setting administrative rules like this at the ballot could complicate the department’s ability to make future changes as conditions change, and the requirement of three bids could impede the city’s ability to get important projects built.

1 See table on page 11 (“MOHCD Affordable Housing Portfolio as of June 30, 2015”), San Francisco Mayor’s Office of Housing and Community Development Annual Progress Report, Fiscal Year 2014–2015

2 MOHCD issued a notice of funding availability in April 2016 that included the following criteria for development proposals: “applicant experience and capacity, project readiness, cost-effectiveness, serving highly-impacted neighborhoods, serving neighborhoods typically under-resourced, serving homeless households, providing extended community benefits and excellent design.” These criteria are very similar to those proposed under this measure.

3 MOHCD’s April 2016 notice of funding availability also outlined the following process: city staff review proposals, and eligible bidders are interviewed and ranked by a selection panel composed of “persons with expertise in the areas of development, affordable housing financing, architecture, property management and resident supportive services.” For Mission District projects, the interview panel would include “two community representatives who can bring knowledge of the Mission’s particular culture, history, community fabric, and aspirations.” The MOHCD director then selects the winning proposal.

4 List of MOHCD Multifamily NOFAs and RFQs/RFPs (1999–2016)

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