Author:: Calvin Welch Full Title:: How Burrowing Owls Lead to Vomiting Anarchists Tags:#media/article Link:: https://techcrunch.com/2014/04/14/sf-housing/
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* highlights from 2021-02-08
* Homeowners have a strong economic incentive to restrict supply because it supports price appreciation of their own homes. It’s understandable. Many of them have put the bulk of their net worth into their homes and they don’t want to lose that. So they engage in NIMBYism under the name of preservationism or environmentalism, even though denying in-fill development here creates pressures for sprawl elsewhere. They do this through hundreds of politically powerful neighborhood groups throughout San Francisco like the Telegraph Hill Dwellers.
* Then the rent-controlled tenants care far more about eviction protections than increasing supply.
* So we’re looking at as much as 80 percent of the city that isn’t naturally oriented to add to the housing stock.
* This is what urbanist Alan Ehrenhalt calls “The Great Inversion,” a major shift where cities and suburbs have traded places over the last 30 to 40 years. As people marry later and employment becomes more temporal, young adults and affluent retirees are moving into the urban core, while immigrants and the less affluent are moving out.
* In 1978, the U.S.’s manufacturing employment peaked and the noise and grit of the blue-collar factories that once fueled the flight of the upper-middle-class disappeared. These vacant manufacturing warehouses turned into the live-work spaces and lofts that emerged in the 1980s and 1990s in cities like New York and San Francisco.
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* So a great question of our time is how American cities handle this shift. They have to do this in the face of global economic changes that are dividing our workforce into highly-skilled knowledge workers who are disproportionately benefiting from growth and lower-skilled service workers that are not seeing their wages rise at all.
* San Francisco’s orientation towards growth control has 50 years of history behind it and more than 80 percent of the city’s housing stock is either owner-occupied or rent controlled. The city’s height limits, its rent control and its formidable permitting process are all products of tenant, environmental and preservationist movements that have arisen and fallen over decades.
* Even back in 1967, thousands of Latino residents in the Mission — the heart of the gentrification battle today — organized and convinced the city’s Board of Supervisors to vote down an urban renewal program in the neighborhood. They saw what happened to the Fillmore — once the “Harlem of the West” — when the city’s re-development agency razed it, displacing tens of thousands of black residents and the businesses they had created after World War II.
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* Its first priority is not revolution but protection — protection of the city’s environment, architectural heritage, neighborhoods, diversity, and overall quality of life from the radical transformations of turbulent American capitalism.
* One of the things that makes housing development different in San Francisco compared to other major U.S. cities is that building permits are discretionary rather than as-of-right. In other cities, if a developer already matches the existing zoning and height restrictions of the city plan, they can get issued a permit relatively quickly.
* But for new housing developments in San Francisco, there’s a preliminary review, which takes six months.
* These barriers add unpredictable costs and years of delays for every developer, which are ultimately passed onto buyers and renters. It also means that developers have problems attracting capital financing in weaker economic years because of the political uncertainty around getting a project passed.
* His organization, the Council of Community Housing Organizations, argues that raw, additional construction will not make housing more affordable to working-class or lower-income San Franciscans. Left to its own devices, the market will only produce housing that chases the very richest buyers. In a time of rising inequality, those market-rate units are increasingly out of reach, even for middle-class San Franciscans.
* You’ll see in the table above that the market is mostly producing housing for ‘above moderate’ incomes, then some ‘low income’ housing units, but hardly anything for ‘moderate incomes.’ The lack of options for middle-class San Franciscans in turn feeds the two-tier systems that we’re seeing in transportation with MUNI-versus-Uber and in education, where 30 percent of the city’s students go to private schools at $30,000 per year while the public school system will see almost all of its enrollment growth coming from public housing over the next three decades.
* The point is that if the entire Bay Area had a more elastic housing supply, it would not only make living affordable for most people, it would allow a far larger portion of the population to find jobs and do things like save or spend money instead of moving somewhere distant and spending their money on driving, or even being unemployed.
* UC Berkeley economist Enrico Moretti calculated that a single tech job typically produces five additional local-services jobs.
* Without the ability to rely as heavily on property taxes, city governments throughout the state had to favor office and retail development over housing in order to boost sales taxes. It may have even accelerated the homogeny of suburbs as smaller city governments had to cut deals to attract “big box” retailers to boost sales tax revenue, crowding out independently-run stores.
* Because both Proposition 13 and rent control insulate homeowners and rent-controlled tenants from dramatic tax or rent increases when the market undersupplies housing, they undermined political will for building homes. Both of these policies were enacted just as the “Great Inversion” started.
* Yes, rent control is a blunt instrument of income re-distribution in an increasingly unequal world. It is not means-tested, meaning anyone from well-salaried, white-collar workers to very low-income residents can benefit from it. It also forces a number of small-time, mom-and-pop landlords to individually subsidize someone else’s cost of living in the city.
* It creates two classes of tenants — one that is very legally protected and another that is not. For market-rate tenants, there is no law compelling their landlords to give them as much as $44,842 in relocation expenses under new city legislation like they will for Ellis Act evictees if they raise rents beyond what they can afford.
* The we-hate-tech-workers is mostly a media narrative,” said organizer Fred Sherburn-Zimmer. “It’s not about that. It’s about income disparity. It’s about speculators using high-income workers to displace communities.”
* Sherburn-Zimmer acknowledged that the bus protests were a tactic. But she said, without them, the movement wouldn’t have been able to get 500 people to march in Sacramento for Ellis Act reform.
* Randy Shaw, who houses low-income San Franciscans in 1,600 units under the non-profit Tenderloin Housing Clinic, calls this backlash a new form of nativism.
* When he moved here in the late 1970s, he remembered straight residents making the same complaints about an influx of gays into the Castro or a flood of Latino immigrants into what was a largely Irish-American Mission District a generation ago.
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* the war on tech workers—as opposed to tech companies or policies— is not really a “class war.” Rather, it is about one group of predominately white people complaining about a similar demographic group that likes many of the same restaurants, bars, street festivals, and Samba classes that they do—but who makes more money.”
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* Then the rent-controlled tenants care far more about eviction protections than increasing supply. That’s because their most vulnerable constituents are paying rents that are so far below market-rate, that only an ungodly amount of construction could possibly help them. Plus, that construction wouldn’t happen fast enough — especially for elderly tenants.
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* So we’re looking at as much as 80 percent of the city that isn’t naturally oriented to add to the housing stock.
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* Oh, and tech? The industry is about 8 percent of San Francisco’s workforce.
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* Then if you look at the cities down on the peninsula and in the traditional heart of Silicon Valley, where home-ownership rates are higher, it’s even worse.
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* The true culprit behind our housing problems: let us deflect blame to Mountain View’s burrowing owl!
* The Google Bus protesters have said that the company should build housing on its campus, but the Mountain View city council has explicitly forbidden Google from doing just that. They’ve argued that it’s to protect the city’s burrowing owl population. (The city council even created a feral cat taskforce last week to protect the owls.)
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* Even more mind-bogglingly, Mountain View is discussing new office development that would bring as many as 42,550 office workers to the city. But the city’s zoning plan only allows for a maximum of 7,000 new homes by 2030.
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* Then, if you look at the job-to-housing ratios in some of the other peninsula cities like Palo Alto, it’s pretty terrible. Palo Alto voters just killed an affordable housing development for seniors by ballot measure last November.
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* So the wealthy voting classes of the peninsula are also strangling themselves of housing too. The median rent in Mountain View is $2,700 compared to $3,400 in San Francisco, according to Zillow. Once you factor in the cost of owning a car — estimated at slightly more than $9,000 a year by the AAA — it’s not that much cheaper.
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* If you look even closer to the Caltrain stations, rents go way up. The newly-opened Madera complex in downtown Mountain View rents out 1-bedroom units starting at $3,299 all the way up to 2-bedroom apartments at $8,000 per month.
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* Certain cities like Menlo Park seem more collaborative. Facebook partnered with developer St. Anton Partners to build a 394-unit complex within walking distance of its Menlo Park headquarters. But that’s 394 units for a company with more than 6,000 employees.
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* So one contributor to the tech industry’s spread into San Francisco is that the peninsula cities are more than happy to vote for jobs, just not homes.
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* 2) Why is the tech industry migrating to cities anyway?
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* This is a demographic shift that is much larger than the technology industry itself — although there are some tech-specific reasons that have fueled a migration north from the historic heart of Silicon Valley over the last 10 years.
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* This is what urbanist Alan Ehrenhalt calls “The Great Inversion,” a major shift where cities and suburbs have traded places over the last 30 to 40 years. As people marry later and employment becomes more temporal, young adults and affluent retirees are moving into the urban core, while immigrants and the less affluent are moving out.
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* San Francisco’s population hit a trough around 1980, after steadily declining since the 1950s as the city’s socially conservative white and Irish-Catholic population left for the suburbs. Into the vacuum of relatively cheaper rents they left behind, came the misfits, hippies and immigrants that fomented so many of San Francisco’s beautifully weird cultural and sexual revolutions.
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* But that out-migration reversed around 1980, and the city’s population has been steadily rising for the last 30 years.
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* This is a phenomenon that’s happening to cities all over the United States.
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* It’s happening in Seattle, Atlanta, New York City, Boston and Washington. D.C.:
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* Create Infographics
* Its rapacious speed may even be accelerating. Witness hyper-gentrification in Brooklyn and Manhattan, or the “Shoreditch-ification” of London.
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* Why?
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* People are getting married later and are living longer. Nearly 50 percent of Americans, or more than 100 million people are unmarried today, up from around 22 percent in 1950.
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* The job market has changed as well. In 1978, the U.S.’s manufacturing employment peaked and the noise and grit of the blue-collar factories that once fueled the flight of the upper-middle-class disappeared. These vacant manufacturing warehouses turned into the live-work spaces and lofts that emerged in the 1980s and 1990s in cities like New York and San Francisco.
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* The concept of lifetime employment also faded. Today, San Francisco’s younger workers derive their job security not from any single employer but instead from a large network of weak ties that lasts from one company to the next. The density of cities favors this job-hopping behavior more than the relative isolation of suburbia.
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* San Francisco led the Bay Area’s venture capital investments in 2012, according to a study by Richard Florida, the urban theorist who wrote “The Rise of the Creative Class.”
* There are also some tech industry-specific reasons too. The capital costs required to found a company and launch a minimum viable product are much lower than a decade ago. Startups also need fewer people, especially with the low distribution costs provided by platforms like Apple’s iOS app store or Facebook. So it’s easier for lots of small companies to find pockets of commercial real estate in the city for new offices. It’s also easier for VCs to fund an order of magnitude more experiments, even if the same proportion of them fails.
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* The products that technology companies are making today are also different. In the 1970s, “Silicon Valley” literally meant making semiconductors in large fabs that required expensive equipment and clean rooms.
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* But the big wave of the last decade has been social networking. And every notable consumer web or mobile product of this wave has been seeded through critical mass in the “analog” world. Facebook had university campuses. Snapchat had Southern California high schools. Foursquare had Lower Manhattan. Twitter had San Francisco. These products favor social density.
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* An even newer generation of startups addresses distinctly urban questions. Airbnb exists because in 2007, San Francisco didn’t have enough hotel capacity to house visitors in town for an industrial design conference. Uber exists because the city’s taxi market was under-supplied with drivers and smartphones offered a new way of summoning transportation on demand. Then there are very young startups like Campus, which is like a venture-backed communal living movement, Leap Transit, which is trying to shake up scheduled transport, or any of the companies out of Tumml, an urban ventures incubator.
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* As tech workers have moved into cities, the industry has changed San Francisco’s culture and San Francisco has changed the technology industry.
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* Nevertheless, while tech is fueling San Francisco’s current boom and has helped cut the city’s unemployment rate by about half since 2010, this gentrification wave has been going on for decades longer than the word “dot-com” has existed.
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* And it’s happening all over the country.
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* So a great question of our time is how American cities handle this shift. They have to do this in the face of global economic changes that are dividing our workforce into highly-skilled knowledge workers who are disproportionately benefiting from growth and lower-skilled service workers that are not seeing their wages rise at all.
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* 3) OK, let’s build more housing!
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* Y Combinator partner Garry Tan tweeted out a map the other week:
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* Want to see why SF housing is so expensive? This is a map of allowed building height. Yellow = 4 stories max. http://t.co/OgQ6JCId8I
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* — Garry Tan (@garrytan) April 6, 2014
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* Wouldn’t that be simple?
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* But it’s not that easy. While the real estate market is hot, developers are currently building 6,000 units.
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* To go beyond that, you have to build political will.
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* You have to win hearts and minds.
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* You have to make sure that people don’t get pushed out or left behind.
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* Origins of SF’s cautious approach to growth are rooted in
* 10) So a highly-restricted housing supply + rising demand + a volatile local economy prone to booms and busts + strict rent control without vacancy control = Eviction crisis every decade!
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* ot of other VCs and founders are also digesting Thomas Piketty’s new book, “Capital in the 21st Century.” With more than 200 years of data, it chronicles an inexorable rise in inequality that was punctuated in the middle of the 20th century by the Great Depression and World War II followed by 30 years of evenly-spread prosperity. Ultimately, it advocates a globally-coordinated tax on wealth.
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* The keyword there is coordinated. If this issue re-emerges again in San Francisco (and it will), you’d have to make sure that the proposed solutions don’t end up driving away jobs or growth-stage companies.