SF Housing Crisis Origin Story

Link:: https://techcrunch.com/2014/04/14/sf-housing/ #media/Article resources

• no one is incentivized to support increasing housing supply
  • “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.”
• The Great Inversion is what urbanist Alan Ehrenhalt uses to describe “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.”
  • used to be poor people went to city for better lives, now rich people pushing poor people out of cities
• Job market changed in terms of what jobs are offered and lead to fundamental shift in the real estate
  • “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.”
• Problem is that globalism is dividing the workforce into skilled and unskilled and dramatically different pay -> [[middle class is gone]]
  • 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.
• Building more housing is not as easy as it sounds because you have to win people over and a lot of distinct interests at play
  • historically SF has a lot of growth-control and conservationist policies
    • 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.
    • Richard DeLeon described it as “==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.”
      • first priority is not revolution but protection
    • Lots of policy barriers that make building housing a long and expensive process, the costs of which are passed down
      • “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.”
    • Just building housing isn’t enough because they will get built priced only for rich people
      • ”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.”
    • Current housing supply and things being built are build for either the low income or the rich. Nothing for middle class or to sustain you on the way up. See this effect in public transport too with MUNI or uber
      • “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.”
    • economic growth has been good for the bay area it created a lot of wealth that wasn’t there, but the housing supply is not elastic which has created problems of living affordability and the spillover of jobs created s smaller in SF
      • 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.
    • Two historical and polar opposite policies have long-term bad ramifications: Proposition 13 and rent control
      • Proposition 13 capped property taxes at 1 percent of their assessed value and to prevent them from rising by more than 2 percent each year until the property was sold again and its taxes were reset at a new market value.
        • argued for by saying tax savings would be passed onto tenants
        • never happened and public outrage caused the opposite reaction
      • Problem is property taxes are a lot of money and fund a lot of important public measures
        • “Amid the outrage, Feinstein pushed for a 60-day rent freeze that would ward off the rise of a tenant-backed mayoral challenger.”
          • “Ovenight, California’s property tax revenues fell by almost 60 percent, and the state had to make emergency allocations from a surplus that year to keep services afloat. Because the state’s K-12 schools are financed largely by property taxes, California’s spending per student fell from 5th in the nation in the mid-1960s to 50th in this decade.”
          • “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.”
      • rent control is not means-tested (rich and poor can both benefit and rich and poor can both be affected) and because of that creates two classes of tenants–one that is legally protected and one that is not
        • “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.”
      • Because of all these factors and the fact that there is no corresponding vacancy control there is an eviction crisis every decade
      • Ellis Act is a “No-Fault” kind of eviction and big landlords using it to evict tenants who have been there for years to increase rent
      • anti tech sentiment was a good way to catalyze a mass movement for change around this stuff but they really werent the problem
        • “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.
      • anti tech sentiment isn’t justified in a lot of people’s opinions because it is a new form of nativism
        • 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.
        • __“…__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.” from Randy Shaw houses low income San Franciscans with a non-profit
          • Many protesters blast twitter but simultaneously request budget increases made possible by taxes paid by techs
      • solution laid out in the book Capital in the 21st century Ultimately, it advocates a globally-coordinated tax on wealth.
        • “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.”
      • 654dxz