Why the private market can never solve SF’s housing crisis

48hillshousingforum2

John Elberling, Dawn Phillips, Brad Paul, and Calvin Welch talk about how we got into this mess — and how we might get out

 

By Tim Redmond

April 14, 2014 — We got a great lesson in the past 30 years or so of San Francisco political history at an Urban IDEA forum last Thursday – and a picture of some astonishing challenges that we face over the next 30.

The forum focused in part on how the city has changed from the late 1970s to the present – and in part on Sup. Jane Kim’s new legislation that aims to set some level of standards for the balance between affordable and luxury housing.

But it was much more than that: Some of the best thinkers about housing policy and politics in San Francisco were batting around the central question of our time: Is there any hope for a non-gentrified city, any path that really ends the displacement of poor and working-class people and creates a long-term sustainable housing policy?

While the mayor and a lot of developers and think-tank types say the city just needs to build a lot more housing – 30,000 units in the next few years, according to Mayor Ed Lee – John Elberling, who has been fighting displacement and building affordable housing for four decades, made the alarming point very clearly:

“The private market,” he said, “will totally gentrify our city’s housing stock. There is no way to stop it.”

In other words, to build a sustainable future for San Francisco, we have to look beyond the private sector. Way beyond.

 

The long view

It’s easy to look at the current tech boom as the source of the city’s housing and affordability crisis. But Calvin Welch, a founder of the Council of Community Housing Organizations and a veteran of nearly half a century of local community organizing (oh, and a member of my board), put the situation in context.

Between 1960 and 1981, San Francisco built 30 million square feet of new downtown office space – and almost no housing. The developers had no interest in building housing; the money was in offices, and the goal was to create a new Manhattan-style financial district, with workers living in the suburbs. That’s what BART was all about – bringing people from the East and South Bay to San Francisco’s downtown.

But without that new housing, by the 1980s, San Francisco had not only used up all of its excess housing capacity (in part thanks to redevelopment projects and freeways that destroyed housing); it had used up the surplus housing capacity of the entire region. And a generation of young people decided that cities, not suburbs, were the place to live, something planners and politicians missed for many years.

“When housing gets out of balance, two things happen,” he said. “Costs rise and speculators arrive.”

Add to that the notion that the city isn’t doing economic development that creates jobs for current residents but instead is focusing on an industry that attracts new arrivals – and the boom in office space on the Peninsula, which is never matched with new housing – and you get a mess.

In the 1980s, activists began talking about linkages between office development and the cost of Muni, housing, and other city services. Every credible study showed that highrise offices paid less in taxes than they used in services – creating a structural budget deficit in San Francisco.

Now, as Dawn Phillips from Causa Justa:Just Cause pointed out, the city’s housing crisis is part of a national problem. But it has to be fought at the local level – and Phillips asked, “is it logical that we rely on private landlords to provide affordable housing?”

Even in San Francisco, it’s kind of a radical question – but it shouldn’t be. Because Phillips is right; the current situation makes no sense.

 

Can inclusionary housing do the job?

Elberling had a proposal: To create a city for everybody, we need to demand that all new housing has at least 30 percent affordable units. That’s already the standard in redevelopment projects, and it’s the standard that Kim’s legislation sets for South of Market.

But according to Elberling, the city’s Housing Trust Fund will only be able to account for about 10 percent, so the rest will have to come through strict regulation, from inclusionary housing – affordable units mandated to be built as part of market-rate projects.

“That’s certainly possible for the private sector,” he said.

And, Kim noted, it’s at the heart of what her bill would do. She wants to create a dashboard that would monitor the level of affordable and luxury housing – and whenever it gets beyond the 70-30 level, all new market-rate housing would have to jump through additional planning hoops to get a permit.

In theory, that would encourage developers to side with tenant advocates protecting existing rent-controlled housing – because if you evict tenants and remove housing from the rent-controlled stock, it skews the 70-30 ratio and would make new market-rate developments more difficult.

If the overall percentage of affordable housing fell below 30 percent, the Planning Commission would have to justify how new market-rate housing would help the balance through a conditional-use permit.

Of course, as longtime land-use lawyer Sue Hestor told me, “this Planning Commission has never seen a conditional use it doesn’t like.” But at least the dashboard would give the city, for the first time, a clue of what’s happening to the housing balance, in one district. That’s something that has never been on City Hall’s radar.

And it potentially gives developers an incentive to help find ways to fund affordable housing. That’s critical because, as the panelists pointed out, when Gov. Jerry Brown shut down redevelopment agencies, San Francisco lost $50 million a year in affordable housing money. As a region, the Bay Area needs $4 billion a year for housing subsidies, and gets about $800 million. That’s a huge shortfall.

Just the housing the mayor has talked about costs $300 million a year, and existing funding isn’t anywhere near that level.

And, of course, the 30 percent level of affordability means that for the indefinite future, 70 percent of all new housing will be set aside for the rich. That doesn’t create a sustainable city by any stretch. Not even close.

The city’s own General Plan states that more than 60 percent of all new housing needs to be available at below market rate.

After all, even if we were able to raise the minimum wage to $15 an hour, Welch noted, a tenant would have to work 130 hours a month to afford a market-rate apartment.

In other words: Our current system, with for-profit developers building most of the housing, the city getting a small bit of inclusionary housing and a modest investment of public money into building new affordable units, simply won’t solve the problem. We’re not even in the ballpark. Nothing on the table at City Hall is even close to a long-term solution.

Of which, I am convinced, there is only one.

San Francisco would have to set as a goal taking as much as 60 percent of all housing in the city out of the private market in the next 20 years.

That could mean, as Brad Paul suggested, using money to buy and rehab dilapidated buildings and put them in land trusts. That’s a start, for a few areas and a few buildings.

But overall, somebody at City Hall needs to say it, and the mayor clearly won’t: The private sector has utterly failed, and will utterly fail, to supply adequate housing in San Francisco. So we have to stop looking that way for solutions, and shift the discussion completely.

How would we get to a city where the vast majority of the housing stock is permanently out of the private market (or so tightly regulated that the price is in effect set by the city?) I don’t know. I don’t know if it’s possible. But we didn’t get into this mess in a day, and we won’t get out of it quickly, either. And if we don’t start asking the right question, we’re never going to find an acceptable answer to this crisis.

This entry was posted in Uncategorized. Bookmark the permalink.