Solving the housing crisis takes all San Franciscans, even big tech



By Joseph Tobener


OPINION This week, San Franciscans learned that they will not be able to rely on Sacramento to fix the housing crisis. State lawmakers voted down Senate Bill 1439, which would have stopped speculators from using the Ellis Act to evict and convert buildings to upscale offices and TICs. One Assembly Democrat said that San Franciscans were "exaggerating the problem." That same day, my office received Ellis Act eviction notices for 21 tenants from an artist building at 16th and Mission streets. The building has a new buyer, and it will soon be a high-end commercial space.

I was a tenant rights attorney during the first dot-com boom, and without question, this new housing crisis is much worse. The gentrification is more widespread and permanent. This time around, the evicted teachers, musicians, and artists are not simply moving down the street to smaller units, they are being priced out of San Francisco altogether.

We need to decide now, as San Franciscans, what we want our city to feel like in a decade. Here are five things I believe we need to do now to address the crisis:

1. Collaborate with tech leaders, rather than vilify them. I have been as guilty as the next person in blaming and berating big tech, ignoring the fact that many of my neighbors, clients, and friends are long-time San Franciscans who work in the tech industry. Enough blaming. We need to somehow bring tech to the table to help create large-scale solutions to the housing crisis. It may not be easy to do.

Earlier this year, Marc Benioff, the CEO of Salesforce, criticized tech companies for being "stingy" in giving to their communities, and I have heard nonprofit fundraisers echo this. If true, we need to find out why. On the other side, our healthy anti-corporate, 'us and them' mindset, which is deeply rooted in San Francisco's political tradition, is not serving us in collaboratively addressing the housing crisis.

While there are a handful of high-profile examples of tech workers wrongfully displacing tenants, tech workers are not the real problem. It is true that tech money drives up prices, but the real villains are the predatory speculators who are profiting from our shared crisis. The bottom line is, like it or not, tech is here to stay, and tech leaders have the resources to fund the arts, help our schools, and yes, help us address the housing crisis.

2. Stop illegal mergers of multi-unit buildings into single-family mansions. It is not enough to have regulations in place to prevent mergers. Real estate speculators are merging units surreptitiously, without permits. The Department of Building Inspection needs to actively police projects. And all San Francisco residents need to share in the responsibility of ensuring that speculators are not doing major construction without permits in our neighborhoods.

3. Support legislation to stop landlords from renting their units as hotel rooms. It is estimated that more than a 1,000 units in San Francisco are being rented out full-time for short-term corporate or tourist use. We need a law to get these units back into the permanent housing stock.  

4. Donate to the Community Land Trust and the Community Arts Stabilization Trust. Community land trusts are buying property to permanently preserve residential housing and art space. We need to do more to support these organizations. Other cities do a much better job than San Francisco in partnering with corporations to preserve culture.  

5. Support an anti-speculation tax. Tenant activists have introduced an anti-speculation tax designed to stop real estate flipping. Our office sees the same LLCs flip properties time and time again.


That's just an urban myth as far as I can tell.

Posted by Guest on Jul. 02, 2014 @ 12:37 pm

I was personally owner-move-in no fault evicted by a couple who works for Genentech. My long-term Mission home that I dearly loved and put years of work into was near one of the tech bus stops.

Please do not invalidate people's tragedies with your lack of being informed or not knowing more diverse perspectives.

Posted by Jean on Jul. 02, 2014 @ 3:30 pm

the Genentech bus?

And you admit that the owners were not at fault?

Maybe you should have made some better decisions rather than rely on the kindness of strangers?

Posted by Guest on Jul. 02, 2014 @ 3:50 pm

Troll! What does the freaking bus have to do with this? It's just a prop to illustrate the real issue that Jean has put forward. Stop trying to skirt the issue. This is a real thing. Now, find that rock you climb out from under or better that bridge.

Posted by Guest telling Guest Troll to climb back under his rock on Jul. 02, 2014 @ 6:03 pm

has EVER evicted a tenant. Jean claimed that she was evicted by a tech worker, which may be true. But she offered no evidence that her evictor rode a shuttle.

Posted by Guest on Jul. 02, 2014 @ 6:25 pm

I am sorry you had to leave your rented home. Hopefully you prepared for this eventuality.

Posted by Guest on Jul. 02, 2014 @ 5:04 pm

Having to move out of a rental is a "tragedy". You should get out more to get a better perspective on life. Here's an idea: go volunteer at Children's Hospital. You'll see family's dealing with real tragedies every day.

Posted by Guest on Jul. 03, 2014 @ 7:36 am

home any longer. She ideally would have wanted her landlrod to subsidize her forever so that she never had to face the economic consequences of her poor decision-making.

But the landlord got sick of her parasitic ass and kicked her out. Welcome to reality and standing on your own two feet, "Jean".

Posted by Guest on Jul. 03, 2014 @ 10:11 am

Rent control creates a false sense of security for many San Franciscans. Often they do not face the reality of their true housing costs until it is too late.

Posted by Guest on Jul. 03, 2014 @ 11:10 am

somebody else to support you indefinitely then your lifestyle is not sustainable.

Posted by Guest on Jul. 03, 2014 @ 11:21 am

So the Wall Street economy is unsustainable?

The landlord economy is unsustainable?

Posted by marcos on Jul. 03, 2014 @ 11:44 am

If you pay the full cost of your housing, there is no reason why you should worry because you are not dependant on others.

Posted by Guest on Jul. 03, 2014 @ 11:57 am

Quantative easing is one multi trillion dollar subsidy to Wall Street.

Posted by marcos on Jul. 03, 2014 @ 12:13 pm

You have the power to change that

Posted by Guest on Jul. 03, 2014 @ 12:23 pm

What do you think this is, a democracy?

Posted by marcos on Jul. 03, 2014 @ 1:31 pm

Most voters are happy with QE because it saved the nation's economy.

Posted by Guest on Jul. 03, 2014 @ 3:10 pm

Most voters are happy with QE

Show your source of statistics on that one.
That's just a verifiable crock.

Posted by Cynthia Berger on Jul. 13, 2014 @ 2:55 am

Now imagine that those children in the hospital had parents who were being evicted and thus could not put all their energy into caring for the child. Cold happen, does happen.

Posted by Guest ethan davidson on Jul. 03, 2014 @ 2:38 pm
Posted by Guest on Jul. 04, 2014 @ 5:01 am

Reform Rent Control.

Posted by Guest on Jul. 02, 2014 @ 1:07 pm

about ten times the rent that was average when it was passed in 1979.

Rent control has been great for landlords, however, and particularly for those who know how to generate turnover. Whatever artifioially constrains supply and competition is good for business.

Posted by Guest on Jul. 02, 2014 @ 1:27 pm

The issue here is that some folks are paying such low rent, and then what to keep it that way forever. Who is really willing to subsidize a tenant for life? Anyone??? No, so they get evicted as it's the only way out.

WHAT THIS WRITER/LAWYER DOESN'T GET - if you don't support the small mom & pop landlords that you'll just get someone that really has no heart. All your legislation against us, is affecting you.

On his list should be: support landlords to get a decent return and there wouldn't be such evictions.

REFORM RENT CONTROL - make that your #1 priority!
Followed by don't vilify landlords. Over half of this town is owned by mom + pop who one a building or two, that they work hard for.

Posted by Guest on Jul. 02, 2014 @ 6:13 pm

#4 - Donate to the Community Land Trust and the Community Arts Stabilization Trust.

SF Community Land Trust hosts a fundraiser July 11th at a Giants game & tailgate party. Please come show your support for emerging models of how to de-commodify space. TIckets include centerfield bleacher seats for the game, and free food and spirits at the tailgate.



Posted by Jean on Jul. 02, 2014 @ 3:33 pm

you could have afforded to buy a home rather than be a tenant victim?

Posted by Guest on Jul. 02, 2014 @ 3:51 pm

Or not. Houses are expensive. And people are not interchangable widgets that you can put anywhere and expect them to thrive. Perhaps when you get older you will realize that, as young folks have shallow roots and can move more easily, if healthy.

Posted by Guest ethan davidson on Jul. 03, 2014 @ 2:41 pm

so how hard can it be?

If you choose not to do so then, like Jean, you are on borrowed time.

Posted by Guest on Jul. 03, 2014 @ 3:13 pm

Is Joseph Tobener donating/going? He runs quite a racket negotiating tenant buyouts. Bye bye suckers, enjoy Oakland.

BTW, does he take a percentage or a flat fee?

Posted by Guest on Jul. 02, 2014 @ 5:11 pm

Who would want to be a landlord in SF? The town that vilifies and shame property owners for providing housing.

Want more units back: start addressing the thousands of tenants who hoard rent controlled units and illegally sublet their unit for a profit. Put their names in the paper.

Encourage owners to provide the tens of thousands of vacant units back on the market for rent by REMOVING RENT CONTROL.

I have 5 nice apartments in SF, but they will never be available for rent on the regular market. Why? the rules here don't support landlords.

Many of us mom & pop landlords would rent our units out at 30% less that these crazy high market prices if we knew we could end a tenancy if needed. When the're no way out but to Ellis - then there's no way many of the units will be available.

The backward thinking, and political pandering (Avalos, Campos & Kim) in this town keep rents sky high! Blame those guys for your astronomical rents.

End rent control after a 5yr tenancy: This would give renters time to make plans but also know that they were secure for 5yrs.
The City would need to do A LOT of trust building to repair all the damage it's done to many small property owners and TIC owners.

Joseph, you don get it.

Posted by Guest on Jul. 02, 2014 @ 6:29 pm

corporate and academic temporary lets.

Visitors and foreigners do not get all uppity about their rights. And, of course, they LEAVE!!!

Posted by Guest on Jul. 02, 2014 @ 7:00 pm

Visitors and foreigners come from countries where they have no rights, which is what you would prefer that all people who make under 100K have.

Posted by Cynthia Berger on Jul. 13, 2014 @ 2:59 am

Genentech is now the same as twitter? I cant keep up with all the people we hate for their success!

Posted by Becky Backside on Jul. 03, 2014 @ 6:29 am

It's not even a conscious reaction any more. "Success = bad and failure = good" is the mindless mantra of the mediocer.

Posted by Guest on Jul. 03, 2014 @ 7:42 am

Every single dollar that the Mayor's Office of Housing has must be directed to the CLT to purchase buildings at risk of Ellis, new construction by affordable housing nonprofits is too expensive, time consuming and impractical. The Board of Supervisors needs to float mortgage revenue bonds to help fund this.

Posted by marcos on Jul. 03, 2014 @ 6:59 am

If CLT purchases of rental buildings are in any way financially viable then they should be able to secure funding themselves via the normal channels.

If such funding is not deemed viable, then neither are the purchases.

And the voters won't support more bonds, especially on buildings with very low rents that will make repayment of those bonds highly risky.

Posted by Guest on Jul. 03, 2014 @ 7:39 am

Won't happen because the nonprofit developers have to pay the salaries of 200 employees.

Mortgage revenue bonds are authorized by charter to be issued by a supermajority vote of the Board of Supervisors, no mayoral consent is required.

Posted by marcos on Jul. 03, 2014 @ 8:08 am

Investors generally want 5%-6% on a revenue bond even if the collateral is first-class. but in this case, the collateral is a whole collection of old buildings with low-rent tenants. If the revenue stream fails and the bonds default, then the bondholers get a bunch of nasty rent-controlled buildings and tenants, which they do not want.

Therefore the coupon has to be much higher, and the rents won't cover that. some rent controlled buildings yield only 2% or 3%. The math doesn't compute.

It doesn't matter that the BofS can authorize them if no investors will touch them.

Posted by Guest on Jul. 03, 2014 @ 10:01 am

Revenue bonds are backed both by the rental revenue stream they generate and failing that the full faith and credit of the City and County of San Francisco. There will be no shortage of people willing to pay the monthly payment to service the bonds.

Posted by marcos on Jul. 03, 2014 @ 10:23 am

If the city stands behind them then they become GO bonds and the voters need to approve those.

Here's a simple real-life example of why it won't work. Twenty years ago a 4-unit rental building in the Mission could be bought for about 500K and might rent 10K per year per unit. That's a 8% yield. Back then a mortgage would have been 7% and with 1% property tax, you'd just about cover your costs, although not quite.

Fast forward and that building is now worth 2 million but the rents are maybe 50K a year, assuming no turnover (and it is the buildings with no turnover that are getting Ellis'ed). So now you have a 4% yield which won't cover the mortgage on 2 million, nor the interest on a revenue bond.

If the rents are below 5% a year, revenue bonds are out of the question.

Posted by Guest on Jul. 03, 2014 @ 10:49 am

A revenue bond will cost at least twice that. Non starter.

The only building I know that CLT recently bought was the "merry-go-round" on 23rd Street. but that was a special case because the rents were good (6% or so), there was little deferred maintenance, and any individual turnover would have allowed rent hikes.

Posted by Guest on Jul. 03, 2014 @ 11:12 am

There are also tax exempt bonds that can be floated for things like this.

Posted by marcos on Jul. 03, 2014 @ 11:43 am

only 3% or 4% then there is no way investors will buy a bond yielding that law, given the low quality of the collateral.

Posted by Guest on Jul. 03, 2014 @ 11:56 am

Revenue bonds do not have collateral, they have income streams that become bonded.

Posted by marcos on Jul. 03, 2014 @ 12:16 pm

attach the assets that produce the revenues, just like with any other creditor.

But again, if the revenue bond pays 6% and the rental yield is 4%, it's not viable.

Posted by Guest on Jul. 03, 2014 @ 12:24 pm

With the higher relocation fees imposed on Ellis evictions and the anti-speculation tax, the value of those buildings will drop accordingly and fewer speculators will find it financial feasible to buy, Ellis and convert. That will make revenue bonds more viable.

Posted by marcos on Jul. 03, 2014 @ 12:17 pm

but in any event, I am not seeing any dip in prices.

A two million bond to pay an asset paying 50K a year is not going to work. No investors will buy it and in fact no IB will under-write it.

Posted by Guest on Jul. 03, 2014 @ 12:25 pm
Posted by Guest on Jul. 03, 2014 @ 1:21 pm

The time horizons on this are much longer than the usual mortgage and the City has to dedicate subsidy to make it pencil out. That is why the nonprofit developers need to be cut off and those affordable housing side aside dollars directed to CLT acquisition.

Posted by marcos on Jul. 03, 2014 @ 1:30 pm

and the revenue bonds would have to have finite lives.

Anyway, I am not aware of a single rent-controlled city anywhere that has made the numbers work and you might care to reflect on why that is.

Posted by Guest on Jul. 03, 2014 @ 3:09 pm

interest rate is greater than the rental yield AND is high enough to compensate for the obvious extra risks.

A 2 million building with a 50K annual rent roll would require at least a 4% coupon to cover its costs, otherwise the debt would just increase every year forever. And with no way of repaying the principal of the loan without finding a greater fool.

And investors can get muni revenue bonds with much better cover and collateral for 5% to 6%. It's a toxic idea which will only work in very specific situations.

Posted by Guest on Jul. 03, 2014 @ 3:23 pm

Mortgage revenue bonds can be floated if the rental revenue stream plus dedicated city subsidy covers the cost of principal and bond overhead.

Posted by marcos on Jul. 03, 2014 @ 5:46 pm

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