The struggle for housing money at City Hall

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It’s barely March, and the next election isn’t until June and that’s just primaries and the Democratic County Central Committee, but we just started getting political mail anyway. It’s a piece from the Board of Realtors, denouncing plans for an increase in the real-estate transfer tax “to provide subsidized housing to people who want to live in San Francisco but don’t have the means to do so.” Mayor Ed Lee, the flier says, is backing this “outrageous” plan.

What, exactly, is going on here?

Well, for starters, the mayor is distinctly NOT pushing for an increase in the transfer tax, not right now, anyway. What he is doing is meeting with housing advocates and legislators and trying to come up with a stable source of funding for affordable housing -- yes, for families and low-income people, many of them longtime residents who are being forced out by Ellis Act evictions, others of them people who work in the city and would rather live here than commute from Pinole, which everyone with any sense agrees is a good idea.

The problem: For years, San Francisco used Redevelopment Agency tax-increment money for affordable housing. Now that money’s gone, since the governor abolished redevelopment agencies. Actually, the money’s not gone, technically -- the increased tax revenue from redevelopment project areas still exists. It’s just that the state is now taking a bunch of it, and other taxing entities like BART and the school district get some of it, and now it’s impossible to send bonds and borrow money against it. So what was once tens of millions for affordable housing is now a few million.

“We might have $20 million a year in the general fund,” said housing activist Peter Cohen. “But that’s compared to the $40 million or $50 million we had in the past, and it still leaves housing short.”

Lee has promised repeatedly to fix that problem, to find a way to make sure that there’s enough money that the nonprofits who build housing can plan and develop for the long term. Right now, it’s being called a Housing Trust Fund, but nobody knows exactly how it will actually work.

Remember: The city’s own General Plan states that 60 percent of all new housing should be available at below market rate. All of the regional growth projections say that San Francisco needs to build more housing -- for its own workforce, not just for the rich. (And the local workforce, for all the tech jobs the mayor keeps hyping, is still mostly public-sector workers and service employees, most of whom can’t possibly afford the soaring rents and housing prices in this city.)

A lot of the existing affordable housing money comes from the city’s inclusionary housing law, which mandates that market-rate developers set aside a percentage of their new units (usually 20 percent) for lower-income people. Most developers eschew allowing poor people into their condo enclaves, so they pay a fee into a city fund instead.
But if we’re aiming for 60 percent, and we’re getting (at most) 20 percent, we’re a long ways off. Oh, and the developers are starting to argue that the 20 percent rule is too onerous and they can’t build enough condos for the rich if they have to throw scraps to the poor and middle-class, too.

And some supervisors are squawking about building more housing for the middle class, and right now in a zero-sum game, that means less for low-income people.
This all adds up to a mess for the mayor, and it’s no wonder some advocates are talking about raising the transfer tax -- which, after all, is paid by the seller of a residential or commercial building, and while there are absolutely some houses underwater in San Francisco (and there should probably be an exemption in the tax for that situation), overall home prices are rising again, and many, probably most home sales these days involve substantial profit. It’s not a perfect tax, but it’s a tax on a class that is (generally) better off to support a class that is typically not so well off.

Here’s the problem: If the mayor supports a transfer tax, and that’s part of the final package, the realtors and the commericial building owners will no doubt put huge amounts of money into defeating it. That would mean Lee would have to raise a bucket of money and campaign really hard to pass it. But Lee’s demonstrated that he’s not the fighting type; he wants something that nobody serious will oppose. Which is why my sources at City Hall say that he wants the transfer tax off the table.

That could mean that the Housing Trust Fund will be a basic set-aside, a budgetary mandate that a certain amount of money go into a reliable fund for housing. That’s one of the city’s most pressing needs (really, if this becomes a city of just the rich, even those of us who own houses or have rent-controlled apartments won’t want to live here any more. Mayor Larry Ellison? Eeew.) So I’m okay with that. I’m not a big fan of set-asides, but this is the whole future of San Francisco we’re talking about.

So the realtors can take a chill pill -- the mayor doesn’t want to get in a fight with you. Sigh.

Comments

Considering Ellis Act evictions and owner move-ins have declined over 86% in the last 10 years and in 2011 numbered a only 191, I would hope the Mayor's housing policies are targeting a broader group of people to support. I'm thinking more along the lines of support for the vanishing S.F. middle class (families included).

San Francisco offers some of the most robust services for low-income residents, and has done so at the expense of the middle.

Tim, when are you going to stop pounding the drum on Ellis Act evictions- they're not the issue, and they no more target low income renters than the newly rich Facebook renters that also benefit from the landlord provided subsidy that is S.F. rent control.

If providing affordable housing is something San Francisco collectively believes in, then all of its citizenry should share in the cost. The current system falls short and many more of those that need assistance could be helped if we stopped indirectly assisting those that do not.

Posted by Guest on Mar. 08, 2012 @ 3:29 pm

He often finds himself fighting yesterday's battles.

Of course, the best way of providing new housing is to remove rent control and zoning restrictions. We'd see thousands of new untis at all elvels of the market. Developers would even start building rental units again - can you imagine?

Posted by Guest on Mar. 08, 2012 @ 3:36 pm

unless someone has figured out a way to magically make more pre 1979 buildings in 2012 then the removal of rent control will pretty much result in a massive displacement of lower income and elderly residents. i realize many people on the SFgate site let their fingers type before engaging the brain so perhaps its not surprising that we see the same phenomenon at the guardian.

Posted by Guest on Mar. 09, 2012 @ 2:20 pm

any time if the rules were changed. Owner-occupied 2-4 unit buildings used to be exempt but not any longer.

So no developer will risk a new build rentald evelopment because the value could all be confiscated at short notice.

The only real solution is to only build condo's - the city cannot touch them because of State law, and that is much harder to rig.

Posted by Guest on Mar. 09, 2012 @ 2:37 pm

notional target but the reality is that it is very, very expensive to subsidise housing - the most valuable commodity in the city.

So for every BMR housing unit built (and BMR is a better descriptor than the vague "affordable", someone has to pay for it. Given the recession, the mortgage crisis, the unemployment and the deficit, there's not a lot of extra money floating around. And there are of course other priorities.

So, Tim, why not just put a bond issue on the June ballot? Hike whatever tax you like (except property tax, of course, which you can't) and see if the people support you.

It's easy for anyone to say they'd like more "affordable" housing. But that takes money and everyone thinks that somebody else should pay.

Oh, and BTW, if you raise the transfer tax too much, people will own homes via companies, and then sell the company rather than the property. There's always a way if taxes become excessive.

Or of course you could support developments like the Wash St. project, and have the rich pay for those affordable units. Ooooh.

Posted by Guest on Mar. 08, 2012 @ 3:33 pm

Like within the past two years? Now there are rumors of ANOTHER increase?

Posted by Guest on Mar. 08, 2012 @ 4:22 pm

keep jacking up the very few options they have i.e. transfer tax, parking rates and fines and, if Lee ever let them, some type of payroll tax hike.

Voters and homeowners are rightly sick of this. But just imagine how much worse things would be if not for Prop 13.

Posted by Guest on Mar. 08, 2012 @ 5:17 pm

We in the progressive intelligentsia fully support '8 Washington'. All and any development proposals to build high-end condos or mega single family homes should be fast-tracked and exempt from most of the restrictive EIR requirements. This city is our playground. We should not be wasting money on 'affordable' homes, it only encourages the poor and lazy to think they have a right to live here. If they can't find a decent job and afford to pay their way they should get out of town. If they refuse to leave we should relocate them to internment camps where they can be given meaningful 'employment' on the production lines of any number of manufacturing operations that will supply us with the goods we need. They can also be bussed into the the city every day to perform the menial tasks for which they are best suited. If they object, well, one day no work-one day no eat.
We would be well advised to heed the words of Chuck Nevius; he has his finger on the true pulse of San Francisco and what our priorities should be.

Posted by h. Brownnose on Mar. 08, 2012 @ 9:51 pm

Avalon @ Ocean Ave. just posted rates for regular units (not with a view or high up in the building)

Studio - $2025 per month for a 493-615 sq. ft. new unit
1-Bedroom - $2610-2945 for a 716-871 sq. ft. new unit
2-Bedroom - $3515-4025 for a 1016-1312 sq.ft. new unit

just think how expensive the parkmerced, treasure island, and transbay terminal units will be....

just like 8 washington, essential housing for the upper-crust.....

where's there housing for students, seniors, families, and the working class of SF?

Posted by goodmaab50 on Mar. 08, 2012 @ 10:20 pm

That's always a solution to not being able to afford the city in which you live.

Posted by Guest on Mar. 08, 2012 @ 10:59 pm

people just think that they should have cheap rent and, of course, that somebody else should pay for it.

It never occurs to these people, apparently, to study and work hard, build income and prosperity, and than at the right moment their dreams can happen.

Why devote years and decades to striving to succeed when you can simply confiscate the wealth of somebody else to subsidise your aspirations?

It's just so very sad. And a slap in the face for all of us who achieved this the hard way - the American way.

Everyone wants to live in SF and then they act shocked that it's expensive. Well, gee, why do you think? They are part of the problem.

Posted by Guest on Mar. 09, 2012 @ 9:18 am

should be able to afford to?

I can't afford La Jolla, Los Altos or the Upper East Side of Manhattan either. Problem?

Posted by Guest on Mar. 09, 2012 @ 8:45 am

lets also remember that avalon decided to use low wage out of town labor to build this project in nominally middle class neighborhood.

Posted by Guest on Mar. 09, 2012 @ 2:22 pm

that is to have lower construction costs.

Posted by Guest on Mar. 09, 2012 @ 2:38 pm

There is almost universal agreement among all sides of the SF housing debates that the "free market" can ONLY provide housing for people at the very highest income levels since there is a virtual unlimited demand for new housing in SF. Since developers are profit maximizers, if they can sell 100 units at $2 milllion each, or rent them for $15,000 a month each, they will.

The best way to achieve a mix of income levels - which the mayor and most supervisors say they want - is to require all new projects over 8 units to provide a range of housing prices, with 20% of the units sold/rented to households at > 150% AMI; 20% sold/rented at 120-150% AMI .... and finally 20% at < 50% AMI. The developers can partner with Habitat for Humanity for marketing the 80% of units sold/rented at below the 150% AMI level since HH is one of the most effective non-profits for establishing permanant affordability when the unit is sold/rented to the next household.

Developers are among the most creative business people on earth. With these new inclusionary building guidelines developers can adjust their projects to fit these requirements and help the city create new housing to meet the entire range of demographics that defines a mixed community.

Posted by Guest on Mar. 09, 2012 @ 4:39 pm

Developers would simply build less, or build cheaper or build elsewhere. You can't legislate people to provide housing, and certainly not punish them for doing so. The more onerous the restriction you place on new build, the less that gets built. That's just human nature. so yes, developers will "adjust their projects". They'll be cheaper, smaller, nastier or non-existent.

And there isn't universal agreement on this topic at all. Everyone I speak to wants to see LESS rules and regs, not more. Having a meddling, interventionst city government for the last 40 years hasn't solved the housing problem at all - they've made it worse.

If you want to sibsidise housing then it can't be on the backs of developers who can simply move elsewhere in the Bay Area. While if you think we'll all vote to pay higher taxes to give cheap rent to people who'd be happier in Oakland anyway then, quite simply, it ain't gonna happen

Posted by Guest on Mar. 09, 2012 @ 5:42 pm

Find something that the city wastes money on and close that operation down and give the money to some other pet project.

Perhaps expect the city to set priorities based on "need" instead of Utopian ideals.

For example close down the cities labor and environment departments and spend that money on something important.

The taxpayers shouldn't be required to finance every stupid progressive dream.

Posted by me me me me me me me me progressive me me me me me on Mar. 09, 2012 @ 8:52 am

It compels the city to make real decisions on priorities, rather than just thinking that they can decide anything and it will be funded.

Posted by Guest on Mar. 09, 2012 @ 11:32 am

My understanding from the deliberations surrounding Prop B in 2008 was that the real estate transfer tax could not be programmed, that it had to go to the general fund as a matter of state law.

Posted by marcos on Mar. 09, 2012 @ 9:31 am

The answer is another increase which goes into the general fund?

Posted by Guest on Mar. 09, 2012 @ 3:12 pm

Too bad for them that the voters aren't stupid. In fact, too bad for them that we have to approve any of this nonsense.

Posted by Guest on Mar. 09, 2012 @ 5:44 pm

Voters came within a few thousand votes of approving Prop B in 2008 which dedicated existing general fund revenues to affordable housing, but the campaign was terribly run, almost as if they wanted it to fail because Newsom told them if it passed, then they'd get none of the money.

Posted by marcos on Mar. 09, 2012 @ 6:06 pm

All that does is drive out the economic base of the city.

Public power "almost passed" too. A lot of things "nearly pass". But in the end, sanity prevails.

Posted by Guest on Mar. 09, 2012 @ 6:21 pm

It is suppy and demand, the builders would be happy to build, but the cost of doing anything in the city is so high. The reason for why mostly things for the upper incomes, the land costs are so high, the zoning or NIMBYism is the big reason why prjects get smaller and smaller or not built at all. When you are done with planning your projects it ends up being mostly for the wealthy upper incomers.

Posted by garrett on Mar. 14, 2012 @ 11:01 am