Can the tech boom solve our housing crisis? No, but it can make it worse

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HAC's mantra.

 San Francisco Housing Action Coalition and San Francisco Magazine posed an intriguing question at a forum they sponsored last night in the W Hotel: “San Francisco’s Housing Crisis: Can the Tech Boom Help Us?” Unfortunately, it wasn’t a question they ever really addressed at an event of, by, and for developers and their most ardent supporters.

Instead, the event was mostly just pro-development boosterism supporting HAC’s goal of building 100,000 new homes in SF over the next 20 years, and the discussion seems to show that the tech boom will exacerbate the housing crisis without ever addressing it, particularly given the local tax breaks and subsidies Mayor Ed Lee keeps giving the industry.

“San Francisco must radically increase its anemic housing production,” HAC Executive Director Tim Colen said during the introduction.

The pro-development cheerleading was slightly offset by the dose of reality offered by panelist Peter Cohen of the San Francisco Council of Community Housing Organizations, who noted that market rate developers aren’t building for today’s San Franciscans, 61 percent of whom make less than 120 percent of the Area Median Income. 

“We don’t believe the market will ever touch the 120 and lower,” Cohen said, later offering, “How do we build for the kind of San Francisco we have now?”

San Francisco Magazine Editor-in-Chief Jon Steinberg, who moderated the panel, said this event grew out of an important and widely acclaimed story that David Talbot wrote for the magazine last fall, “How Much Tech Can One City Take?” that raised critical questions about the wisdom of the big bet that San Francisco has placed on an industry driven by speculative bubbles.

“We got more responses from readers than anything we published in our history,” Steinberg said of the article, before shamefully expressing second thoughts on publishing it. “I felt the writer had been a little hard on our friends in the tech industry.”

He introduced UC Berkeley Economics Professor Enrico Moretti, whose 2012 book “The New Geography of Jobs” argues for reducing regulations that hinder housing production in cities, by saying that if he’d read it before publishing Talbot’s excellent article, “I think it would have had a little different tenor.”

Yet Moretti’s presentation was an overly simplistic Economics 101 argument that housing prices go up when demand is strong and supply is weak. “It doesn’t take a degree in economics to know those workers will bid up the price of housing,” Moretti said after noting San Francisco added 21,500 job but just 2,548 new housing units last year.

That’s the basic line we hear a lot these days, that only a massive housing construction boom will keep housing prices down and prevent mass displacement. “The only answer is to radically increase the supply,” said SPUR Executive Director Gabriel Metcalf, noting that means tossing out many of the city’s historic preservation and height and density restrictions. “All we have to do is get out of the way and allow housing to increase to make it normal again.”

Metcalf confidently predicted that housing prices and rents would drop if the city pursued that kind of unfettered housing boom, offering to buy Cohen a beer if he was wrong. Yet even Moretti’s research shows that Metcalf would probably lose that bet.

Moretti compared San Francisco to Seattle, which is also experiencing a comparable high-tech job boom that exacerbated a housing supply shortage, which Seattle responded to by following the prescription of HAC and building thousands of new condos in the downtown core.

The result was that rents in Seattle have increased 31 percent less than San Francisco’s, which he called significant, despite the fact that rents are still on the rise there even with a massive influx of new people and condos and all the infrastructure challenges that presents (it’s widely accepted that new development in San Francisco doesn’t pay for the full cost of infrastructure needed to serve it, which is a huge issue in the transportation sector alone).

Nobody had a good answer to Cohen’s point that building tons of market rate housing won’t actually do much to prevent the displacement of a majority of current city residents. As he put it, “What’s missing is who is that housing for, who is it actually serving?”

Metcalf welcomes the wholesale transformation of San Francisco – “It will be a change, a total change, and guess what? That could be great.” – but even he argues for the importance of policies that protect those on the bottom half of the economic scale, from rent control to more government-subsidized affordable housing production.

As Metcalf, one of the biggest market rate development cheerleaders in city, said, “If it were not for rent control, I would have been forced out of the city by now.”

Comments

Yes, thank you for that. I'm seeing more and more people talk about ending welfare for the wealthy (Proposition 13).

Posted by Guest on May. 15, 2013 @ 4:07 pm
Posted by Lucretia Snapples on May. 15, 2013 @ 4:16 pm
Posted by Guest on May. 15, 2013 @ 4:18 pm

the negotiating table?

Or were you thinking of an even more uneven playing field?

Posted by Guest on May. 15, 2013 @ 4:17 pm

Today I'm reminded of one thing: It's futile to respond to trolls for any reason. Even when one tries to "engage" in a reasonable and rationale conversation with one of the trolls (Lucretia Snapples, right-wing Guest, anon, matlock), it's a complete waste of one's time because "reasonable and rationale" are not why they're here. They are here entirely to disrupt, inflame, bait, hate and to write things most mature, well-adjusted and rational people would never think of saying to anyone to their face. I don't know why the Guardian continues this forum as it is. It is a cesspool. Is it for hits for advertizing purposes? Is that why they allow these trolls free-reign to say anything they want? Because this forum is really not worth being on the way it is. It's unreadable, annoying and really no different than the useless forum at SFGate, which I can't stand. I stopped reading that sometime ago. I appreciate many of the Guardian's article (such as this article and I appreciate them keeping up on this tech shit), but I can't stand the forum. What a cesspool and it's because of the rabid right-wing trolls. That's it.

Posted by Guest on May. 15, 2013 @ 5:03 pm

That should be "rabid, nasty, chip-on-both-shoulders, bile-filled, venom-filled, full-of-anger and miserable right-wing trolls."

Posted by Guest on May. 15, 2013 @ 5:18 pm

Bad day? It's hard work spending all day hating. People should feel more sorry for you.

Posted by Guest on May. 15, 2013 @ 5:26 pm

in, and are now seeking to blame SFBG for that?

Posted by Guest on May. 15, 2013 @ 5:24 pm

>"it’s widely accepted that new development in San Francisco doesn’t pay for the full cost of infrastructure needed to serve it, which is a huge issue in the transportation sector alone"

Not so sure that is true.....lets say that someone builds 1 condo and sells it to a couple that works for Zynga for $1 million. Which means $11,000 a year for the city. Now this couple will also pay for their water, refuse and DMV if they have a car. They dutifully use their Clipper Card when they take city transit. They'll pay state and federal income taxes, some of which will come back to the city. Much of what they spend locally is subject to the city's gross receipt tax.

So $11,000 a year isn't enough to cover the rest? Is their place going to need the SFFD every year? Are they likely to need more than an hour of SFPD help a year? Are we going to have to build a sewer directly to their home? Will we need to add a Muni line for them?

Another thing that we constantly hear from SFBG that doesn't quite ring true.

Posted by Troll on May. 15, 2013 @ 5:17 pm

That's just said to justify the extortion and bribery that goes along every time someone wants to build something.

In particular, high-density structures on existing transit routes carries little overhead. It's all a shakedown.

Posted by Guest on May. 15, 2013 @ 5:25 pm

What is missing is the taxes and ensured infrastructure development prior to the negotiated approvals of projects.

SFSU-CSU is paying 2 mil. On the 19th ave impacts... Ridiculous

Parkmerced just sold the management duties to Essex properties. Again without utilizing the mills act on the town homes, and redoing the towers and doing an infill town home scheme,parkmerceds future proposal is again in question. And still legally on challenge by SF Tommorow and PmAC.

While Tim Colen and SPRU cheer on growth without looking at impacts we will soon see development like ocean ave, where transit near city college is close to grid locked.

Transit cannot wait, we cannot go longer without serious upfront construction of train linkages and looping like the L taraval to stern grove or shifting a north south route to daly city Bart up front...

It's not just the techies driving the future, it's the need to have the designers like the Trekkies provide a better envisionmentw not with a wall on the waterfront but decent transit improvements before you put in high end homes and a warriors arena...

Get the horse in front of the cart....spur is driving the city with the SFHAC without serious consideration of the real needs of the city up front....

Posted by Guest on May. 16, 2013 @ 3:35 pm

services. First, attract the business, and only then can you spend the money you extort from them.

Posted by Guest on May. 16, 2013 @ 3:59 pm

The only thing more enjoyable that watching Stevens pathetic attempt at maintaining relevance is to watch the complete shi*show that the comments devolve into!

Build absolutely nothing anywhere near anything!

This will bring back the real soul of SF!

Posted by NOT_Eric_Brooks on May. 16, 2013 @ 4:56 pm

Sierra Club, Save the Bay, Green Foothills and Marin Land Trust. If you want to find out why and how we can't build anything in the Bay Area. Check out the history of Marincello, Post War Bay Area general plan, Ag Preserve, Little Boxes on the Hillside made of Ticky Tacky.

Posted by Garrett on May. 21, 2013 @ 4:28 pm