Corporate welfare boom: SF's business tax breaks jump to $14.2 million annually

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Twitter and Mayor Ed Lee
Photo illustration by Joe Fitzgerald Rodriguez
Two peas in a pod

Business tax breaks instituted by San Francisco Mayor Ed Lee and other corporate-friendly local politicians to stimulate growth in tech, biotech, and cleantech, diverted roughly $14.2 million from city coffers in 2012, records show. That's a staggering increase from 2011, when the city’s corporate welfare programs amounted to roughly $4.2 million.

The beneficiaries, mostly representing sectors that are enjoying supercharged growth buoyed by venture capital at a time when much of the economy is still floundering in the wake of the Great Recession, qualified for the tax breaks in exchange for doing business in San Francisco or setting up shop in the Central Market/Tenderloin area.

When the latest spate of business tax cuts were launched in early 2011 to keep Twitter in San Francisco and stimulate economic growth around its headquarters on mid-Market Street, critics took aim at Lee for sapping city resources with needless corporate giveaways. A 2012 New York Times analysis showed that the $22 million Twitter is expected to save over the six-year tax break makes it the largest incentive granted to a company in California, based on data going at least as far back as 2002.

The various payroll-tax exclusions — they're available for green technology and biotech firms, as well as companies operating in designated "enterprise" zones — waive a 1.5 percent tax on employee compensation expenses. Collectively, the forgone revenues from 2012 reflect taxes not collected on more than $680 million in employee compensation.

Since 2011 the amount given away has swelled as even more businesses lined up to take advantage of the handouts, and two additional tax breaks were made. The Treasurer & Tax Collector’s Office submitted the final figures in annual reports to the Board of Supervisors on Sept. 13.

Some of the tech companies receiving tax breaks are investments of venture capitalist Ron Conway, a behind-the-scenes power player with Ed Lee's ear. Read more of our coverage on Conway here.

The giveaways included $3.3 million for two companies claiming exclusions for stock-based compensation. In 2011, only Zynga qualified for this stock-based exclusion program, saving them $1.5 million in taxes. In 2012, a second company qualified for this break, more than doubling the amount given away as the value of Zynga’s tax break soared. 

A Central Market / Tenderloin payroll tax exclusion program waived payroll taxes for 14 businesses operating last year in that neighborhood — a long-impoverished area where tech and venture capital firms have been snapping up commercial office space. While the Central Market tax exclusion resulted in corporate giveaways totaling just $34,000 in 2011, the incentive resulted in about $1.9 million in forgone revenues in 2012.

Meanwhile, about $5.4 million stemmed from programs that didn't specifically benefit tech firms or mid-Market transplants. There was a payroll-tax exemption crafted to aid small business, and a surplus business tax credit, which distributed $500 to each of the 6,781 businesses that paid the payroll tax.

Speaking onstage at the TechCrunch Disrupt conference on Sept. 9, Mayor Lee touted the tech sector's soaring job growth, using an info-graphic to spotlight the city's 1,892 tech companies and 45,493 jobs that were recently added.

 

The eye-popping statistics prompted conference host Michael Arrington to query Lee on what is being done for San Franciscans who are finding it increasingly unaffordable to remain in the city. The mayor, who was sitting beside billionaire tech investor Ron Conway, acknowledged that Arrington had "a good point," and referenced an affordable housing trust fund approved by voters last year.

But at the end of the day, despite the growing imbalance, the current economic climate appears to be the exact effect Lee's administration had hoped for when it created these corporate welfare programs.

Ilan Moscowitz contributed to this report.

This report has been corrected from an earlier version.

Comments

But Facebook stock is doing great, as is LinkedIn.

Gotta love America.

Posted by Guest on Sep. 17, 2013 @ 5:58 am

Which America?

North America
Central America
South America

???

Posted by Guest on Sep. 17, 2013 @ 3:51 pm

more specifically the US. Can't argue with that - the US stock market cap is over 405 of the global market cap.

Posted by Guest on Sep. 17, 2013 @ 4:25 pm

Speaking of Twitter's IPO:

Search engine:

EXCLUSIVE-Saudi prince to hold Twitter stake, sees IPO by early 2014

By Mirna Sleiman

Excerpt:

"DUBAI, Sept 15 (Reuters) - Saudi billionaire Prince Alwaleed bin Talal says he will not sell any of his shares in microblogging site Twitter Inc when it goes public, and expects the firm's IPO to hit the market later this year or in early 2014.

The prince, a nephew of Saudi Arabia's King Abdullah and owner of international investment firm Kingdom Holding , invested $300 million in the social media giant in late 2011."

--------------

By the way, does anyone remember who was reportedly responsible for 911? 15 of the hijackers were from Saudi Arabia, but I don't see the US attacking or bullying Saudi Arabia. No, quite the contrary. Instead, there are lucrative business deals for a select group of people, i.e. the bourgeois elite.

Posted by Guest on Sep. 16, 2013 @ 7:04 pm
Posted by Guest on Sep. 17, 2013 @ 6:00 am

The only tax breaks that should ever be given are for investments and operations that result in net increases in employment here. If more people have jobs in SF, then perhaps more of these tax breaks are needed. Better these than tax breaks given to companies who invest overseas, taking jobs with them.

Posted by Richmondmam on Sep. 17, 2013 @ 5:31 am

Ideally we should just have low taxes, period.

All over the world, there are enterprise zones and development areas where taxes are lowered to attract more business there. While high taxes drive out business.

So the solution is simply - extend Lee's tax breaks. Lee was elected on a pro-jobs, pro-growth mandate and he is doing what he promised. More please.

Posted by Guest on Sep. 17, 2013 @ 6:02 am

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into petty, mean spirited, personal attacks and irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 17, 2013 @ 11:25 am

This troll barrier is a signpost to indicate to the reader that anonymous trolls are beginning to purposely diminish the conversation with a sock- puppetry: the intellectual equivalent, if you'll allow, of the swapping back and forth among themselves the right wing's propaganda seed.

The barrier is put in place to signal that there is little point in reading or adding to the thread past this point. Their points have been refuted again and again.

Proceed at your own risk.

Posted by lillipublicans on Sep. 17, 2013 @ 12:10 pm

Yes, that's right, the guy who was banned from SFGate for trolling there has somehow miraculously morphed himself into an enemy of trolling.

Does this mean you hate yourself?

Posted by Guest on Sep. 17, 2013 @ 12:25 pm

his "real" handle" with the "troll barrier" one.

If you're going to lie, cheat and troll, better that you take some care, learn some tech, and remember your previous lies.

Posted by anon on Sep. 17, 2013 @ 1:00 pm

been successful at attracting business here. The main competition is of course neighboring counties rather than Bumfuck, Arkansas

Posted by Guest on Sep. 17, 2013 @ 11:56 am

SF undoubtedly loses some money by not having a payroll tax on Twitter.

But what if the city gets more money than it loses through other taxes that it collects because these companies stay in SF (i.e. real estate tax, sales tax)? Is it not a good thing if SF ends up receiving more money in taxes?

Posted by SFRealist on Sep. 17, 2013 @ 6:26 am

Jurisdictions give tax breaks all around the world for a very simple reason - what you gain in indirect benefits far outweighs what you lose directly in foregone tax. Obviously a city that businesses love will do better than places that repel businesses through punitive taxes and regulations.

An analogy. Suppose San Mateo County gave a sales tax so that there was no sales tax there. A ten minute drive to the malls in Colma would save you near 10% on every purchase. Many SF'er would shop there.

You see the same thing in Medford, Oregon. It's a small city just across the CA/OR border but with a bewildering number of malls, outlets and stores? Why? Because Oregon has no sales tax and anyone who lives in CA north of Redding does all their shopping there.

Simple.

Posted by Guest on Sep. 17, 2013 @ 7:24 am

Actually I'm not saying the tax break is a good thing, I'm saying that what we *should* be doing is having the discussion about that calculation. My hunch is that it makes sense, but to me that's the real question here.

(I know the city says the tax break makes sense, but they're the same economists and statisticians who said the America's Cup would bring in like $2 billion, so I'm not about to trust their numbers. I'd just like to see the correct debate.)

Posted by SFRealist on Sep. 17, 2013 @ 7:35 am

the "cost" of the tax break, it is harder to accurately compute the savings and benefits, because many of them are indirect in nature.

I'd assume that someone did the sums anyway though, and the fact that local tax breaks and inducements are done universally indicates that the rationale has a solid basis.

The AC isn't a good analogy as that is a one-off, while something like a Twitter tax break is permanent. Or at least five years, as I understand it.

Benefits of the Twitter tax break include these:

1) Increased rental revenue for the city, and the taxes on that
2) Increased local spend from the workers
3) Keeps employees in Sf who might otherwise move away
4) Re-develops one of the most grim parts of the city - mid-Market
5) Puts SF on the map as a great place for new business
6) Encourages the newest and most dynamic businesses to be in SF
7) Extra hotel and restaurant revenues for guests of that business, conferences and meetings etc.

Posted by Guest on Sep. 17, 2013 @ 8:17 am

Like I said, I tend to believe that the city ends up receiving MORE in taxes in the end. It would be nice if the SFBG actually calculated those numbers instead of just looking at the one half of the equation (taxes lost) while ignoring the other (taxes gained).

Posted by SFRealist on Sep. 17, 2013 @ 2:11 pm

objectivity, they would of course research and present both sides of the story - the first thing you learn in journalism school.

But of course they do not because they are not interested in the process of honest discovery and presentation. They are interested in forwarding a particularly skewed agenda and, as such, their articles have to be biased, partisan, prejudiced and highly selective.

Posted by Guest on Sep. 17, 2013 @ 2:31 pm

instead of attacking what is clearly an advocacy journalism news source for simply doing its job

the problem with your dialog is that you are not factoring in that businesses are not by any stretch of the imagination going to leave San Francisco, or fail to locate here, without these stupid tax breaks

they are just *pretending* they will so that they can extort the tax breaks out of us

San Francisco is so beautiful and amazing that most cutting edge tech businesses will fall all over themselves to locate here, because their employees will love it

these tax breaks are nothing but the successful result of a well orchestrated extortion racket

Posted by racer x on Sep. 17, 2013 @ 8:56 pm

"San Francisco is so beautiful and amazing that most cutting edge tech businesses will fall all over themselves to locate here, because their employees will love it..."

Well their employees might love it if they ever saw it (the city)....but that's the problem.

How exactly do (and will) tech employees SEE San Francisco when they are on their gadgets every moment they are awake and riding in blackened window tech shuttles or in blackened window limos? The rare times they walk on the streets of San Francisco (from the shuttle to their home) they are looking at their gadget so they don't SEE San Francisco. They also have their groceries delivered to them. Therefore, the real San Francisco they refuse to see because they isolate themselves from it whenever possible.

In reality, they could live anywhere and might as well be anywhere because they don't see or live San Francisco. They live in their own tech bubble, devoid of the city they live in.

"these tax breaks are nothing but the successful result of a well orchestrated extortion racket "

I agree with that.

Posted by Guest on Sep. 17, 2013 @ 9:22 pm

Isolating themselves: That's true. When Twitter came in, restaurants in the area were all excited about that prospect and the extra business they were assuming or hoping to get from the employees going out to lunch/dinner. Didn't happen. I read recently from a credible article that the Twitter deal has done nothing for restaurants and other businesses in the area.

Posted by Guest on Sep. 17, 2013 @ 9:44 pm

more workers and visitors now go there, which directly helps business there.

It's the indirect benefits of the so-called Twitter tax break that have been huge.

Posted by Guest on Sep. 18, 2013 @ 6:06 am

Twitter was going only as far as Brisbane - barely across the county line. And of course the biggest tech companies are in Santa Clara and San Mateo counties.

You can enjoy SF without working there. Ever noticed all those Google buses taking SF'ers to a place nearby where another county gets all the tax revenue?

Posted by Guest on Sep. 18, 2013 @ 6:20 am

and when we are weighing this out, we need to also consider that the mid-Market area is clearly becoming less of a shithole than it has been in the 20 years that I've lived in SF, and other such intangible benefits.

Posted by GuestD on Sep. 17, 2013 @ 8:17 am

Leave it to the SFBG to stamp its feet and hold its breath over a sum that's little more than a rounding error in the overall budget.

Posted by Chromefields on Sep. 17, 2013 @ 7:11 am

not giving any kind of break to wealthy people. (This is a tax break to companies and not people, but that minor detail doesn't concern an ideolog).

In other words, this isn't about revenues, fairness, equality or justice. It's about envy. If Steven knows someone who is poor, then nobody should be rich.

Posted by Guest on Sep. 17, 2013 @ 7:25 am

A "company" neither gets the benefit of tax breaks nor pays any tax. The millions of dollars of payroll tax breaks discussed in this article go directly to the owners of the company, with perhaps a little trickling down to the worker bees, albeit unlikely.

A company or trust or partnership is entirely fictional, as mere alter egos of their owners. Different entities may cause less or more tax or provide more or less tax benefits to the owners, depending on which tax loophole is being discussed, but in the end it's the shareholders, worker bees, and/or customers of the company that either pay any tax or receive any tax benefits given to the company.

And Guest (anon), you can try to reframe the issue being discussed in this article (as per your usual technique), but it doesn't change the reality everyone else is discussing. The payroll tax give-away to companies like Twitter isn't about envy. The question instead is the specific issue of whether the city really benefits from these multi-million dollar tax breaks. Personally I hate to watch the "city family" get played by political insiders, wealthy businesses, and powerful legal and lobbying groups, but maybe that's the only way politicians can stay in power is by giving wealthy people multi-million dollar tax breaks. It sure seems to work in federal and state governments where multi-billion dollar companies, wealthy landlords and companies that ship jobs overseas are also given massive tax subsidies every year.

Posted by Guest on Sep. 17, 2013 @ 11:01 am

Neither a payroll tax, an income tax, or corporate tax apply at the individual level. Rather, they decrement EBITDA to yield the net earnings, which in turn fund dividends, stock buybacks and retained earnings.

So a break in corporate taxes only benefits owners and executives to the extent that they boost the dividends or share price - that is indirect at best since both could decline for other reasons.

Your other question is better i.e. do these tax breaks pay for themselves? The fact that cities and states around the globe indicate that they do, and most US cities would kill to have companies like Twitter based there. There seems little doubt that the benefits are far higher than the cost, but the cost is more easily computed.

As for the real world, yes, money helps, which is why unions routinely fund politicians to ensure that their precious benefits are retaiend no matter what the cost.

Posted by Guest on Sep. 17, 2013 @ 11:53 am

Today I was at Market/Van Ness at around 8am. I saw many tech shuttles going south and numerous black limos. These black limos started showing up about 7 months ago and have been increasing in number since. I watched as two of them opened the doors for their passengers. The people who got out were in their twenties and white males. They are always young, white males. Is it that important to them that they have to show off their wealth? What shallow and superficial elitist people! One person does this and another person sees it and has to do it. Sheeple. Those limos don't come cheap with the driver included. This is all about "Keeping up with the Joneses." I'm wondering if these black limos will eventually replace the tech shuttles so there will be a stream of black limos going to Silicon Valley.

I have news for the "I think I'm better than the rest of you" elitist techies: NOBODY CARES IF YOU'RE WEALTHY.

Why don't you give the money you waste on your black limo to homeless programs or feed the homeless instead of having to be all pretentious. Or help pave our potholed streets in San Francisco with that money. Put that extra wealth to something useful for the city instead of wasting it on your pretentious "Keeping up with the Joneses" issues. And take the tech shuttle instead of the limo, useless.

Posted by Guest on Sep. 17, 2013 @ 4:13 pm

are more successful than you enjoy?

The politics of ency is always ugly, but rarely uglier when it leads to baseless stereotypes like yours as a basis for hatred and discrimination.

Posted by Guest on Sep. 17, 2013 @ 4:30 pm

Are you always this bitter and sour? Maybe you need to take a walk around the block.

Posted by Guest on Sep. 17, 2013 @ 5:07 pm

someone somewhere has a better ride than you do.

Hint: Maybe they create more economic value than you do and so get rewarded better? You think?

Posted by Guest on Sep. 17, 2013 @ 5:24 pm

Well again, you sound so bitter, angry, vengeful and full of gastric acids. You don't know anything about my finances to even venture a guess on them. I could be a billionaire and a paid troll like you. Maybe relax some and you'll feel less need to rant. Have a nice soothing dinner. That might help you feel better and then you won't feel the need to rant endlessly about someone you know nothing about with your baseless assumptions. Go out and look at the moon. It's full tonight. Spend some time with that. Go troll the moon for a while.

Posted by Guest on Sep. 17, 2013 @ 8:10 pm

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into petty, mean spirited, personal attacks and irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 17, 2013 @ 8:59 pm

Surely you jest. A limo is a "better ride?" Hardly, although that is elitist know-nothing thinking so I'm not the least bit surprised you said that. Here's a hint: A limo is on the same rough streets and hits the same pot holes any other vehicles does. I guess you didn't think of that. I'd prefer to be on the Muni metro frankly with the real people rather than be in a stuffy limo with blackened windows complete with elitist snoots who think they are too good to be the masses.

Posted by Guest on Sep. 17, 2013 @ 9:09 pm

Plus you have a drinks cabinet, air-con, a sound system papers and magazines, coffee etc.

It's a different world from the one that you live in, so I wouldn't expect you to understand it.

Posted by Guest on Sep. 18, 2013 @ 6:17 am

Oh tell it like it is. They're nothing but wealthy young white trash for the most part. They've moved to this city---because of TECH!!!!!!!----and they have zero respect for the city, zero respect for its history, its neighborhoods, its culture or anything about this city (not that they know anything about this city or are interested in it other than where the got-to-get-drunk bars are), nor do they have any interest in the people already living here. That's why they isolate themselves buried in their gadgets 24/7 and on their luxury tech shuttles instead of living close to where they work...the South Bay/Palo Alto etc. All they are concerned about is: "me, me, me" as well as when they can get drunk next and throw up on the sidewalks here in the city.

The wealthy are the ones who complain the most about the homeless. Why don't they do something positive about the homeless since they are the ones who have the money who could help the homeless. Why is it that people who have the most money do the least for society as a whole (and not just for the bourgeois elite)?

Posted by Guest on Sep. 17, 2013 @ 8:00 pm

The urbanists and transportation advocates have done a marvelous job extolling the benefits of dense city living, where a region's cultural attractions, night life, finest restaurants, and functional transit systems combine to deliver a much higher quality of life than the surrounding suburban towns. In the 1980's the "war on crack" helped clear out poorer people from the city and into jails, public housing projects were dismantled, and property speculators moved in to upgrade the housing stock making it more appealing to higher income residents.

Many cities in the US are going through a similar transformation where the wealthiest people of a region are moving back to the city, displacing existing residents who can't afford the much higher property values.

San Francisco is particularly impacted by this massive change in attitude towards city living since it is surrounded by a white-hot tech industry, along with the financial and legal firms that cater to these companies. Younger, affluent tech and professional workers are naturally drawn to the city with its dining and entertainment options and its close proximity to thousands of other younger workers also drawn to the city experience.

When tens of thousands of new higher paying jobs are added to the region every year over a 20 year period, and when new housing construction has lagged except for new housing built in the suburban fringes, of course there is going to be displacement of lower and middle income people from the urban core. Ironically, many of the people displaced didn't need to own a car while living in the urban core, but they are required to become car owners when they move to outlying regions since there is no reasonable way to get to one sprawl location where their housing may be located to another sprawl location where their job may be located. And with many people working 2 or 3 jobs to earn enough income to pay rent and other living costs, they may work at multiple places located tens of miles away that are not covered by transit without spending a couple of hours on buses in any direction.

Aside from a few hundred people displaced from the city every year, most everyone else in the city is very happy with the transformation. Politicians get higher tax revenue from the more affluent residents; landlords and property developers make outsized gains from the increasing property values; the local businesses benefit from the bigger wallets of the new residents; and the local non-profits have wealthier patrons to fund their activities.

PS - There's a new spelling editor in the comments section now? Nice change! Now if a registration system was adopted along with a way to block the most annoying, repetitive and obsessive posters, the comments section might become an even better place to share views and ideas.

Posted by Guest on Sep. 17, 2013 @ 9:18 pm

Did you copy most of that from the SF Chamber of Commerce website by chance? It looks very familiar. I've seen it before. It's the same smug, elitist nose-in-the-air "only the wealthy matter and are important" script almost word-for-word. Meanwhile back to reality:

David Binder Poll: SF is building too much luxury housing

Nearly two-thirds of San Francisco voters think the city is building too much luxury housing for the rich, a new poll shows. The survey, by the highly respected firm David Binder and Associates found that 63 percent of people likely to vote in the November election agreed with the statement that "the city is adding too much luxury housing that only the wealthy can afford." Only 30 percent disagreed. The opposition to the city's current policy of encouraging all high-end housing resonates not only citywide but in every single supervisorial district. Even in the conservative District 2, 59.9 percent of the voters said the city is building too much luxury housing. In District 8, 63 percent agree.

Posted by Guest on Sep. 17, 2013 @ 9:33 pm

I wish I had known it was on the CofC website since I could have saved a lot of time by just copying it. My observations were my own, however, based on living in SF from the 1970's to early 1990's before being evicted by a "nice gay couple" who converted our 4-unit building to condos. Even then we couldn't afford the much higher rents compared to what we were paying for a rent-controlled apartment and had to leave the city for the wastelands of suburbia. And since the rents have gone up 300-400% compared to the early 1990's, there's no way a modest income household can afford to live in SF unless they win out on the low-income housing lottery (1 in 1000 odds that many of us can't play anyway since our income is above "low-income.") Fortunately humans are quite adaptable and there are interesting and fun people all across the globe, even in the most desolate suburban environments.

And just because a poll says SF voters would prefer a mix of more moderate housing options (very good news for future ballot initiatives, btw) doesn't mean the observations made about the influx of higher-income residents over the past 20 years is incorrect. I suspect 1/2 of the city's renters are in exactly the situation we were in: when the rent-controlled housing goes away there is no way to stay in the city with its very high current rents. The city is fun and beautiful, but spending over 1/2 of one's income to live there isn't very fun or smart. The city is for high-income people now (and has been for the past 10 years at least), and for a few poorer people who win out on the almost impossible odds of getting a low-income, subsidized housing unit.

Posted by Guest on Sep. 17, 2013 @ 10:07 pm

"Fortunately humans are quite adaptable and there are interesting and fun people all across the globe, even in the most desolate suburban environments."

Well you would know all about "desolate suburban environments" since it's been proven repeatedly on this site that you don't live in San Francisco. You just pretend to for purposes of your paid trolling job for the one-percent.

Posted by Guest on Sep. 17, 2013 @ 10:30 pm
Posted by Guest on Sep. 18, 2013 @ 6:26 am

"We often don't like to face harsh truths..."

Well you don't, and you can only speak for yourself. As smug and elitist as you like to pretend to be as a shill for the 1%, you don't speak for "we."

Posted by Guest on Sep. 17, 2013 @ 10:38 pm

The new prosperity has improved most everything, especially restaurants and air links, and made several neighborhoods cleaner and safer.

There are still too many homeless people, petty criminals and other annoying folks here though as SF's benefits are too generous, attracting them from elsewhere. So there is more work to be done.

Oakland has done a good job of absorbing many SF'ers who no longer have the fiscal power to make living in SF viable or desirable, and I feel sure they are happier as a result.

Posted by Guest on Sep. 18, 2013 @ 6:25 am

this is simply a troll barrier

it is a signpost to indicate to the reader that other anonymous posters on this thread are beginning to purposely diminish the conversation into petty, mean spirited, personal attacks and irrelevant bickering

the barrier is put in place to signal that there is probably little point in reading more replies in the thread past this point

proceed at your own risk

Posted by troll barrier on Sep. 18, 2013 @ 9:01 am

The multi-million dollar city tax breaks given to big businesses like Twitter make sense if the goal is to create a city mostly for the wealthy and prosperous, which appears to be the motivation of the Board of Supervisors and mayor when they enact these tax giveaways.

In a Washington Post article today discussing proposed increases to DC's height limits, there's this quote:

"[Harriet] Tregoning worries about land values becoming so high that lower- and middle-income people will be forced out of the District. “I love San Francisco, but I don’t want to live in a city that is only for the wealthy,” she says."

Although SF has thousands of residents living in SRO's, small studio apartments and affordable housing projects that skew the mean and median incomes reported for the city, any house hunter or tenant looking for a new place to live in the Bay Area is keenly aware that housing costs in San Francisco preclude the vast majority of Bay Area residents from being able to afford SF. And at least 50% of all rent-controlled tenants are keenly aware that once their building is converted to TIC units they too will no longer be able to call SF home unless they want to live on its streets.

What the WaPo article doesn't discuss is whether the proposed Washington DC apartment high-rises will be filled with residents with a broad range of incomes, or merely become towers filled with high-income residents, corporate owned housing and pied-de-terres for the world's wealthiest families, similar to what has occured in SF with its robust high-rise construction over the past 10 years.

Housing policies are a mess in the entire US and a mirror of its increasing societal divisions, where the top 30% of households have significant wealth from the ownership of housing, apartment buildings and commerical buildings, while the bottom 70% struggles with high rents, high mortgage payments and reduced standards of living.

http://www.washingtonpost.com/lifestyle/style/dcs-height-limits-the-risk...

Posted by Guest on Sep. 19, 2013 @ 11:00 am

obviously dirt-poor, shabby, miserable-looking people in most parts of the city?

There are hundreds of thousands of people in Sf who quite clearly are not rich or even in the middle, and yet somehow they all live sleep somewhere, eat decently, get around and otherwise live here.

Of course there are a good number of rich people here. Good, because we need them to form the tax base to fund all the largesse that the city loves to throw at the poor.

But there is zero chance of SF being a city only for the wealthy in any forseeable future. And it's not as if there aren't much cheaper cities all around SF for those who want somewhere cheaper.

Non issue.

Posted by Guest on Sep. 19, 2013 @ 11:10 am

One measure of a city's wealthiness is the income required to buy a house there. If you want to buy a house in SF, London, Paris, Manhattan, west LA or similar locations, best bring a very large checkbook. Most new buyers are millionaires or soon-to-be millionaires (new doctors, lawyers, dentists, MBA types, etc.)

Even renting a modest 1-bedroom apartment in SF requires about $3,000 a month, which equates to about $120,000 annual income. ($120K income less $40K in fed, state and local taxes = $80K net income, X 40% housing costs = $32,000 rent per year.)

The tens of thousands of SF residents living in SROs, small studio apartments, and low-income subsidized housing projects are not indicative of the wealth required for new residents to live in SF since few of them move out once living in reasonably priced housing.

With thousands of highly paid workers coming to the Bay Area each year to make their fortunes, and with a relative paucity of new housing construction in the 100 towns within the Bay Area to accomodate them, of course housing prices will rise in the most desirable areas to a level that matches the highest incomes of the house buyers and new tenants who want to live in high demand areas such as SF.

Posted by Guest on Sep. 19, 2013 @ 12:20 pm

the city average, which in turn was about three times my family's annual income. Easily affordable especially at record low interest rates and tax deductions.

Two SF'ers both making a normal salary of 75K a year will find the average SF home to be only five times their income - easily affordable with a 3%-4% mortgage.

There are places all over the US, and all over the world, where homes are expensive. Try buying in Aspen and La Jolla - much harder than buying in SF.

And there is always Oakland - much cheaper and just a few minutes away on BART.

Posted by Guest on Sep. 19, 2013 @ 12:54 pm

I don't agree

But I don't want to raise taxes, pass laws or whine about class to enforce my world view.

Posted by Matlock on Sep. 19, 2013 @ 5:24 pm

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