Our three-point plan to save San Francisco - Page 6

A radical new approach to affordable housing isn't just an option anymore — it's imperative

Of course, setting aside $30 million for affordable housing means less money for other city programs, so activists are also looking at ways to pay for it. One obvious option is to rewrite the city's business-tax laws, replacing some or all of the current payroll tax money with a tax on gross receipts. That tax would exempt all companies with less than $2 million a year in revenue — the vast majority of the small businesses in town — and would be skewed to tax the bigger businesses at a higher rate.

Daly's measure is likely headed for the November 2008 ballot.

The other funding option that's being discussed in some circles — including the Mayor's Office of Housing — is complicated but makes a tremendous amount of sense. Redevelopment agencies now have the legal right to sell revenue bonds and to collect income based on so-called tax increments — that is, the increased property-tax collections that come from a newly developed area. With a modest change in state law, the city should be able to do that too — to in effect capture the increased property taxes from new development in, say, the Mission and use that money entirely to build affordable housing in the neighborhood.

That, again, is a big pot of cash — potentially tens of millions of dollars a year. Assemblymember Mark Leno (D–San Francisco) told us he's been researching the issue and is prepared to author state legislation if necessary to give the city the right to use tax-increment financing anywhere in town. "With a steady revenue stream, you can issue revenue bonds and get housing money up front," he said.

That's something redevelopment agencies can do, and it's a powerful tool: revenue bonds don't have to go to the voters and are an easy way to raise money for big projects — like an ambitious affordable-housing development program.

Somewhere, between all of these different approaches, the city needs to find a regular, steady source for a large sum of money to build housing for people who currently work in San Francisco. If we want a healthy, diverse, functioning city, it's not a choice any more; it's a mandate.

3. A Proposition M for housing. One of the most interesting and far-reaching ideas we've heard in the past year comes from Marc Salomon, a Green Party activist and policy wonk who has done extensive research into the local housing market. It may be the key to the city's future.

In March, Salomon did something that the Planning Department should have done years ago: he took a list of all of the housing developments that had opened in the South of Market area in the past 10 years and compared it to the Department of Elections' master voter files for 2002 and 2006. His conclusion: fully two-thirds of the people moving into the new housing were from out of town. The numbers, he said, "indicate that the city is pursuing the exact opposite priorities and policies of what the Housing Element of the General Plan calls for in planning for new residential construction."

That confirms what we found more than a year earlier when we knocked on doors and interviewed residents of the new condo complexes ("A Streetcar Named Displacement," 10/19/05). The people for whom San Francisco is building housing are overwhelmingly young, rich, white commuters who work in Silicon Valley. Or they're older, rich empty nesters who are moving back to the city from the suburbs. They aren't people who work in San Francisco, and they certainly aren't representative of the diversity of the city's population and workforce.

Welch calls it "socially psychotic" planning.

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