City Hall must address rising rents

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EDITORIAL Another flurry of public concern over rising rents in San Francisco — driven by one-bedroom apartments listed for almost $4,000, a well-attended forum on gentrification in the Mission, fresh residential and commercial evictions, and a poll showing 63 percent think the city is building too much luxury housing — has been ignited. And once again, it's falling on deaf ears at City Hall.

Working class residents, small businesses, and nonprofits are being driven out of San Francisco, unable to keep up in a city that increasingly caters to chain stores, wealthy residents, and tourists (both vacationers and conventioneers).

When Mayor Ed Lee and kindred politicians, who have fueled the rising rents with tax breaks and pro-landlord policies, are asked about the problem, they mouth stale rhetoric about job creation, change the subject (gee, we now have bike share!), or cite far-off and insufficient solutions like the Affordable Housing Trust Fund.

San Francisco's landlords are doing great — despite the sob stories published recently by tone-deaf local media outlets such as San Francisco Magazine — and they've actually been emboldened to start attacking rent control as somehow hurting renters, threatening the last lifeline of diversity in the city.

The whole debate has gotten so surreal that it would be funny if it weren't so serious. The future of San Francisco is at stake, yet nobody at City Hall with any clout seems to be taking it seriously. So here are a few places where our policymakers could start:

- End corporate welfare. Twitter is valued at $1 billion as it prepares its initial public stock offering, so it doesn't need a $22 million multi-year tax break from city taxpayers. In 2012, city tax breaks nearly quadrupled, reaching $14.2 million (and that's not even counting the $2 million annually that Airbnb is simply refusing to pay). Enough! We need that money more than Wall Street does.

- Hold developers accountable. Lennar Urban has been sitting on public land in southeast San Francisco for a decade while housing officials just let it slide. Lennar should front-load affordable housing or lose its land. Threaten a citywide moratorium on all market-rate housing permits until more low-income units come online and watch what happens. And protect existing rent control apartments from illegal subletting.

- Stand with people, not capital. Put the clout of San Francisco behind Richmond's threat to buy underwater mortgages, using eminent domain if necessary, as Sup. David Campos proposed. Mayor Lee's Housing Authority "reforms" should cater to residents rather than developers. Push for state-level reforms like pro-tenant changes to the Ellis Act, a Prop. 13 split role, and the right to control commercial rents and vacancies.

It's time to change the conversation.

 

Comments

rents, either directly or indirectly. Facts:

1) SF cannot limit rents on new tenancies. That's State law.

2) SF cannot prevent Ellis evictions. Again, state law.

3) SF cannot prevent TIC formations, because TIC's are a form of ownership and not a sub-division.

4) SF almost definitely cannot adopt the "Richmond solution" because of legal and constitutional issues. And even if it could, Fannie/Freddie would red-line SF for lending and SF would find it very hard to float Muni bonds.

5) The Twitter tax break is old news, is existing law, and there is nothing that can be done about it. But for that, Twitter would have elft and SF would have lost all those revenues. And mid-Market would still be full of dealers and hookers.

6) People are increasing using AirBnB and the like to get around rent control. Rent control doesn't work and people find ways to do end runs around it rather than risk having a "lifer loser" in your home forever.

Posted by Guest on Sep. 24, 2013 @ 2:44 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 reactionary hyperbole and/or 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. 24, 2013 @ 8:31 pm

Means Test Rent Control. High income tenants should not be allowed to hoard housing at subsidized rents.

Posted by Guest on Sep. 24, 2013 @ 3:07 pm

Makes sense, although the limit there is set quite high - 150K a year, I believe.

for SF, I'd prefer to see around the average i.e. 75K a year. If you're above average, you don't get the subsidy.

Posted by Guest on Sep. 24, 2013 @ 3:20 pm

None of these are solutions to the problem. However, why not make all rental revenues subject to Business Tax? Perhaps if we broadened the tax base, tax rates could be lowered for employers, bringing jobs to the city. But SF has a SPENDING problem, not a REVENUE problem.

Posted by Richmondman on Sep. 24, 2013 @ 3:55 pm

People have discussed in the past having a gross receipts tax on rents. Oakland has one, apparently, but it's tiny. Same problem with a business tax or similar. It would have of on;y two effects. Either it would drive up rents because landlrods could pass it though to tenants. Or if it could not be passed through in some way, it would simply drive more landlords to Ellis and exit the business.

The problem ultimately isn't rents but the gradual transition of homes from renting to owner occupied. While the new rentals being built are exempt from rent control anyway.

Several thousands RC units permanently vanish each year and cannot be replaced. If there were a solution to that, the city would have done it already. but there isn't.

Posted by Guest on Sep. 24, 2013 @ 4:16 pm

I've been reading the SFBG for awhile now, I know all about Twitter as the poster child of corporate welfare, just as described in the article.

But the SFBG has never explained how they wold have kept Twitter in the city when locations like Brisbane were available and presenting much better tax environments.

Twitter wasn't bluffing about moving...they DID move from their cramped SOMA building.

SFBG has never shared with us their plan for keeping Twitter in the city, providing Twitter with some cover to explain to both employees and investors why they were moving within a city that had higher taxes when more lower options were available a short shuttle ride away.

Come on, SFBG...please let us in on how you would have kept Twitter in the city!

Thanks.

Posted by Guest on Sep. 24, 2013 @ 4:19 pm

But remember that SFBG doesn't want successful businesses here. They want economic failure here so that rents become cheap again and all of life's losers can live here forever.

SFBg wants SF to be like Detroit and, if we followed their polices, it would be.

Posted by Guest on Sep. 24, 2013 @ 4:38 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 reactionary hyperbole and/or 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. 24, 2013 @ 8:24 pm

Current officeholders will do none of this. Whatcha got next?

Posted by marcos on Sep. 24, 2013 @ 7:13 pm

so it is CANNOT do this, not will not do this.

The best way to reduce rents is to increase supply, since demand is unlikely to abate. Most government tinkering to try and reduce prices leads to higher prices. Remember - the current situation is the RESULT of rent and planning controls.

Posted by Guest on Sep. 25, 2013 @ 8:03 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 reactionary hyperbole and/or 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. 25, 2013 @ 8:39 am

Prop. 13 split role = Prop. 13 split roll

Posted by Guest on Sep. 24, 2013 @ 7:43 pm

not something the city can do anything about.

Posted by Guest on Sep. 25, 2013 @ 8:03 am

I feel badly when anybody gets evicted through no fault of their own. But what the Bay Guardian seems to not understand is that Ellis Act evictions are a symptom of the problem not the problem itself. When you make owning rental property in San Francisco as onerous, unpleasant and uneconomic as possible, why should you be surprised that more and more landlords are just taking themselves out of the rental business? So called "progressives" pursue housing policies that succeed only in reducing the supply of housing, discouraging landlords from investing in their properties and driving up the cost of housing outside rent control’s reach. San Francisco enforces rent control by suppressing annual rent increases to 60 percent of the rise in the cost of living. Over the last decade, permitted annual increases have averaged 1.25 percent. As costs — building owners’ tax, maintenance and other expenses — have increased at an annual rate substantially higher than that, every year owning rental property becomes less economically viable. Under inclusionary rules, market-rate and affordable housing in San Francisco are developed in tandem — so opposition to market-rate projects is, by definition, opposition to their affordable equivalent. And tenant activists are among the most ardent opponents of market-rate housing. Therefore, tenant activists should be surprised this is where the city’s rental market is heading: It’s where they’ve driven it and if they need to know who is to blame then they should look in the mirror.

Posted by Guest on Sep. 25, 2013 @ 8:39 am

Controls on rents drive up the rents on new or vacant unit, and increase the incentive to evict tenants.

While controls on planning and new development ensures that there can never be enough units to satisfy the demand.

Taken together, the argument to Ellis a rental building and sell the units as TIC's becomes compelling. And if the existing owner doesn't want to do that, he ends up selling the building to someone else who will.

There are a couple of property investment partnerships who specialize in buying up buildings with low rents, vacating them, remodelling them and selling them on. In fact, you don't even need to remodel - a simple buy, Ellis and see strategy can get you a quick and easy 20% to 40% profit in a short time with no risk. Investors love deals like that, and why shouldn't they?

Posted by Guest on Sep. 25, 2013 @ 8:49 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 reactionary hyperbole and/or 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. 25, 2013 @ 9:05 am

Troll?

Isn't the definition of a "troll" is somebody who repeats the same thing over an over again? And what comment has been posted that is "mean spirited" or "personal attacks?"

Posted by Guest on Sep. 25, 2013 @ 9:25 am

trolling, so he should be an expert on the subject.

Posted by Guest on Sep. 25, 2013 @ 10:29 am

A troll is someone who expresses uncomfortable truths.

Posted by Guest on Sep. 25, 2013 @ 10:43 am

hounded, harassed and stalked here for taking the risk of being honest and open.

Posted by Guest on Sep. 25, 2013 @ 10:51 am

are insuring for themselves that they will be some of the first to the tumbrils.

Posted by Guest on Sep. 25, 2013 @ 9:33 am

Lilli/racer x is in a pretty bloodthirsty mood today, isn't he?

Posted by LOL Barrier on Sep. 25, 2013 @ 9:49 am

and I am neither lillipublicans nor racer x, whom I believe are different people.

Real estate speculators who profit from throwing people out of their homes are the bloodthirsty ones, Ellis Act be damned.

Posted by Guest on Sep. 25, 2013 @ 9:57 am

Even if you could see their IP addresses, that wouldn't prove it.

The Ellis Act only exists because rent control went too far. It is the balancing item, ensuring that the risk of owning rental property does not exceed an unbearable level.

Posted by Guest on Sep. 25, 2013 @ 10:31 am

protect or increase their profits. Big whoop. Their days are numbered.

Posted by Guest on Sep. 25, 2013 @ 10:43 am

that it wasn't sponsored by large real estate speculators or investors or developers at all. It was provoked by a small mom'n'pop landlord who was prevented by his city (not SF, as it happened) from leaving his unit vacant or from charging a market rent to a new tenant when it was vacant.

Such constraints were then held to be un-constitutional by the courts and the Ellis Act merely enshrined that ruling.

A little learning would help you understand the dynamics better.

Posted by Guest on Sep. 25, 2013 @ 10:54 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 reactionary hyperbole and/or 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. 25, 2013 @ 12:24 pm

Ellis doesn't exist because of rent control. It's a state law and most areas of California do not have rent control.

Posted by Guest on Sep. 25, 2013 @ 1:51 pm

had the strictest rent control in the State.

Obviously it has little relevance outside of rent-controlled cities since a LL can evict or raise the rents without restriction in those places anyway.

but it was the excesses of cities that do have rent control, like SF, Berkeley and Santa Monica that directly led to Ellis. And Costa-Hawkins if you want tor esearch it.

Posted by Guest on Sep. 25, 2013 @ 2:04 pm

the ellis act was quickly passed into law once real estate magnates noticed that cities and counties were starting to pass rent control ordinances, and that they would be quite properly fucked out of screwing everyone else, if this continued

the whole point of ellis was to block the rest of the cities and counties in the state from passing rent control

and to encircle existing rent control ordinances to keep them from expanding

and unfortunately it worked

we must repeal ellis as quickly as we can to return california housing to affordability so that the economy can become strong again through increased consumer spending

Posted by racer x on Sep. 25, 2013 @ 2:16 pm

Ellis was necessary only because some cities (not SF, ironically) pushed rent control too far. For instance both Berkeley and Santa Monica passed vacancy control, while SF never did. Even so, the costa-Hawkins Act passed in 1996 banned vacancy control.

Santa Monica went even further. When their vacancy control caused landlords to not re-rent when they had vacancies, Santa Monica tried to make it illegal for a landlord to leave that unit vacant rather than rent it out.

A LL sued the city claiming that was unconstitutional and a taking, and he won, The Ellis Act then merely ratified the court's ruling.

So you cannot repeal Ellis because that would be unconstitutional.

Posted by Guest on Sep. 25, 2013 @ 2:40 pm

but thankfully it's not true, and as soon as the legislature gets its act together it can strike down ellis

Posted by racer x on Sep. 25, 2013 @ 3:13 pm

Research Nash versus the City of Santa Monica.

http://www.wehonews.com/z/wehonews/files/1General%20ellis%20overview.pdf

It's possible to change the details of the Ellis Act, such as relocation expenses and notice periods. But the principle of it cannot be reversed without a change to the CA Constitution, and even that could be bounced by SCOTUS.

Posted by Guest on Sep. 25, 2013 @ 3:19 pm
Posted by anon on Sep. 28, 2013 @ 7:45 am

If you want to address rising rents, address the need for massive (and necessary) development. This city needs 100,000 housing units not in 10 years, they are needed NOW.

Posted by Guest on Sep. 25, 2013 @ 9:26 am

I agree. But the same "activisits" who complain about the high rents are the same people who pursue housing policies that succeed only in reducing the supply of housing. Under inclusionary rules, market-rate and affordable housing in San Francisco are developed in tandem — so opposition to market-rate projects is, by definition, opposition to their affordable equivalent. And tenant activists are among the most ardent opponents of market-rate housing. So what you have is a situation where these activists have created or at least made worse the very problem they complain about.

Posted by Guest on Sep. 25, 2013 @ 9:38 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 reactionary hyperbole and/or 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. 25, 2013 @ 9:43 am

build dozens of BMR homes. Progressives would rather slap a rich person than help a poor person.

Posted by Guest on Sep. 25, 2013 @ 10:29 am

Well, the problem is even more complicated than that. In part because developers often don't want to be bothered with market rate rental housing. Let alone the idea of "market rate". They realized long ago that it costs almost as much money to build reasonable housing as it does to throw in some granite countertops and call it "luxury" then turn around and sell it as a condo at a ridiculous price. Because of the lack of housing and the stunningly large number of people with more money than sense they end up being bought. Just like people who bought houses they couldn't afford because everything was overpriced. Rather than caring about what the market will sustain they only aim at the top percentage and when that's all that's available people will inevitably pay what they can't afford.

At the same time "affordable housing" rarely is much of either. It's about putting in the tiniest studio apartments possible and then citing that "affordable" means 15% above the median income so charging $2,200 a month for that studio is considered acceptable. They're forced into awkward spots of the development that would otherwise be poorly utilized or problematic to work around.

And to top it all off none of them will have rent control so the prices will quickly lurch all over the place as landlords hear that some people are making more money and want to be a part of that.

The only way we're going to get out of this problem is to start relaxing height restrictions and building large high-rise complexes. Old, crumbling Victorians sub-divided into two or three flats simply isn't the solution to housing in a city this dense. We need to be building up, not out. With more and more housing available prices will finally start to stabilize. Rather than only chasing the high end it will become possible to make more money through volume.

Posted by Belgand on Nov. 05, 2013 @ 6:29 pm

under-utilized wasteland in the SE of the city. We only lack the political will to help the poor. The politicians would rather the poor moved to Oakland, which is what is currently happening.

Posted by Guest on Sep. 25, 2013 @ 10:32 am

By which I mean both the SE and Oakland. You're not going to convince people to want to live there until you make it seem like a reasonable place to live. And as soon as you do that these days the place gentrifies overnight as landlords rush to outdo each other seeing who can charge more for rent.

Posted by Belgand on Nov. 05, 2013 @ 6:30 pm

Businesses, jobs and entertainment spring up around population densities and a neighborhood materializes.

Just look at the area around the ballpark for an example.

Posted by Guest on Nov. 05, 2013 @ 6:44 pm

made without a lot of thought. You must be writing legislation for David Campos

Posted by Richmondman on Oct. 02, 2013 @ 10:07 am

How the EFF is putting a moratorium on market rate housing supposed to do anything but make things worse?
Does that stop wealthy people from coming here and gentrifying marginal neighborhoods?
I am really scratching my head on this one.

Posted by Guest on Sep. 25, 2013 @ 9:36 am

a valid policy for reducing rents, when it has the exact opposite effect to anyone who has done even one class in economics?

Posted by Guest on Sep. 25, 2013 @ 10:23 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 reactionary hyperbole and/or 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. 25, 2013 @ 2:18 pm

Of the three initiatives proposed:

1 End corporate welfare.
2 Hold developers accountable.
3 Stand with people, not capital.

Only one, "Hold developers account' (i.e. discourage the buying up and holding of undeveloped properties) would have any effect on SF housing costs. The only way 1) could improve the housing situation is by suppressing employment to such an extent that demand was finally diminished, and 3) while a humane policy that I agree with, would probably have the perverse effect of increasing housing costs as keeping those units from being foreclosed upon and resold or rented by the mortgage institution suppresses the over residential housing supply.

I have to say that it's very disheartening to hear this constant chorus of proposals from community activists and advocates for the poor that would at best make no difference to the unafordability of SF or, in fact very often, make it worse. Indeed it is such advocates who have helped put in place a raft regulations and restrictions that make it impossible or heavily discouraged to build dense residential neighborhoods. And since increasing the supply of housing is more or less the only mitigation against soaring rents, such advocates, inadvertent or not, bear a far higher responsibility for the decimation of SF's black and working class neighborhoods than greedy developers.

Posted by nico on Sep. 25, 2013 @ 10:17 am

We have a high demand for housing. If you limit supply while demand is high, prices rise. Demand is outside the city's control--it comes from the general Bay Area economy. Supply is in the city's control. We made some small steps to increase supply, but we need to do far, far more.

(Not just us. Also the peninsula. Places like Palo Alto, Sunnyvale, etc. need to allow taller residential buildings in their downtowns or else housing will stay ridiculously expensive.)

Overall, this is a good problem. Cities like Detroit don't have the problem of high demand for housing. Their problems are much worse.

Posted by SFRealist on Sep. 25, 2013 @ 10:25 am

While #1 is best re-stated as "turn SF into Detroit and rents will drop". Detroit just filed BK.

As for regulating land banks, it could also make the situation worse. If it is not economic to build on land and you are barred from leaving it vacant, then you will just sell it. And if the rule carries over to the new owner, then that will cause the value to drop, but it will also discourage anyone investing in land, which won't help create more housing.

There is only one real solution - relax planning controls and build, build, build. But progressives don't care about the poor enough to actually construct anything - they just want to take pot shots at those who do.

Posted by Guest on Sep. 25, 2013 @ 10:26 am

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