One percent assault the waterfront

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Condos for the one percent: the 8 Washington project

While the 99 percent are fighting to hold onto a crowded encampment at Justin Herman Plaza, two new condo projects are moving along in San Francisco that would give the one percent specatular views from their mulitmillion-dollar homes on the waterfront.

And as much as OccupySF has been a challenge for Mayor Ed Lee, his administration's response to giving choice parcels to some of the wealthiest people in the country will test his housing policy and his political independence.

The Port Commission is holding preliminary meetings on the 8 Washington project, which is about as direct a conflict with the city's General Plan and housing needs as anyone could ever imagine. The developer wants to build 165 of the most expensive condos in the city's history, aimed entirely at the very, very rich. Many will no doubt be used as pieds a terre for people who will live in San Francisco only a few weeks of the year. The project will do nothing to address the desperate need for affordable housing and housing for the middle class.

Rose Pak, the Chinatown business consultant who was central to Lee's campaign, told me a few months ago that she supports the project. Marcia Smolens, one of the city's top lobbyists, is working on it. There will be big money and clout pushing this -- even though there is no rational reason why San Francisco should ever approve it.

And while BeyondChron claims that gentrifcation and overdevelopment isn't so much of a problem these days because "financing ... development is more difficult than ever," the developers don't seem to have noticed. A Nov. 11 story in the San Francisco Business Times (you can only get a few paragraphs if you don't subscribe) explains that "developers are starting to plan new projects again after more than three years of inactivity" --and one of the biggest is a 284-foot, 160 unit residental highrise at 75 Howard Street. There's a parking garage now on the site, which would be demolished to build condos that one expert told the BizTimes would sell for 1,000 a square foot.

You got that? A 1,000 square-foot one-bedroom unit would go for $1 million.

So we have two major waterfront projects -- both of them high-end luxury condos, both of which would have just lovely views of the OccupySF encampment -- moving forward while the barricades go up and the mayor decides when to evict the protesters. A classic battle for the soul of the city. Who's side will Ed Lee be on?

Comments

instead give the land to the homeless to squat and defecate on.

While every other city on the planet seeks to attact inward investment, only you seek to oppose it on the grounds of envy.

Obviously the choicest developments will have the best location. You don't build million dollar condo's in Hunter's Point and you don't build rat-infested projects in Presidio Type.

Did you miss Econ classes at high school?

Posted by Anonymous on Nov. 15, 2011 @ 12:24 pm

It just gets funneled back into the accounts and projects of Wall Street developers so that they can build yet more overpriced corporate wastes of space, with the developers and their executives taking a cut (as their profits) of these totally unnecessary and useless expenditures.

Posted by Aragorn on Nov. 15, 2011 @ 3:21 pm

Tim-

Re: "The project will do nothing to address the desperate need for affordable housing and housing for the middle class."

Usually when someone develops high income housing in SF they are required to pay a fee in lieu that is used for affordable housing elsewhere in the city. How did the 8 Washington developers bypass this law?

Posted by District 3 Vet on Nov. 15, 2011 @ 1:20 pm

Yes, guest, you are correct, if the project is approved (it is only a proposal at this point), then the developers would be required to either set aside a certain percentage of units as affordable housing or pay fees in lieu.

Posted by Chris on Nov. 15, 2011 @ 2:31 pm

Actually I did know that. I was being a bit sarcastic but I do think it is important to point out the stuff that Tim Redmond completely makes up. Some people aren't aware and think of him as a serious journalist.

Posted by District 3 Vet on Nov. 15, 2011 @ 10:45 pm

...with your 'inward investment'. When will you folks wake up and realize that the policy and practice of this city is 'outward divestment', of profits; public resources; contracts etc. And yes, 'they' are planning to build "million dollar condo's in Hunters Point".

Posted by Patrick Monk. RN on Nov. 15, 2011 @ 1:44 pm

So the SFBG supports this public land remaining a surface parking lot?? Whom would that benefit, exactly? Except for the SFBG, the opposition to this project comes from a small group that is overwhelmingly white, older and upper middle-class, who live in one of the most pleasant neighborhoods in the city. I'm confused by who the 99% are that are referred to in this article. The folks opposing this project live in housing that itself displaced an earlier generation of businesses and residents. Ironic!

Posted by Guest on Nov. 15, 2011 @ 2:28 pm

The area from southern North Beach, Telegraph Hill, Chinatown, the antique district, and the financial center north of Market have very few grand open spaces that welcome residents and tourists alike.

The parcel in question could be incorporated with adjacent park land and San Francisco would get a world class open space area that would be used by thousands every day. Let's see, a world class park befitting a city like San Francisco, or another parcel dedicated to a couple hundred virtually vacant housing units owned by absentee 1%ers who show up only when the America Cup is happening? Decisions, decisions.

Let's put it to a citywide vote and see what the voters think.

Posted by Guest on Nov. 15, 2011 @ 4:19 pm

Just like SF voters approved the Lennar development in the Bayview so too will they support this one.

Posted by guest on Nov. 15, 2011 @ 8:32 pm

It's a multi-story parking garage, at least 7 floors, NOT a surface parking lot, in a city with an almost debilitating dearth of available parking.

Next time, "Guest", please take a minute and do a little critical reading, to make sure you comprehend and retain the information, before you make yourself look foolish.

Posted by SentPacking on Nov. 15, 2011 @ 6:53 pm

Don't be idiots -- of course I don't support parking lots. And developers have to pay a modest fee to pay for affordable housing. The rules usually require about 15 percent of the units to be "below market," but not on site -- they can pay into a fund to build a couple of cheap units somewhere else so that no middle-class people intrude on their rich oasis.

Here's the deal: The city's own general plan, and the projections made by ABAG, and all of the regional planning assumptions, and everything that any professional planners have looked at, states very clearly that San Francisco needs to build a LOT of new below-market housing -- housing for its own workforce, among other things. The general plan states that some 60 percent of ALL new housing needs to be below-market rate.

All this will do is further skew that need. It's bad planning, bad policy and does nothing for the city. San Francisco has no identified need for $2 million condos. And it's been proven over and over that building more luxury housing has no impact at all on the cost of housing for the middle class. That's not how housing demand works in this city.

Posted by tim on Nov. 15, 2011 @ 2:40 pm

through property taxes - there's no doubt about that.

Posted by guest on Nov. 15, 2011 @ 2:55 pm

Almost all of it, just gets funneled back into the accounts and projects of Wall Street developers so that they can build yet more overpriced corporate wastes of space, with the developers and their executives taking a cut (as their profits) of these totally unnecessary and useless expenditures.

Posted by Aragorn on Nov. 15, 2011 @ 3:24 pm

This is the first I've heard of this project, but in general, if a new condo complex is built, regardless of tax breaks and whatnot that the developer may (or may not receive), once those condo units are sold, the new owners have to pay property taxes, no? and the tax on a $1M condo? Somewhere close to $10,000, I'd guess. are you saying that this money doesn't benefit the City at all? I'm not really following you on this

Posted by DanO on Nov. 15, 2011 @ 3:56 pm

One example of what Aragorn is talking about is Tax Increment Financing (TIF) in which the city dedicates tax revenues that it would have gotten from a project, to instead pay the long term debt on the project itself, which deeply cuts into the tax benefit of the project. So a project becomes little more than a money pump for developers, contractors, and the Building Trades.

See http://en.wikipedia.org/wiki/Tax_increment_financing#Theory

The latest shuffle in this TIF pack of trick cards is called Infrastructure Financing Districts (IFDs), which are currently being manipulated to allow mega developers to exploit them for bloated profit making.

See http://senweb03.senate.ca.gov/committee/standing/GOVERNANCE/IFDINFORMATI...

Combine this with other subsidies that the City provides on mega developer projects (like the ridiculous sweetheart deals we have doled out for the America's Cup) and these mega developments end up tossing a tiny pittance to San Francisco (at best) while making a handful of the rich, far more wealthy.

The whole system is a joke.

Posted by Eric Brooks on Nov. 15, 2011 @ 5:07 pm

Why would the infrastructure financial district on this specific project affect the City's property tax receipts to any significant degree? It would only fund public capital improvements related to this project up to a certain limit, and this project isn't actually that big.

The comparison to the America's Cup deal doesn't seem fair, either. As I understand it, the capital improvements for America's Cup are on a much larger scale, since it includes things like the cruise terminal construction and all that expensive work on the actual piers.

Posted by Guest on Nov. 16, 2011 @ 7:03 am

IFDs impound the new property taxes generated by new development to pay for infrastructural improvements for that new development.

What this means is that our existing crumbling infrastructure will be allowed to further deteriorate so that new infrastructure can be fashioned to make new development pencil out.

Market rate housing does not pay for itself over the short, mid or long term. Approving new market rate housing means that existing San Franciscans are subsidizing housing for those who do not live or vote here so that developers can make more money than otherwise.

I'll take the surface parking lot over subsidizing housing for the wealthy and developer profit when government cannot deliver services to existing taxpaying residents.

Posted by marcos on Nov. 16, 2011 @ 9:50 am

So market-rate housing is "subsidized" but BMR housing is not? Is that your paradoxical argument?

It's not the dirt poor that pay for the bulk of the city's budget. It's the wealthy. SF would be in dire trouble now but for the revenues afforded by high-value real estate. Just look at Oakland's situation to see what SF would be like without all those rich folks.

Berating the wealthy is flavor of the moment right now; I guess envy and class warfare are cyclical fads. But SF doesn't need more poor and homeless people - that won't balance the books.

Remember also that SFBG's real motive is to try and keep the voting demographics from ever changing. They'd reject new developments even if the BMR setoff was twice the 15% level, because they are basically engaged in social engineering to try and keep SF liberal.

Otherwise, they'd be out of business.

Posted by Guest on Nov. 16, 2011 @ 10:19 am

What is missing from your analysis is that new, market rate developments are incredibly overblown bloated projects which are designed to be huge, expensive cash cows for the developers, -heavily- subsidized by the City through mechanisms like tax increment financing. These projects are nothing but giant money pumps for Wall Street designed to suck the city dry of its wealth. An excellent example is Treasure Island. If that monstrosity is ever built, the developers will walk away with their mega-pork project profits, while San Francisco gets stuck with all of the bills for waging a massive battle against encroaching sea level rise, and dealing with an utterly intractable transportation gridlock nightmare produced by placing that mega development in the worst possible location for transportation outcomes. In short San Francisco, rather than gaining, will -lose- huge amounts of its tax revenue base because of that project; permanently.

Whereas housing projects for our existing working, middle and lower classes will be sensibly priced basic housing projects with no such wildly out of control financial bloat and externalized costs.

And as noted on other parts of this thread, those working, middle, and lower classes (because they won't be forced to move to the suburbs taking all of their spending with them) will spend almost all of their income right here in the city, strengthening our tax base.

Posted by Eric Brooks on Nov. 16, 2011 @ 12:19 pm

I did not comment on any subsidy for BMR housing. I made the case that market rate housing was not hefting its freight. Existing San Franciscans would see resources, property taxes from new development, which we were promised would be used to provide additional social services and fix our crumbling infrastructure, go to pay for infrastructure for new development. That new infrastructure would also depreciate and need repair in the future which would further sap city resources and degrade our existing communities further.

San Francisco's budget comes from those who purchased their homes most recently, most of that comes from those who purchased high end homes most recently.

The last thing that any of us need, homeowners or tenants alike, is for a city government that cannot meet its basic needs to bend over backwards to meet the needs of developer campaign contributors by entitling new market rate housing, both because new housing drains infrastructure and city services resources from our communities as fast as it drains equity from our home values.

I concur with the Guardian that it is politically suicidal to entitle housing for those who will vote against you.

Posted by marcos on Nov. 17, 2011 @ 10:06 am

It is of note that Marc Salomon has gone on record multiple times stating that he opposes any construction of market rate housing which may depress the value of his market rate condo. A condo which he purchased with money gained by extortion from a landlord.

Posted by bob on Nov. 19, 2011 @ 9:11 am

Did you learn that Ad hominem tactic from Fox "NEWS?"

New market rate construction is neither in the interests of existing San Francisco home owners nor in the interests of existing San Francisco taxpayers.

Posted by marcos on Nov. 19, 2011 @ 9:23 am

Is any of it not true? Even in this thread you mention depression of your own home equity.

Posted by bob on Nov. 19, 2011 @ 9:48 am

Actually, It is a tactic of Fox news to not disclose a financial interest in something. Thanks for pointing that out!

Posted by John Galt on Nov. 19, 2011 @ 9:56 am

So the only legitimate financial interests at the table are those few who stand to make money on crappy real estate scams? All others are not legitimate?

Posted by marcos on Nov. 19, 2011 @ 7:32 pm

The depression of the home equity of tens of thousands of San Franciscans' who've purchased over the past decade is the issue.

The cannibalization of infrastructure dollars that would have gone to shore up the infrastructure upon which hundreds of thousands of San Franciscans depend on is the issue.

Public policy should not be to drive existing San Franciscans under water in order to cater to developers and the über wealthy.

Posted by marcos on Nov. 19, 2011 @ 10:03 am

So you oppose any construction that could depress your home equity?
Including construction of BMR units? thanks for clarifying!

Posted by John Galt on Nov. 19, 2011 @ 10:18 am

So you support transferring equity in bulk from the homes of San Franciscans into the pockets of developers who buy off politicians?

Posted by marcos on Nov. 19, 2011 @ 10:32 am

I'm curious, when you bought your home, did you not pay money into the pocket of a developer? Or did you home grow organically like a mushroom out the fertile mission soil.

Posted by John Galt on Nov. 19, 2011 @ 10:46 am

Our home was built post-quake 103 years ago when development economics were different than they are now.

Posted by marcos on Nov. 19, 2011 @ 11:09 am

So it just matters when the developer built the home then? So you support purchase of immediately-post quake built units

Posted by John Galt on Nov. 19, 2011 @ 11:15 am

Not much you can do about existing housing stock except try to keep it in rent control. Prospectively new construction needs to pencil out for San Franciscans as a good business deal. If it does not pencil out, that is, if new market rate luxury housing costs the City and San Franciscans more than it generates, then there is no reason for us all to get into a bad business deal, is there?

Why are you pushing bad business deals on San Franciscans?

Posted by marcos on Nov. 19, 2011 @ 11:51 am

Why are you trying to prevent san franciscans from enjoying the same opportunity that you yourself have taken advantage of?
Seems a little unfair that you get to decide its ok to buy something built in 1903 but "A bad business deal" for anyone who isnt you.

Posted by John Galt on Nov. 19, 2011 @ 7:00 pm

There are plenty of places to live in San Francisco, there is no shortage of market rate housing, by definition.

Posted by marcos on Nov. 19, 2011 @ 7:33 pm

none of what you said applies to the points that I made. Why do you get to decide what is a "bad business deal" for San Franciscans who wish to own a home?
I dont follow how you were able to buy your home if you find home ownership in sf to be a "bad business deal"

Posted by John Galt on Nov. 20, 2011 @ 10:59 am

It is a bad business deal for San Franciscans when the costs of largely future San Franciscans or pieds-a-tierrorists owning that new home are shunted off to existing San Franciscans when our own city services and infrastructure are being cut.

Some libertarians would call that arrangement socialism. But when it is trickle-up socialism, it is called progress.

Posted by marcos on Nov. 21, 2011 @ 11:03 am

Bullshit. Show me the studies that show:
1) That these homes are going to be purchased by people who aren’t already in the bay area
2) That they’ll be occupied solely on the weekends
3) That the costs of this development are borne by existing residents
I remember your posts during the affordable housing ballot initiatives – they were all about housing for “real san Franciscans”
My guess is you get to head up that approval board. Only sexually promiscuous misanthropes need apply

Posted by Guest on Nov. 21, 2011 @ 1:28 pm

when Ayn Rand's kindergarten mentality economic philosophy has been so totally discredited that even her lead sycophant Alan Greenspan now says that it was wrong; any blog poster with that kind of Orwellian retrograde dis-intellect, who then has the stupid audacity to actually preach the tenets of that ridiculous philosophy, does not warrant any serious consideration whatsoever on this blog forum.

Your ideas are a cartoonish joke, best left behind with the 20th century that they so completely demolished, through fostering rampant war and greed.

Posted by Eric Brooks on Nov. 20, 2011 @ 12:04 pm

The maintenance on the public infrastructure would be funded by a special assessment; there shouldn't be any net affect to the City's general fund.

Posted by Guest on Nov. 21, 2011 @ 9:27 pm

According to the Port, the expected appropriation limit for the project IFD is 5 million, which doesn't seem unreasonable. Seawall Lot 351 is also partially Port property, so there's public access and open space requirements attached to the project that probably account for most of the capital improvements.

Unless I'm missing something, it sounds to me like this thing should actually pay off in the long run, at least. The middle run, too, but I'm not sure what your definition of middle is.

Posted by Guest on Nov. 16, 2011 @ 11:40 am

The Planning Department stipulates that new market rate luxury housing does not cover its infrastructure or operations costs.

Posted by marcos on Nov. 19, 2011 @ 9:30 am

progressives will never make it with the trade unions they always complain about selling them out.

Posted by matlock on Nov. 15, 2011 @ 3:40 pm

There is no benefit to local or future San Francisco residents to build new housing that will not be used as a PERMANENT residence. Luxury pieds a terre type units make housing prices much worse for future residents since they contribute the trend of SF real estate becoming like the City of London and Paris - the exclusive domain of the very, very affluent. Even mere millionaires are not welcomed in these elite real estate markets.

The 2010 census showed San Francisco already has 8% vacant residence units - 30,000 potential homes - because investors and worldwide speculators think SF is such a cool place to own a $1.5 million real estate trinket for their sizable portfolio. These units are a blight to the larger community since they deprive people - the 99%ers - of homes. And these luxury units create real environmental damage since permanent residents are forced to live further away from the urban core where the jobs, transportation and shopping are located, destroying farmland and open space in the process.

Since county supervisors have the authority to regulate the general welfare the solution is simple. Require all new housing units be sold and rented to individuals/families who will use them as their primary personal residence (over 6 months continuous occupancy each year and 80% over a 2-year period, with minimal hardship exceptions.) Include a $1 million fine and 3 year jail time if anyone lies about using the housing unit as their primary personal residence, which will get most of the real estate speculators out of the market. This leaves the new housing for the individuals and familes who want to make San Francisco their home and who plan to be part of the permanent community. The speculators and pieds a terrre owners have many other places they can live and invest. San Francisco can show the world that cities can favor families and permanent residents over speculators and investors.

Local policitians have the power to make reasonable restrictions on property use. Indeed, property zoning is the most important and lucrative power of local government, maybe more powerful than the annual $6.5 billion budget the mayor and supervisors dole out each year.

Perhaps the occupiers are already engaging city hall to make a difference on these proposed luxury projects - as well as the massive development proposed for the shipyard - that obviously only benefit the 1%ers. Finding out decent information about who currently owns the 30,000 vacant units would shed light on who will likely buy or rent the new units. Maybe the City Attorney has worked on draft legislation that restricts new housing construction to only owner-occupiers that's available for review and comment.

And maybe some groups are already reviewing why the SF Port has turned into teh ultimate Donald Trump developer, almost exclusively favoring projects for the 1%ers. Why does this government agency even exist any more? It's not like shipping 1 million cars or refrigerators to SF ports make a lot of sense when you then need to haul them over a bridge or three to get them anyplace useful.

The developers, real estate specualtors, and bankers won't like the permanent residency rule change very much so there might be some push back, but no one expects the 1%ers to give up all of their exalted economic status and privileges easily.

Posted by Guest on Nov. 15, 2011 @ 4:00 pm

I love the way we figured out that these units, which haven't even been built yet, will only be bought as pieds a terre to be used a few weekends a month.

But then again, we are Progressives. we can say whatever we want if it helps prove our point!

Posted by District 3 Vet on Nov. 15, 2011 @ 10:54 pm

It doesn't take a rocket science background to understand who will buy or rent these units. The city has been building these type of luxury highrises near the eastern waterfront over the past 20 years.

Once the Planning Department can show detailed data about who owns these high-end units - ie, investors, corporations, personal residences (permanent vs. temporary use) - we can talk intelligently about who is most likely to buy and rent the units at 8 Washington St.

Without detailed feedback information about who has been buying and renting these units built over the past 20 years the city has no idea if its planning goals are being met. But that may be the point. If we don't review the detailed data about who is buying these units along the eastern waterfront, we don't have to confront the possible fact worldwide investors from the 1% class own and control more and more of the city's most valuable real estate, and that many of them don't even live in the city full time.

San Francisco has very little land. Only a tiny fraction of parcels will be built or redeveloped in any given year, no matter how robust or stagnent the overall economy.

The real issue is, who gets these limited number of units? Investors and speculators, or individuals and families who live in San Francisco on a permanent basis? Occupation groups in San Francisco, Manhattan, Paris and London should be asking themsleves the same question. How many speculators and corporations own the housing units around here, and does the government give bilion dollar tax welfare subsidies to wealthy landlords and speculators like in the US?

The city should be able to use its power to promote the general welfare by requiring any newly constructed units be sold and/or rented to permanent residents. Investors and speculators have thousands of others places besides San Francisco they can play the real estate speculation game - the game of kings and lords, where the 1%ers get their property loan losses subsidized by taxpayers during the downtimes, but the speculators get all of the property gains during the recurring boom periods.

Posted by Guest on Nov. 16, 2011 @ 10:44 am

how little time you spend there. Maybe it interests you but there is no way you have any control over whether someone chooses to live full-time, part-time or for that matter rent it out.

And it shouldn't matter to you either. They have to pay their property taxes and HOA fees regardless. So in a sense, if they pay all that and use no city services, then the city makes an even bigger profit out of them.

Moreover, even if the city had extreme powers to control such things (which would be illegal under current laws) that would have the effect of discouraging new build, in much the same way as rent control discourages new build of rental housing (even though it's technically exempted from RC).

And if there were no new build, then those affluent IT workers would be Ellis'ing Mission district flats rather than buying SOMA condo's. Which would decrease affordable housing in SF.

Posted by Guest on Nov. 16, 2011 @ 11:13 am

'Guest' we've already explained ad nauseam how the tax revenues from such projects get incestuously and vampirically sucked back into those and future bloated projects, leaving a pittance, or more usually a negative balance, in city revenues.

As I said in another reply, such projects are designed to pump money -out- of cities and into the bank accounts of wealthy international financiers.

To see an excellent speech which lays out this three-card monte scheme in detail watch the David Harvey video presentation 'The Neo-Liberal City' at:

http://www.youtube.com/watch?v=rfd5kHb-Hc8

Posted by Eric Brooks on Nov. 16, 2011 @ 12:43 pm

Yes, the new owners will pay property taxes. I don't think that's going to make or break the city budget. 160 condos at $1 mill = $160 million. Property tax at 1.5 percent is about $2 million.

Posted by tim on Nov. 15, 2011 @ 4:24 pm

Don't turn up your nose at that. Gabs Haaland needs the new SEIU members and lord only knows - the city needs new admins.

Posted by guest on Nov. 15, 2011 @ 4:53 pm

If you account for the requisite, irrevocable guaranteed lavish pension and health care for life upon hire...

Posted by Guest on Nov. 15, 2011 @ 5:41 pm