The 8 Washington disaster goes to Planning

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condos for the 1 percent

The urban planning disaster that is 8 Washington goes before the San Francisco City Planning Commission March 8 amid a long list of questions -- including Mayor Lee's position on the project and how it could screw up the America's Cup.

Developer Simon Snellgrove wants to build the most expensive condos in San Francisco history on the waterfront, 145 units that will be far out of reach to anyone who makes less than half a million dollars a year. And many of the units will require income far higher than that. It's not just housing for the 1 percent; it's housing for the top half of the 1 percent.

There's no need for this kind of housing in SF; the very rich have no problem finding places to live. And the spot zoning violates every standard of good waterfront planning practice.

The project will benefit the Port of San Francisco, which stands to take a cut of the money since some of the project is on Port land. But more than half of the land is owned by Golden Gateway and is a former redevelopment area, so the supervisors and the Port are going to have to fight over who gets the property tax increments and how that's all financed.

More interesting, 8 Washington will be a boon to Golden Gateway, which as the landowner is a partner in the deal. And Golden Gateway is one of those big properties that are paying far too little in city taxes. When the complex changed hands several years ago, the owners used a stock-swap deal to transfer it, avoiding the Prop. 13 reassessment that could have substantially raised its taxes. So the city's losing millions of dollars -- and now Timothy Foo, who is the principal owner of Golden Gateway, will be getting a nice favor from the city he's been screwing.

Oh, and by the way -- a lot of Golden Gateway units are being advertised as short-term (that is, hotel) rentals -- something that violates at least the spirit of city law. This is an outfit that deserves special zoning treatement from San Francisco?

Then there's the fact that this could be a serious problem for the big America's Cup party. Project critic Brad Paul has been analyzing the impacts of the development, and noticed some new language in the comments and responses to the Environmental Impact Report suggesting that excavation could lead to something like 200 dump-truck trips a day along the Embarcadero -- roughly one trip every two minutes. In an email to Paul, Paul Matltzer in the Planning Department confirmed that the likely construction process could, indeed, involve that many dump trucks, rumbling along the Embarcadero during the peak construction period, which will also be the peak period for America's Cup tourism.

Dump trucks, Paul (who used to drive one) notes, start slowly and brake slowly. The Embarcadero is already crowded -- and will be far more crowded during the Cup races, so much so that city officials are thinking of closing traffic lanes to all but bicyles and transit. How, exactly, will that work out with 200 trucks a day fighting for room?

I've called and emailed the America's Cup people, but they haven't gotten back to me. I'll keep you posted.

Lee's office hasn't gotten back to me, either, but I'm hearing that the mayor is telling people he hasn't made up his mind -- on a project that's a week away from the Planning Commission and that one of his close allies, Rose Pak, is strongly promoting.

 

Comments

I live nearby...it's important to note that 8 Washington isn't really on the waterfront, it is on the other side of the Embarcadero. That is noteworthy because it isn't going to interfere with anyone's enjoyment when the decide to take a little stroll from the Ferry Building to Fisherman's Wharf.

Right now that area does me no good whatsoever. It is a surface parking lot and a tennis club with 30 foot high walls all around it. 8 Washington would open up a public path from Jackson Street to the water that is currently blocked by the tennis walls. There would be other public areas created where none exist now along with ground floor retail.

Quote frankly, right now it is an eyesore. 8 Washington would be a marked improvement, would boost city revenue and create some BMR housing in lieu.

I don't discriminate against rich people. Sometimes, just for laughs, I read Tim's articles and mentally replace his references to the wealthy with references to other minority segments. It makes the posts seem really bigoted. But since he is singling out the wealthy I guess it is okay. I mean, you would never say "There's no need for this kind of housing in SF; Hispanics have no problem finding places to live" but the rich? Let them live on Pier 80.

Posted by Guest on Feb. 29, 2012 @ 6:58 pm

My eyes don't get sore when there are no condos on a parcel of land, what's wrong with your eyes, Guest?

Posted by marcos on Feb. 29, 2012 @ 7:39 pm

It is completely surrounded by a 30 foot high chain link fence with dark green slats inserted to block any views (I know that it also blocks some wind for the tennis players but so could clear panels).

I just don't agree that there is nothing in this world as ugly as housing for the wealthy. Really, there are uglier things, just go down there and take a look. If it makes you feel any better, the club is $120 a month so some wealthy people will get pissed off if it has to be scaled down.

Posted by Guest on Feb. 29, 2012 @ 8:05 pm

The horror, how DO you manage to carry on?

Posted by marcos on Feb. 29, 2012 @ 9:21 pm

Doesn't everyone?

Posted by Guest on Feb. 29, 2012 @ 9:51 pm
Posted by Guest on Feb. 29, 2012 @ 7:12 pm

It is infill housing. So what if they are rich. The trades need work. We just built affordable rentals at the foot of Broadway and more- with equally fabulous views are planned. The in leiu for affordable housing plus the tax increment is needed by the city and the port. This is going to be another lost opportunity if the planning dept says no.

Posted by Guest on Feb. 29, 2012 @ 9:25 pm

Build it in Stockton. Lands cheap there. This is a city for the rich. If you don't have the money, then tough. You don't get to live here. Free market all the way baby!!!

And besides, the kind of people that live in affordable housing are not the kind of people I want to see when I'm walking to dinner at Boulevard after dark. Once my maid is done cleaning my loft, she can go back to Tracy or wherever.

Posted by Steroidal Moderate on Feb. 29, 2012 @ 11:55 pm

If you're not extremely wealthy you can't live in one of the most desirable spots in town. The world has actually been like that since....well...forever?

Posted by Guest on Mar. 01, 2012 @ 6:42 am
Posted by Anonymous on Mar. 01, 2012 @ 7:27 am

The trolls here are just becoming caracitures of themselves. They're piling on the crazy so thick that it's hard to tell who's a real troll and who's being sarcastic.

Posted by Greg on Mar. 01, 2012 @ 8:52 am

have affordable housing? As long as they are not here?

There's always housing for the rich and housing for the poor. I can't afford a yacht or a private plane either. Boo hoo.

Posted by Guest on Mar. 01, 2012 @ 9:21 am

The more money at stake from public entitlements, the more frothy their mixture of fecal matter and lube becomes.

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=8&cts=13306...

Posted by marcos on Mar. 01, 2012 @ 9:21 am

Maybe they'll both leave town in disgust and sell their condo's thereby helping the the truly deserving to find housing.

It's not like SF doesn't have already enough activists and NIMBY's.

Posted by Guest on Mar. 01, 2012 @ 9:36 am

Tim and Marcos towing the THD party line! You know if I hadn't known better, I would have sworn I saw Marco's hand on Peskins knee in the steam room the other night.
Do as daddy tells you!

Posted by Greg on Feb. 29, 2012 @ 10:32 pm

How many people can I smear in one post? I don't don't know but since Daddy Ellison pays me to troll here I can stay up all night and keep trying to break my own personal record, stealing identities and hurling ad hominem character attacks left and right in an effort to silence anyone who doesn't agree with my corporate agenda. I'm pretty proud of that last post if I do say so myself. I know I can get away with it because the Guardian will never look up my IP and ban me. I can sit here and abuse the Guardian's committment to free speech and ain't nobody gonna do a thing about it!

Posted by Longtime Lurker on Feb. 29, 2012 @ 11:46 pm

Ad hominem is all they have when their policies are bankrupt, bankrupt the City and shift resources into the developers who pay their freight.

Posted by marcos on Mar. 01, 2012 @ 8:20 am

I think the headline for this article has a typo in it, guys. Unless we're talking about someplace else.

Posted by Guest on Mar. 01, 2012 @ 12:41 am

what does it matter if they build short-term rentals?

All and any new housing is desirable. Every new-build condo means one less rich person bidding up TIC's in the Mission. Think, Tim, think.

This project is actually set back from the waterfront - it merely has views of it. And it will create singificant amounts of jobs, revenues, fees and taxes. Let's get it built!

Posted by Anonymous on Mar. 01, 2012 @ 7:25 am

"All and any new housing is desirable. Every new-build condo means one less rich person bidding up TIC's in the Mission. Think, Tim, think."

Nonsense. New construction and existing San Francisco construction appeal to two different segments of the market. Suggesting that the production of luxury bayfront condos in any way impacts the price of Mission Edwardians and Victorians is baseless market sharia masquerading as economics.

Posted by marcos on Mar. 01, 2012 @ 8:43 am

If I can't afford a downtown new-build, I'll buy a SOMA loft. If I can't afford a SOMA loft, I'll buy a Mission TIC. If I can't afford a Mission TIC, I'll buy a rathole in Oakland.

Posted by Guest on Mar. 01, 2012 @ 9:39 am

There is no empirical evidence that demonstrates that kind of purchaser behavior, more argument by the waving of the hands and appeal to free market economic sharia. Markets are messy and do not conform to such reality defying rules.

Posted by marcos on Mar. 01, 2012 @ 10:34 am

which of course applies equally to your position.

But it's common sense that consumers will look for value wherever they can find it. if they can't afford Telegraph Hill, then SOMA will do, and so on.

Posted by Guest on Mar. 01, 2012 @ 11:37 am

I am not trying to make the case for cascading housing demand, you are. Either make with the empirical case or proceed with the waving of the hands and appeal to economic sharia like a good booster who has the game wired.

Posted by marcos on Mar. 01, 2012 @ 11:51 am

Asking for that is just a rhetorical gambit. You can't prove anything any more than I can. I'm offering the opinion that we need more housing in SF. Where's your "empircal evidence" that we don't?

Posted by Guest on Mar. 01, 2012 @ 12:05 pm

You're making an assertion that you admit can not be substantiated.

If all you've got is the waving of the hands and appeal to economic sharia, then you ain't got nothing going, okay?

Posted by marcos on Mar. 01, 2012 @ 12:20 pm

be "substantiated".

See, that's the thing with internet debates. They are expressions of opinion. Nobody ever proves anything, changes anyone else's mind or "wins" the debate.

But the idea that supply is irrelevant is a stretch for anyone who doesn't have a political agenda.

Posted by Guest on Mar. 01, 2012 @ 12:30 pm

from market rate policy- time to separate them - it is just gridlock and both types of development are needed.

Posted by Guest on Mar. 01, 2012 @ 7:40 am

simply built enough new housing. The entire SE part of the city could be rebuilt with high-rise towers and the cost of housing will plummet.

But of course the activist with their sweetheart condo deals wouldn't want that.

Posted by Guest on Mar. 01, 2012 @ 9:23 am

If you've 10,000 buyers and 9,000 units, prices go up.

9,000 buyers and 10,000 units, prices go down.

SF RE is only expensive because we haven't built enough.

But of course, since you already own, you have a vested interest in seeing no new build.

Posted by Guest on Mar. 01, 2012 @ 9:18 am

You ignore the role of artificially low interest rates in determining housing price.

There is no evidence that there is sufficient latitude to drive down home prices in SF by increasing supply. Between 2000 and 2006 some 15000 units were built and the population dwindled to a low of 730,000, yet housing prices rose the entire time.

Boosters have been unable to provide even back of the napkin analysis of how adding supply will drive down prices, how far the prices would be driven down for a given addition of supply, how long that would last, how many units per year would be needed to maintain that depression in price, what impacts that would have for existing infrastructure and disaster planning, and what happens after the City has been built out over a million.

Argument by the waving of the hands and appeal to free market economic sharia all by boosters who are being paid by Wall Street to corrupt local decisions to grant favorable entitlements at the cost of honest government.

Posted by marcos on Mar. 01, 2012 @ 9:50 am

There is no reason to believe that more supply = higher prices. In economic terms, that's nonsense.

SF could easily build tens of thousands of new units, except for zoning laws, which are decided by people who have a vested interest in high RE prices.

Posted by Guest on Mar. 01, 2012 @ 11:43 am

San Francisco has just rezoned for some 30,000 new units. Even with that 10% potential increase, supply is still inelastic when compared to the base of 300,000 existing units. Interest rates and the cost of money dominate the determination of housing prices, supply is largely irrelevant.

Posted by marcos on Mar. 01, 2012 @ 11:49 am

Lots of SF buyers pay cash - a third of SF properties carry no mortgage - so interest rates aren't always the issue.

If SF magically had 100,000 units for sale tomorrow, prices would fall.

But so what either way? SF prices are what they are and, for those who are priced out, Oakland is only 8 minutes away.

Posted by Guest on Mar. 01, 2012 @ 12:04 pm

Do you believe in magic?

Posted by marcos on Mar. 01, 2012 @ 12:22 pm

To disprove your assertion, I simply amplify it.

Posted by Guest on Mar. 01, 2012 @ 12:31 pm

The price of a commodity does not depend on the cost of production or any debt hanging over it, rather it depends on what price the market places on it. When mortgage financing is made easy, then we see inflation generated by the introduction if that much money into the economy raise the price of the commodity to which that cheap money is directed--housing.

Posted by marcos on Mar. 01, 2012 @ 1:01 pm

create artifical shortages, then prices go up.

Posted by Guest on Mar. 01, 2012 @ 1:22 pm

reductio ad absurdum is where the most extreme and unlikely case is presented as the general case even though it is not.

this is different than demanding substantiation for fallacious argument.

Posted by marcos on Mar. 01, 2012 @ 1:03 pm

not a reductio ad absurdum.

And we're still all waiting for the "substantiation" of your counter-intuitive theory that supply doesn't matter. And waiting. And waiting.

Posted by Guest on Mar. 01, 2012 @ 1:19 pm

Reductio ad absurdum is similar to a strawman but is not. RaA requires a real absurd instance of an argument that is generalized and summarily demolished where the strawman involves substitution of tangentially equivalent or totally unrelated which is then demolished.

Show us a back of the napkin economic analysis that proves your assertion that adding housing supply in San Francisco given pipeline and capital availability constraints will lower price.

Posted by marcos on Mar. 01, 2012 @ 1:28 pm

And where is your "back of a napkin" analysis that shows that supply is irrelevant in any economic system?

The burden of proof is on you here since you are the one making the counter-intuitive assertion.

Posted by Guest on Mar. 01, 2012 @ 1:39 pm

Between 2000 and 2005 SF built like 15,000 new residential units while the population dropped by several times that number and prices still rose.

Posted by marcos on Mar. 01, 2012 @ 9:27 pm

You also ignore the fact that this is a highly irregular housing market with a nearly infinite demand curve. Quoth the late Redevelopment Agency: "Omnes volunt habitare in urbe San Francisco." Everyone wants to live in the city of San Francisco. Demand is not related to supply or price in the normal way. The people who will buy condos at 8 Washington aren't looking for a condo or a TIC in the Mission, and will never be competing for that space. This type of property will be marketed to the very rich who will use the units as second or third homes, as places to live when they visit this city. 

The economics of housing in SF don't conform to anything Adam Smith (or even John Maynard Keynes) ever wrote.

 

Posted by tim on Mar. 01, 2012 @ 11:29 am

Classical capitalist economists entire reason for existing was to eradicate unearned income, economic rent, achieved via rent seeking. Rent seeking is when the powerful rig the game in order to realize extraordinary unearned income.

Current economic sharia flies in the face of the work done two centuries ago by the paragons of capitalist economics and is evident right here in San Francisco. The economics at work are the precise opposite of the economics that Smith proposed because of regulatory capture of the land use entitlement agencies as well as the printing of mortgage money previously via serialized mortgages (no inflation whiners complaining about inflation in housing prices) and current below zero interest rates.

Posted by marcos on Mar. 01, 2012 @ 11:37 am

You've had since the sixties to improve on "property is theft" and that's the best you can come up with?

Posted by Guest on Mar. 01, 2012 @ 11:49 am

http://www.econlib.org/library/Enc/RentSeeking.html

“ Rent seeking” is one of the most important insights in the last fifty years of economics and, unfortunately, one of the most inappropriately labeled. Gordon Tullock originated the idea in 1967, and Anne Krueger introduced the label in 1974. The idea is simple but powerful. People are said to seek rents when they try to obtain benefits for themselves through the political arena. They typically do so by getting a subsidy for a good they produce or for being in a particular class of people, by getting a tariff on a good they produce, or by getting a special regulation that hampers their competitors. Elderly people, for example, often seek higher Social Security payments; steel producers often seek restrictions on imports of steel; and licensed electricians and doctors often lobby to keep regulations in place that restrict competition from unlicensed electricians or doctors.

But why do economists use the term “rent”? Unfortunately, there is no good reason. David Ricardo introduced the term “rent” in economics. It means the payment to a factor of production in excess of what is required to keep that factor in its present use. So, for example, if I am paid $150,000 in my current job but I would stay in that job for any salary over $130,000, I am making $20,000 in rent. What is wrong with rent seeking? Absolutely nothing. I would be rent seeking if I asked for a raise. My employer would then be free to decide if my services are worth it. Even though I am seeking rents by asking for a raise, this is not what economists mean by “rent seeking.” They use the term to describe people’s lobbying of government to give them special privileges. A much better term is “privilege seeking.”

It has been known for centuries that people lobby the government for privileges. Tullock’s insight was that expenditures on lobbying for privileges are costly and that these expenditures, therefore, dissipate some of the gains to the beneficiaries and cause inefficiency. If, for example, a steel firm spends one million dollars lobbying and advertising for restrictions on steel imports, whatever money it gains by succeeding, presumably more than one million, is not a net gain. From this gain must be subtracted the one-million-dollar cost of seeking the restrictions. Although such an expenditure is rational from the narrow viewpoint of the firm that spends it, it represents a use of real resources to get a transfer from others and is therefore a pure loss to the economy as a whole.

Krueger (1974) independently discovered the idea in her study of poor economies whose governments heavily regulated their people’s economic lives. She pointed out that the regulation was so extensive that the government had the power to create “rents” equal to a large percentage of national income. For India in 1964, for example, Krueger estimated that government regulation created rents equal to 7.3 percent of national income; for Turkey in 1968, she estimated that rents from import licenses alone were about 15 percent of Turkey’s gross national product. Krueger did not attempt to estimate what percentage of these rents were dissipated in the attempt to get them. Tullock (1993) tentatively maintained that expenditures on rent-seeking in democracies are not very large.

Posted by marcos on Mar. 01, 2012 @ 11:59 am

understand why prices are high. Building this may not make much material difference on it's own but it's better than nothing, and will bring some affordable units with it, as well as revenues and jobs.

Not building it, as you want, gives us nothing. Except of course that it helps preserve the value of homes owned by you, Hestor, Welch, Marcos, Greg and every other NIMBY in town who has his and doesn't want anyone else to get theirs.

Posted by Guest on Mar. 01, 2012 @ 11:46 am

The idea that everyone wants to live in SF is ridiculous. Everyone does NOT want to live in SF. If demand was indeed infinite, prices would reflect that, and would be much much higher then they are now given our restrictions on growth.

I guess its just easier to say no, we shouldn't build because it wont help anything, and it could potentially make my life more difficult.

Posted by Greg on Mar. 01, 2012 @ 12:04 pm

if we took the same NIMBY attitude that Tim is exuding here to every development, then it would start to make a real and material difference to the supply/demand equation, and housing would become even more expensive.

The two biggest drivers of high housing costs in SF are zoning rules and rent control.

Posted by Guest on Mar. 01, 2012 @ 12:15 pm