The unanswered question: How do we bridge SF's affordable housing gap?

The Bridge Housing media roundtable on March 14 couldn't answer the fundamental housing affordability question.
Steven T. Jones

Nobody has a good answer to San Francisco’s most basic housing problem: How do we build the housing that existing city residents need? It was a question the Guardian has been posing for many years, and one that I again asked a panel of journalists and housing advocates on Friday, again getting no good answers.

The question is an important one given Mayor Ed Lee’s so-called “affordability agenda” and pledge to build 30,000 new housing units, a third of them somehow affordable, by 2020. And it’s a question that led to the founding 30 years ago of Bridge Housing, the builder of affordable and supportive housing that assembled Friday’s media roundtable.

“There really isn’t one thing, there needs to be a lot of changes in a lot of areas to make it happen,” was the closest that Bridge CEO Cynthia Parker came to answering the question.

One of those things is a general obligation bond measure this fall to fund affordable housing and transportation projects around the Bay Area, which Bridge and a large coalition of other partners are pushing. That would help channel some of the booming Bay Area’s wealth into its severely underfunded affordable housing and transit needs.

When I brought up other ideas from last week’s Guardian editorial for capturing more of the city’s wealth — such as new taxes on tech companies, a congestion pricing charge, and downtown transit assessment districts — Parker replied, “We’d be in favor of a lot of that.”

Yet it’s going to take far more proactive, aggressive, and creative actions to really bridge the gap between the San Francisco Housing Element’s analysis that 60 percent of new housing should be below-market-rate and affordable to those earning 120 percent or less of the area median income, and the less than 20 percent that San Francisco is actually building and promoting through its policies.

Stated another way, about 80 percent of housing we’re building is for a small minority of city residents, or the wealthy people that these developers hope to attract to the city. And we’re not building housing for the vast majority of city residents. That is a recipe for gentrification, displacement, and destruction of San Francisco as a progressive-minded city.

Parker parroted Lee and other pro-development boosters, including SPUR, in arguing that city needs to make it easier and faster for developers to build new housing of all types. “In San Francisco, we do need to expedite the [housing] entitlement process,” Parker said.

But when asked whether meeting or exceeded Lee’s housing production goals would ever bring the price of market-rate housing down to the level where someone more 120 percent of AMI — which HUD recently set at $81,550 for single San Franciscans, or $116,500 for a family of four — Parker conceded that it wouldn’t.

The bottom line for San Francisco and its overheated real estate market is we can never built our way to affordability. The only way to build housing that most people can afford is with public subsidies, and San Francisco just isn’t asking enough from its wealthy individuals, corporations, and developers to create an Affordable Housign Trust Fund that is anywhere near big enough to meet the real demand.

That kind of assertion seems radical by the standards of today’s skewed political (and online) discourse. But when I raised it to a panel that included Bridge Housing officials, members of SPUR and HOPE SF, and a panel of journalists from such pro-development outlets as San Francisco Business Times, San Francisco Magazine, SocketSite, The Registry SF, KQED, and TechCrunch (as well as the more Guardian-aligned Mother Jones), nobody had any good answers or remedies to that basic question that we’ve raised again and again.

Instead, some of the business journalists offered a more sober assessment of what’s to come than most of this city’s pro-development boosters, noting a few signs of irrational exhuberance in the local economy.

The Registry’s Vladimir Bosanac said he’s observed a recent trend of developers buying up unentitled land, indicating more optimism in the sustainability of this development boom than market conditions might warrant. Adam Koval of SocketSite, an early predicter of the last dom-com crash, also voiced sketicism in the pervasive “this time is different” faith in the tech sector, noting how realms such as gaming and online coupons are losing steam and predicting that commercial rents are plateauing.

“I think there are some real gut checks coming up,” Koval said of the tech sector and the sustainability of its growth and valuations.

Perhaps it’s also time for a gut check by Mayor Lee and others who argue that we can build our way to housing affordability without any major new efforts to capture more of the wealth now being generated in San Francisco, wealth that might not be here later if we continue avoiding the question of how to provide the housing that San Francisco needs. 


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Posted by Ship My Car on Jun. 14, 2014 @ 10:53 pm

make on a development? What business is that of yours?

If buyers are willing to pay what the developer is asking, then that is all we need to know.

Posted by Guest on Mar. 19, 2014 @ 8:41 am

Because these projects do not pay their fair share of infrastructure or ongoing operations and excess profit is fair game for recovery so that taxpayers are not on the hook to subsidize high profit housing developers.

Posted by marcos on Mar. 21, 2014 @ 9:03 am

factor in our success and prosperity.

There's a lot of focus on tech right now but, historically, SF has always been about finance, real estate and the professions. It's always been a high-value town, with the inevitably large service sector following behind.

Posted by Guest on Mar. 19, 2014 @ 7:06 am

Of course, in a geographically constrained peninsula, real estate is important because real estate only prospers when it tears up to rebuild over and again, after which investors take the money and run.

Posted by marcos on Mar. 19, 2014 @ 8:15 am

You could make the same tired arguments about any other business, or at least any other resource-based business.

People who think it is a good business to be in, invest in it. If you think opportunities are better elsewhere, you invest elsewhere.

So what?

Posted by Guest on Mar. 19, 2014 @ 8:43 am

Finance, Insurance and Real Estate have purchased the US government and are fomenting bubble after destructive bubble, the results of which are now evident.

Real Estate has coopted the activists and nonprofits rendering the voters no choice but rule of, by and for Wall Street.

Posted by marcos on Mar. 19, 2014 @ 8:54 am

entities would pay no tax, and in fact they pay a great deal of tax. The government benefits directly because every time a property is sold, they get another cut. Eventually they collect more in tax than the property originally sold for.

The city too, via transfer tax and uprated Prop13 basis.

Posted by Guest on Mar. 19, 2014 @ 9:09 am

Wrong, it is possible for a sector to purchase government and still pay taxes because the windfalls from corporate welfare dwarf any tax bill.

Posted by marcos on Mar. 21, 2014 @ 7:39 am

And there would be no new homes either.

The people benefit from both, which is why it is public policy to build new homes

Posted by Guest on Mar. 21, 2014 @ 8:06 am

I am guessing you failed 5th grade math. No shame in it, we all have our weak points. But I would not start an argument based on your ability to do it.

1% refers to 1% of the world population (which isn't mentioned in this article at all). 80% refers to the new buildings being built in San Francisco. San Francisco is a small city. 80% of 30,000 new buildings is 24,000 buildings.

What happens is that many people (more than 24,000) want to move to San Francisco to be part of the economy. Those who can afford to do so rent/own the expensive units. Otherwise, they remain empty until investors can recoup their losses. Like in Manhattan, many people will own these units are the incredibly wealthy, and though they own the units, will not reside in San Francisco. Wealthy people own multiple properties.

The point is that most of the housing being built cannot be afforded by the majority of San Francisco residents. In order to continue working in the city, San Francisco residents will have to move out of the city they work and pay taxes in.

This exacerbates a two tiered economic system in which the haves benefit from the have-nots. They get to have a lovely city, not pay much in taxes for it, and have the "have nots" service them.

The have-nots that labor in the city, no longer get any ownership of the city their labor supports.

Posted by Haystacks on Apr. 08, 2014 @ 8:47 pm

You cannot take the most expensive city in the nation and make it cheap. And even if you could, that would essentially mean destroying the economy and turning us into something more like Detroit, and nobody wants that.

All we can do is tinker around the edges. If the powerhouses of the knowledge and sharing economies want to be in SF than it will never be cheap.

Your real mistake is looking at SF in isolation, rather than considering SF as just a part of the Bay Area. Looked at that way, the problem is far milder because people can commute in from all the other towns and counties of the Bay ~Area, most of which are cheaper or considerably cheaper.

The real city is the Bay Area. SF is just the downtown and not everyone who works in SF has to live here. Many of these poorer folks would be happier in Oakland and other towns a little further out.

Posted by Guest on Mar. 18, 2014 @ 4:03 pm

So first the rich decided they wanted to flee to the suburbs, so we all subsidized that choice. And now the rich decide that they want to come back to the cities, so we subsidize that with corporate tax breaks and displacement policies. Should we just admit that we live in a plutocracy and stop pretending that we're a democracy or a constitutional republic? At least that would be more honest. 

Posted by steven on Mar. 18, 2014 @ 4:33 pm

The wealthiest 2% of our nation pay 50% of all taxes. without them, the poor would be far, far poorer.

But to the question, Steven, what is wrong with people living in Oakland and working in SF?

Posted by Guest on Mar. 18, 2014 @ 4:47 pm

Cite your source on your tax claims, which sound like the kind of bullshit that the country's top tax journalist routinely refutes:

Posted by steven on Mar. 18, 2014 @ 5:38 pm

Oh course, citing a Republican extremist quoted by Fox News, how perfect. And you couldn't even cite that information correctly, which was that the wealthiest 2 percent pay 50 percent of federal income taxes, not all taxes, as you wrote. If you read the article I cited, you'll learn that federal income taxes are a small part of the overall taxes that all of us pay. And the figure you cite says far more about the extreme concentrations of wealth in this country than it does about the wealthy somehow being overtaxed despite this country's low income tax rates compared to other countries and our own history of progressive taxation. 

Posted by steven on Mar. 19, 2014 @ 11:34 am

source but that SFBG is not an extreme left-wing source.

There are extreme concentrations of wealth because they are extreme concentrations of ability and productivity. But it's good to see you agreeing that the successful pay the lion's share of taxes. QED.

Posted by Guest on Mar. 19, 2014 @ 12:04 pm

The richest 50% do not pay 2% of all taxes. I have thoroughly debunked your lies before. Go away.

Posted by GlenParkDaddy on Mar. 18, 2014 @ 5:40 pm

Tell us your theory. That the poor subsidize the rich?

Posted by Guest on Mar. 18, 2014 @ 6:12 pm

If the rich have 90% of the wealth, shouldn't they pay 90% of the taxes.
BTW - Mitt Romney overpaid his taxes by paying 11.5% instead of the 9% which is what he was obligated to pay. 28% here, Who is subsidizing who?
The rich are afraid of a flat tax because their rates go up.

Posted by Richmondman on Mar. 19, 2014 @ 5:30 am

your net worth? That's not close to being true and in fact the US doesn't tax wealth at all - just income.

If you have a billion dollars and keep it in a checking account paying 0% interest, you will pay no tax.

Posted by Guest on Mar. 19, 2014 @ 6:11 am

Read "Perfectly Legal" by David Cay Johnson - it will reveal the dirty secrets about taxes.

Wall St Execs get their "compensation" by exercising stock options. Since these aren't "income" they don't pay income tax, nor Social Security. They pay capital gains tax - at 50% the income tax rate.

Professional Investors don't pay the same rates as workers - only about 1/3 the income tax for every dollar they take earn. We should tax all sources of income the same.

Arguments that "capital gains are already taxed" is total BS. You put money in an investment, you take money out. You should pay tax on the profit/interest/dividend at the same rate as work.

Posted by Richmondman on Mar. 19, 2014 @ 9:50 am

1) Yes, some folks get part of their compensation in the form of stock. But that is income that is at risk - the stock could decline in value. Often the executive has to put in their own money and so could end up with a negative income

2) CGT rates were increased for the wealthy by Obama last year. It's no longer just 15% for high earners. CGT rates are lower than income tax rates in every nation I have looked at, and for obvious reasons.

3) Again, yes, investment income is typically taxed at lower rates but that is to compensate for the risk of investing. Again, it's also true in every other nation.

4) You pay CGT on gains that are purely inflationary. So if you make 30% on an investment over a period of ten years when inflation rose by 30%, you've made nothing in real terms but you pay tax as if you did.

Posted by Guest on Mar. 19, 2014 @ 10:05 am

Tax rates are based on income.
Tax breaks are based on wealth.

Example: People who borrow money to purchase a house and make payments on a loan pay less tax, and are subsidized by renters.

2 people make $100K. 1 purchases a house, the other rents. In the first 5 years of the loan, almost 90% of the loan payments (the portion that represents interest expense) are tax deductable. None of the rental payments are tax deductable.

The person purchasing the house (and building wealth) pays less in income tax than the renter. In addition, if the renter may not be able to itemize deductions if there are "enough" deductions for the IRS.

And this is just the tip of the iceberg. People with more wealth have access to more tax breaks, and pay less in taxes than people with less wealth, even if they make the same income.

Posted by Richmondman on Mar. 19, 2014 @ 11:04 am

are the main beneficiaries of policies designed to reduce the burden of tax.

No shit, Sherlock.

The tax system is designed not just to raise revenues but also to encourage some behaviors and discourage others. If you choose to ignore all that then you cannot reasonably complain that you pay too much tax.

Posted by Guest on Mar. 19, 2014 @ 11:18 am

Taxes should only be used to raise revenues, in the fairest way possible. Instead, it creates benefits to some, at the expense of others. It creates inequality. Those with wealth hire the tax lobbyists who write the tax laws; the tax laws are written to increase the wealth of those who paid the lobbyists. So we end up with middle-class Americans paying the highest tax rates, the most wealthy pay a small %, and as Mitt Romney correctly stated, 47% don't pay any Income Tax.

If we had a flat income tax, then everyone would pay the same % of income. Most of the current taxpayers would see their taxes reduced. We could even exempt the first $25,000 of income for all taxpayers, then make all income taxed at the same rate, with no deductions allowed.

Posted by Richmondman on Mar. 19, 2014 @ 2:15 pm

Although I think that any government would have to preserve the deduction for mortgage interest and property tax, else they would face a massive election defeat next time around.

But there is too much focus on taxes and not enough on how much the government wastes on welfare programs and perks for their own employees.

Posted by Guest on Mar. 19, 2014 @ 2:36 pm

Are we to maintain our parents' mistake and maintain suburban sprawl instead, Stephen? The city's going to have to grow, one way or another.

Posted by Guest on Mar. 18, 2014 @ 4:48 pm

That involves destroying the tech industry and all the success and prosperity that we have achieved. We should pull down all the highrises, demolish BART and the Moscone Center, and build lots more SROs.

And why, you ask?

Because it is really important that aging hippies and losers have their very own theme park.

Posted by Guest on Mar. 18, 2014 @ 5:07 pm

To some degree I have to agree with you Steve. The only solution to building "affordable" housing is to tax "market rate" housing to such a degree that you can subsidize "affordable" housing. The only problem with that solution is that you will make it financially impractical for developers to build "market rate" housing which will dry-up funding for much of the other services funded from impact fees. But it is the only way that you can create the fund required to build the volume of lower cost housing that is desired.

The question that I would ask is: Is there a right to live in San Francisco? While I would agree that there is a right to live in a decent home, does it have to be is San Francisco or could it be else where in California or even in another part of the United States? Where in the Constitution is the right to live in San Francisco stated?

Posted by Guest on Mar. 18, 2014 @ 5:02 pm

and then he wonders why he can't make a gilded omelet.

And he never thinks about SF as being just one part of a much larger city. He is blinkered.

Posted by Guest on Mar. 18, 2014 @ 5:21 pm

California law requires each county and city to build its fair share of affordable housing and to study the housing needs of its residents and workers, which is known as the Housing Element.

Cities can be fined by the state for refusing to plan for this obligation, as the city of Folsom was several years ago when it had a policy of only allowing market rate housing. There are good economic equity and public policy arguments for this requirement, such as the fact that San Francisco should build housing for its workers (the majority of which are low-wage service workers and not high-paid tech or FIRE employees) rather than bedroom housing for Silicon Valley workers, which places a terrible burden on region's transportation system, one that we all pay for. 

Property owners don't have the right to build whatever they want, for whomever they want. Cities and their residents have a say in how the land of a city is used, and at what levels those who use the city as a place to make money should be taxed. You want to make this about people's "right" to live where they want, just so you can mock that straw man argument, but this is really about people's right to have say how their community grows and in whose interests.  


Posted by steven on Mar. 18, 2014 @ 5:36 pm

has to live in SF?

If the state is going to look at housing affordability they should do it across the entire commutable Bay Area and not within the dozens of fiefdoms that exists within that.

Posted by Guest on Mar. 18, 2014 @ 5:47 pm

Mid-20's Tech workers never "fled to the suburbs", Steven. They weren't even born yet when that was happening. They moved here because they wanted to live in San Francisco, same the activists.

Posted by Snoozers on Mar. 18, 2014 @ 5:55 pm

Tech worker - bad

Talentless poet and activist - good

Posted by Guest on Mar. 18, 2014 @ 6:22 pm

They're not all talentless; I hear the all-Spanish Vagina Monologues is a cultural triumph. And lets not forget the wonderful Google bus street theatre.

Posted by Snoozers on Mar. 18, 2014 @ 6:29 pm

I know some tech workers who would rather not live here and pay the high cost of living. They live here because there are jobs here in an industry they like working in. I knew plenty of people who loved working in the entertainment industry, but hated living in LA. We all make compromises.

In any case, if I had children, I too would likely move to the suburbs. It's just too expensive here and the schools are terrible. People of all income levels enjoy one or the other. Some people like a dense urban environment, others don't.

Posted by robco on Mar. 19, 2014 @ 12:50 pm

The experts have been in control of policy for some time and policy is in shambles. It appears due to the only disinterested economic analysis on the table that we run out of runway before we can build our way to affordability due to infrastructure constraints.

Posted by marcos on Mar. 19, 2014 @ 6:23 am

claimed what they claim here i.e. that there are no magic solutions to the fact that SF RE is expensive. There is no fix, no silver bullet and no second coming. It's just expensive here and not everyone who is here, should be here or needs to be here.

That said, we cannot bury our heads in the sand and build nothing. Even a massive building program might not make homes cheap, or even cheaper. But it would make homes cheaper than they otherwise would have been.

Posted by Guest on Mar. 19, 2014 @ 7:08 am

Counter-cyclical economic policies.

Posted by marcos on Mar. 18, 2014 @ 5:18 pm

And the rest of us have it wrong?


Posted by Guest on Mar. 18, 2014 @ 5:21 pm

The housing impact take should be set such that half of all projects don't pencil out economically.

That way, the housing we do get will be awesome and the affordable housing take increased.

Posted by marcos on Mar. 18, 2014 @ 6:48 pm

would mean even more unaffordable homes.

See, marcos, this is why purists like you always fail and are exiled to the wilderness. Because you don't get anything done by being intransigent and incalcitrant.

Half a loaf is better than no loaf. Take a negotiating class.

Posted by Guest on Mar. 18, 2014 @ 7:20 pm

It makes no difference to price at this point how many units are built or not. A few lucky families will win the lottery for the BMR. The best we can do is to put such onerous conditions on development that we scare half of the projects away. That is a middle of the road liberal view.

The libertarian view is to lower all barriers to land use. Most San Franciscans are not libertarians, they are middle of the road liberals who believe in the City leveraging its position for equity in new development.

Posted by marcos on Mar. 18, 2014 @ 7:27 pm

your descent into irrelevance in the local political scene is easy to understand.

Posted by Guest on Mar. 19, 2014 @ 6:14 am

Except that the voters indicate that they might see things more my way than yours. Thanks for playing!

Posted by marcos on Mar. 21, 2014 @ 7:40 am

growth, pro jobs, pro development mayor.

The odd one-off prop on a single building in a low-turnout election with a wild card billionaire on your side proves nothing.

The voters want more homes

Posted by Guest on Mar. 21, 2014 @ 8:05 am

This is the upcycle period, it is time to tax like hell, fill the public coffers with money and try and slow down the bubble.

In a few years, we can spend that money to build housing when construction workers are out of work, land is cheap and the economy needs stimulus.

Keynes was smarter than any of us.

Posted by GlenParkDaddy on Mar. 26, 2014 @ 11:36 pm

aka "community forums" like this. You need to spend more time reporting and covering the scene in San Francisco. Until the capitalist system is overthrown, which will be never, your ideas won't come to fruition.

Posted by Guest on Mar. 18, 2014 @ 5:19 pm

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