SF doesn’t have many remaining sites for development of any kind. We should reserve those that remain for affordable housing development.

20 April 2018: San Francisco, CA. Development just below the Potrero Projects. Photo Robert Gumpert

The cost of housing is transforming – destroying – San Francisco and the Bay Area. The crisis is so bad that the even the ruling elite is forced to address it. True to form, all of their proposals are shaped by their self-interest. Ditto local governments responses. Some people – and sadly not just the wealthy – believe that we can lower or stabilize housing costs in SF by building more market rate housing. I don’t. The housing market hasn’t worked for most San Franciscans for decades. I have no faith in market-based solutions. The monthly rent for a typical unit is $4650. The lower-end price to buy a home in the entire Bay Area is over $500,000. In a city like SF, with an international housing market, market rate housing may make the cost of housing even higher, not lower. But most importantly, the debate over market rate housing, and new housing development in general, misses the most important solution – strong rent control, or vacancy control. Vacancy control is the only way to save SF as a mixed-income and multi-ethnic, diverse City. The housing development debate gets far more attention than it deserves. Development is part of the answer, but it is more and more beside the point, as is even the building of affordable housing. The only reform worthy of discussion is strong rent control/vacancy control.

Earlier this year, State Senator Scott Weiner introduced SB 827 – ‘planning and zoning – transit rich housing bonus’. His legislation embodies the corporate elite’s solution – more market rate housing. Weiner’s bill is a gift to for-profit market rate developers, with the false ‘common sense’ rationale that more/denser market rate development will lower housing costs in SF. People on the Left opposed it for my reasons. People on the West side of SF opposed it because they oppose any and all additional development in their neighborhoods. They would oppose affordable housing even more strongly. It stalled in the CA legislature in 2018. He will reintroduce it next year.

SF doesn’t have many remaining sites for development of any kind. We should reserve those that remain for affordable housing development. Prop I – the Mission moratorium – called for declaring a moratorium on market rate housing development in the Mission. It was an effort to preserve any remaining Mission sites for affordable housing development. Development of new housing, affordable or not, will play a relatively small part in the fight to preserve the City as mixed income and multi-ethnic. The only way to save SF is with strong rent control – vacancy control.

The Italian Marxist Antonio Gramsci’s concept of cultural hegemony is useful in understanding why the affordable housing debate is so skewed, and why both the corporate elite and local government refuse to pursue the only realistic solution. What serves the interests of the class in power is taken as common sense and a given, and what challenges it is viewed as irrational or blasphemy. That’s the best way to understand the politics of the market rate housing vs. strong rent control debate.

The belief that more market rate housing will lower the cost of housing is straight up supply side Reaganomics. How much housing of any kind gets built in SF every year? And even if folks built on every available site, how many units are we talking about? The City is 2/3s renters. We need changes that stabilize their rents and permanently lower the cost of rental housing. There’s only one solution – vacancy control.

With the passage of the Costa-Hawkins Act in 1995, landlords and developers got the California legislature to preempt a locality’s ability to institute vacancy control. (I wish there were a more people-friendly term than vacancy control. ‘Strong rent control’ isn’t sufficient, especially for areas where there is no form of even weak rent control). Berkeley and Santa Monica had passed strong rent control, and San Francisco came within one vote of over-riding then-Mayor Dianne Feinstein’s veto to pass it. The Costa-Hawkins Act limits local rent control to vacancy decontrol – controls only on occupied units. A landlord can raise the rent whenever a unit becomes vacant. Over time, the increase in rents remains the same, with periodic unit-by-unit stabilization. Vacancy decontrol also gives landlords a tremendous incentive to evict people, especially longer-term renters who have stabilized rents.

The good news is that a California Alliance of Californians for Community Empowerment (ACCE) led coalition has gathered enough signatures to place repeal of Costa-Hawkins on the November 2018 ballot. If passed, it would remove the Costa-Hawkins preemption and return authority to decide on rent control to the local level.

The only ‘market’ based solution I believe would work is universal Section 8 or deep rental subsidy.

California’s tenant organizations had assumed that folks around the state wouldn’t understand the need for vacancy control unless and until they had experienced vacancy decontrol, and realized its limitations. They have worked, with mixed success, in smaller cities and in the San Joaquin Valley, to win vacancy decontrol. Statewide tenant leaders have felt that it didn’t make sense to go to the ballot statewide until more cities had experienced vacancy decontrol, like SF, Oakland and LA. But – and it’s too long a story to relate here – the Executive Director of the SF AIDS Foundation bankrolled a statewide effort to place Costa-Hawkins repeal on the statewide ballot. He failed to confer with tenant organizations. He had the money to pay signature gatherers. The tenant groups joined in. So repeal has qualified for the November 2018 ballot. CA ACCE, which has a strong base of members in cities statewide, has stepped up to try to provide leadership for the campaign.

It does make sense for nonprofits to build 100% affordable housing anywhere they can. They view any ‘underutilized’ site as a potential development site – parking lots (like the one in front of your local Safeway, one story warehouses, etc. Yet most local governments, like San Francisco, fail to pursue the development of new affordable housing wherever possible. Why don’t they? And why does local government cling to the false notion that ‘inclusionary zoning’ is the solution?

Affordable housing development comes down to two factors – sites, and ‘subsidy’. The primary impediment to creating affordable housing isn’t lack of sites, or Not In My Back Yards resistance. It’s the enormous amount of subsidy required to develop – by new construction or acquisition of existing multiunit buildings – affordable rental housing. Subsidy is the term for the amount of money needed to close the gap between the cost of housing and what a poor, working or middle class person can afford to pay. Even with the federal low income housing tax credit, every unit of affordable housing requires from $3-400,000 in local cash subsidy. The federal government long ago abandoned funding new affordable housing. The State has never provided much support. The City has shied away from passing the enormous general operating bonds required to provide the necessary subsidy.

‘Inclusionary zoning’ is the term to describe when government forces a market rate developer to provide the internal or non-public subsidy to produce a percentage of affordable units. I believe inclusionary zoning is like getting to roast a marshmallow while you’re burning at the stake. Whatever the percentage of ‘inclusionary’ units per development – 15, 20, 25% – it’s still a very small drop in the bucket.

The only ‘market’ based solution I believe would work is universal Section 8 or deep rental subsidy. Section 8 provides a landlord a set ‘contract’ rent. The tenant pays 30% of their income toward that rent – NOT 30% of the rent. The federal government provides the difference. A state or city could provide deep rental subsidy to replace federal Section 8, but the cost would be even greater than providing the subsidy necessary to maximize affordable housing development.