Alternative facts and the mayor’s housing plan

"Density bonus" for "middle-class housing" defies reality

Mayor Ed Lee two weeks ago launched a new effort to bring about “affordable” housing opportunities for San Franciscans by proposing, as he did 18 months ago, that market-rate developers be given a density bonus if they provide housing that can be affordable by folks earning up to 150% of median ($113,000 for a single person, $162,000 for a household of four).

Mayor Ed Lee's housing policy is based on "alternative facts." Photo by Sana Saleem
Mayor Ed Lee’s housing policy is based on “alternative facts.” Photo by Sana Saleem

Lee also proposed raising the average affordability level from its current $65,000 (single person income) to $90,000 and from $90,000 to $130,000 for a four-person household for the city’s inclusionary housing program and rolling these numbers into the density bonus plan. Give developers a density bonus AND lower their affordability requirements and we will get “middle income” housing. He is selling this as a “family housing” plan.

This new plan came hard on the heels of Lee cutting an existing rental subsidy program for families at risk of becoming homeless. It seems that in Ed Lee’s San Francisco, only families able to be served by market-rate developers are worthy of support. Poor folks are simply shown the door.

While the legislative language of the new program — named HOME SF by the spinners in Room 200 — is yet to be released and details remain to be seen, this is, in broad brush, the way both Sacramento and the mayor prefer to deal with falling incomes and rising housing prices: increase the profitability of market rate housing development in hot markets like San Francisco. At its heart, it confers public value — increase in density — on private developers for a reduced level of affordability. This is at the very heart of the Trump “art of the deal” model of urban development. It is Trumpism without Trump and it is being pushed from Van Ness Avenue to Sacramento by Democrats claiming to be fighting Trumpism.

We need to remember that Trump did not win in November — Clinton lost, a distinction with a very big difference. Jerry Brown, Scott Wiener and Ed Lee all belonged to the Clinton wing of the party and rode her wagon to national defeat in no small measure because of elite-based urban policies such as community-busting density bonus giveaways that lowered urban turnout in the Philadelphia, Cleveland, and Milwaukie as working and middle income residents saw no difference between Clinton and Trump and simply did not bother to vote.

That such an absurd position could be touted by Democrats and championed in the media, shows just how far “alternative facts” have superseded actual objective evidence concerning housing production and costs, income inequality, and the actual nature of the assault on the urban working middle class.

The “alternative facts” that create a “narrative” (that is then reported — “fake news”) for a density bonus are depressingly familiar and go something like this:

Since the 1970’s misguided (or, alternatively, incredibly prescient profit seeking) progressives, seeking the political support of Nimbys, have, through zoning and land-use planning requirements, blocked housing production here in San Francisco. At the same time misguided environmentalists forced on the state the California Environmental Quality Act and have used it, or worse, allied with racists Nimby homeowners seeking to enhance their profit, to block housing development, especially in coastal California, statewide.

These two groups, progressives and environmentalists, are the reason both San Francisco and California suffer from high housing costs. Only by removing local planning controls and limiting CEQA can the “market” be allowed to function and, by the simple “law of supply and demand,” produce housing at affordable price levels. Only by mandating increased density with no local opposition allowed can the historic imbalance of supply be reversed and prices actually reduced.

It must be made clear that by “alternate facts” I do not mean mere differences in preferences or theory. People may differ about the aesthetics of a tall building, the benefits of urban bike lanes, or if native plants make a better urban park. By “alternate facts” I mean something of what Colbert means with his term “truthiness:” something that sounds true because it advances an argument or a feeling, not because of evidence or actual examination. An “alternate fact” is something that is demonstratively un-true and is used as true evidence for a policy change.

 

The “Alternate Facts” in the Density bonus Argument

“Alternative Fact:” San Francisco has “under built” housing since the 1970’s

FACT: According to the US Census, between 1960 and 2010 San Francisco’s population increased by 64,561, from 740,316 to 805,235. During that same period, we built 91,933 net new housing units, or 1.4 new housing units for each new resident.

Alternative Fact:” San Francisco Progressives and Nimbys, using local zoning and planning laws, have kept critically needed housing from being approved.

FACT: According the San Francisco Planning Department, between 1996 and 2015 some 50,904 units were approved for construction, of which some 16,000 were approved in the last five years.

Alternative Fact:” San Francisco needs more market-rate housing than it is building to meet the needs of new workers, otherwise they will “outbid” existing residents for too few existing apartments and force out existing residents.

FACT: According to the Planning Department, by the third quarter of 2016 San Francisco had approved 181% of the estimated number of market rate units it needed by 2022, while meeting only 16% of its low income need. Even during the Great Recession, San Francisco continued to overproduce market-rate housing. According to the Association of Bay Area Governments, between 2007 and 2014 San Francisco approved 109% of its need of market rate housing while meeting only 27% of its low income housing need.

“Alternative Fact:” High-rise, high-density development produces cheaper rents because more units can be built per acre of land. These cheaper rents drive down rents in general where high density development is allowed.

FACT: While it may be the case that building more units on a site may reduce per unit cost to the developer, unless required by the density bonus legislation to pass that savings on as lower rents, that cost reduction simply results in higher profits if rented at the prevailing rent levels. According to Zumper, the web based rent tracking webpage, in the Fall of 2016 the San Francisco neighborhoods with the highest rents were Soma, Mission Bay/ Dogpatch and South Beach, the three neighborhoods at the heart of the high-rise, high density building boom. The neighborhoods with the lowest rents were Mission/Excelsior, Outer Sunset and Bayview, neighborhoods with nearly no new construction and the fewest high-density buildings in the City.

 

Alternative Fact:” Nimbys use of the California Environmental Quality Act has materially reduced housing development in California and significantly added cost to the states housing development. Allowable use of CEQA to stop housing development must be banned.

FACT: First, residents have little ability to require CEQA review of a project since the initial and presumptive evaluation is done by the city. The vast majority of housing development in San Francisco is done in currently residentially zoned areas and is categorically exempt from environmental review. One of the most comprehensive studies of the use of CEQA “CEQA in the 21st Century,” found that from 2013 to 2015, a period that saw some 10,000 housing units approved in San Francisco, a total of 14 EIRs were required of developers of all types of projects (not just residential), with fewer than 29% of projects subject to environmental evaluation, indicating little evidence of overuse of CEQA.

“Alternative Fact:” San Francisco has the urban infrastructure necessary to support high-density residential development, especially public transit. High density housing can be built in “anticipation of the construction of future transit improvements.”

FACT: So called “transit oriented development” requires major investments in transit to keep pace with residential development. San Francisco has fallen dramatically behind in making those investments. In 2015, SFMTA identified a need for some $10 billion in transit investments to be made by 2030 and $11 billion more by 2035, for a total of $21 billion. Ed Lee’s loss of Prop K this last November knocked a $3.5 billion hole in that projection for 2035. Indeed, only $500 million of that budget has been secured with the passage of a street repair bond two years ago. When a city falls behind in transit investments and continues to allow high density market rate residential development, the result is the recent report that San Francisco is the most congested city in the world during peak morning and evening commute times as the wealthy residents of the market rate high rises continue to rely on their private cars for transportation. while Lee continues to underfund Muni.

Alternative Fact:” Local zoning laws have been historically used to keep people of color out of certain neighborhoods and need to be overridden by state or national policies to allow for high density residential development.

FACT: Since the 1970s in San Francisco, community-initiated rezoning in Chinatown, the Mission, the South of Market and the Tenderloin have protected low-income communities of color from displacement by private developers. In the 1960s community-based law suits had to be used in the Western Addition and the South of Market to protect low income residents from being displaced by redevelopment. Federal and state programs and policies have been used to displace communities of color in San Francisco while local, neighborhood and community based actions have preserved those communities. The current debate over a state mandated “density bonus” is simply the latest example of state laws over riding local controls – the way redevelopment and freeway building did in the 1960s — that will result in the displacement of thousands of existing residents as medium-density buildings are demolished to allow high-density luxury development.

 

 

 

 

  • Y.

    Your best article in as long as I remember.

  • curiousKulak

    Well, I don’t think I agree with Y, but you do make some points.

    However, if you’re going to compare a claim about “1970” – then use stats based on ‘1970’. So https://housing.datasf.org/overview/ sez that from 1970 – 2014 (a more realistic point, as we weren’t talking “housing crisis” in 2010 like we are now (although we’ve been talking “housing crisis since before Rent Control in 1979, or … “1970”?).

    Anyway for housing: 387k-310k = 77,000 net increased housing units. And for population 819k – 710k = 109,000 more people. This about 1.3 people per unit. Now in 1970 the average occupancy per unit was 2.34 ppl/unit; where 2014 the average was 2.32, or almost the same. So to me that indicates that perhaps we aren’t building enuf. But maybe for you it means we’re building too much. But those are the figures and the sources I used; which seem to vary greatly with your source.

    I will agree with you on the TOD concept though. I thought it great at first. But 15 yrs later, it seems like a bunch of bull. Transit isn’t increasing, yet the building in those areas is (Market-Octavia is one little example). That suggests the developers aren’t paying their fair share for the transit use they will induce; and that maybe TOD ought to include an extra enhancement for anticipated need. BUT – maybe we don’t need surface transport – we’ll have everything delivered by drone and get around by Uber-ized robots. I already feel that some of the bike lane infrastructure is maxed out. So …

    • Don Sebastopol

      1970 was the low point. It was 775,357 in 1950.

      • curiousKulak

        No, actually 1980 was the low point (679,000) – you know, when the housing crisis started!

        • Don Sebastopol

          Yes it was 1980; my error. As wrong stroke of the key. From my perspective the housing crisis started in 1973. I recall house hunters were then suffering from sticker shock, they couldn’t believe a house could sell for $50K. In ’73 I looked at a house in Glenn Park asking $40K. A year or so later it was being resold for $50K. And by ’75 the value was up to $60K. The population was declining and the prices were going up?

          • curiousKulak

            Hmm, I seem to remember a house in the Inner Sunset (10th & Irv? 11??) going for $42k around ’76. Seemed like a lot of money to me, and I didn’t really care for that area (doh!), but if I’d only stretched … .

            But then a friend bought a lot on North slope Bernal in ’75 for $10k and sold it a yr later for $27k!

            Five of us rented a 5.5 rm apt in Duboce Tri in ’73 for $250. That was a lot for a single-earner family making a middle-class $8000/yr with kids, but not for a bunch of single guys ($50/mth). Someone older than me said that that couldn’t have happened before, cuz unrelated family were not allowed to co-habit. Thus, all the Victs on the east side were rented to roommates, and families started getting pushed out. Good for investors (and maybe single people); bad for families..

          • Don Sebastopol

            I am not sure when the policy to allow a maximum of five unrelated individuals to live in one household was passed. But for a short time in the mid 1960’s I shared a flat with 4 others in the Haight, but then found an inlaw in Eureka Valley (across the street from Duboce Tri.) I didn’t like having roommates. SF was not affordable even in the late 60’s for young low income people. Most of the young single teachers I knew could not afford to live in the City without roommates. SF has not been affordable for teachers for 50 years.

            One good thing about multi unit development with smaller units on the Eastside, is that it may prevent families from being pushed out of houses and flats. The demand for illegal secondary units has declined and homes in my area are eliminating secondary units to make room for children.

            I sold a cottage near Holly Park I (and my brother) inherited from my grandmother for $14K in 1974 for the down payment on my house west of the peaks. Bernal was not so nice back then. In hindsight I should have kept it; also doh.

          • curiousKulak

            Yeah, anything south of Cortland was reserved for paroles, car thieves and burglars, up until … 2012?!

  • curiousKulak

    And again, Redevelopment was a local agency; it displaced thousands of people of color – it wasn’t a State or Federal “program” (although I can see how you’d argue that). Local zoning laws, which allowed Covenants and Red-lining, were used to segregate housing in SF – not some State program.

    And in the 70s, the whole City was downzoned – not just the Mission/ Chinatown/Tenderloin. You want to claim neighborhood communities did that. But it was the whole City – including the Sunset and outer SFH ‘hoods. Maybe that’s the basis for a feeling that NIMBYs have kept the lid tight on housing (even as we’ve changed marginally or industrially used lands into ‘market rate’ housing.

    Am I a fan of luxury development? Increasingly not. Its a bit sickening to see most of the cars parked or driving being LBB (Lexus – BMW – Benz) these days. That is not ‘normal’ and marks everyone with a Honda (or Chevy) as being “lower-than”. The middle class has been hollowed out. But I don’t see stopping building as somehow preserving middle class households. And even “affordable” building is a losing game – at a cheap-ass amenity level of $300,000 per unit sans land cost – who can afford even that?

    • Don Sebastopol

      Affordable housing may not only be a losing game, it may harm the middle-class. In any case, are there any middle-class jobs left in SF. Some I am sure, but declining. Over the years many of my neighbors followed their jobs to the East Bay, or other counties; a BofA IT unit to Concord; Chevron and Pac Bell to Alameda County; Fireman’s Fund to Novato, etc. People moving in are higher wage workers. But interestingly nearly half of them reverse commute to either the peninsula or the Eastbay.

      • Dirty Burrito

        I agree with you, for once.

    • 4th Gen SF

      LBBT – T for Tesla. Everyone is leaving that out.

    • Foginacan

      We haven’t had anything remotely close to redlined segregated housing in SF for 40+ years.

  • Andy M

    this author wrote an article about how office building in the south bay has generated a housing crisis in the area. How can an author claim we don’t have enough housing one week and then claim we’ve built enough the next?

    The last “fact” is the the most odious of all. Chinatown, the Mission represent a sliver of all the zoning in the city. What does the zoning west of twin peaks do? Pacific Heights? Making almost all of the city exclusionary except for small number of lower income ethnic neighborhoods is called segregation and it’s what the forefathers of zoning intended.

    • Don Sebastopol

      I am not clear on the exclusionary part. Exclude who? My single-family owner-occupied neighborhood west of the peaks was 90% White 50 years ago and 70% White non-Hispanic in 2010. In 2015 it was 55% White non-Hispanic. The number and percent of Blacks and Latino’s has increased. The larger area of the West of Twin Peaks is seeing more upper-middle class Black and Latino families; some (second generation) moved here from the Mission. It is true St. Francis Wood had restrictive covenants until 1960, but there was an upper middle class enclave in Miraloma Park in the 1950’s.

  • Dirty Burrito

    Lots of fallacious arguments here.

    -“we built 91,933 net new housing units, or 1.4 new housing units for each new resident.”

    Examining the number of residents and the number of housing units doesn’t tell you anything about demand. If 100k people want to move to SF and we build units to accommodate 10k people, then we will gain 10k people and it will look like we are meeting demand. We need to look at the cost of construction relative to the market rate price to understand whether or not we are meeting demand.

    -” “Alternative Fact:” High-rise, high-density development produces cheaper rents because more units can be built per acre of land. These cheaper rents drive down rents in general where high density development is allowed”

    Absolute density has little to do with prices. It only dictates the minimum cost to build. Eg. The millennium tower hard costs were $300/sf vs $100/sf for a tract houses elsewhere. If we allow supply to rise faster than demand, prices will fall close to construction costs. Yes, we’re building a lot, but demand is rising faster.

    -“Alternative Fact:” San Francisco Progressives and Nimbys, using local zoning and planning laws, have kept critically needed housing from being approved”

    The author saying “we built 50k units” and have another “16k units” in the pipeline doesn’t disprove the above statement. Again, prices tell the story of supply and demand, not construction numbers.

    -“FACT: According to the Planning Department, by the third quarter of 2016 San Francisco had approved 181% of the estimated number of market rate units it needed by 2022”

    What the planning department says we need and reality are two different things. Sky high prices clearly point to a shortage.

    -““Alternative Fact:” Nimbys use of the California Environmental Quality Act has materially reduced housing development in California and significantly added cost to the states housing development. ”

    This is well documented. Unions routinely use the threat of a CEQA lawsuit as blackmail to force union labor on project. Big box stores have used CEQA to delay competition from moving in. 80% of CEQA lawsuits are for infill projects, not sprawl, wetlands, etc.

    -““Alternative Fact:” San Francisco has the urban infrastructure necessary to support high-density residential development, especially public transit. High density housing can be built in “anticipation of the construction of future transit improvements.”

    We’re not going to build transit to accommodate potential future growth, the last 50 years of doing little to nothing have made that clear. Density will have to drive the development of new transit, not vice versa. It’s more a matter of forcing new transit vs anticipating it. No one said growing was easy.

    • curiousKulak

      On the last point, putting in transit before development was the old model (and cheaper). Witness Geary trolleys, West Portal tunnel. Building to gridlock, and then putting in transit (Chinatown subway anyone) is a recipe for disaster.

      And this is not to condone the T-trolley line (T for Terrible). Such an slow, inadequate and costly addition is a head scratcher.

      • Y.

        The T-line was Willie Brown’s parting vanity project, with the pretense of benefiting the Bayview, but actually as a shiny invitation to developers to come to 3rd Street.

    • Foginacan

      “We need to look at the cost of construction relative to the market rate price to understand whether or not we are meeting demand.”

      No we don’t. Most of us aren’t worried about the bottom line profits for builders, or pretending it’s demand that set the pricing for their condos.

      • Dirty Burrito

        You misunderstand. If the market rate price is much higher than the cost of construction there is a constraint on supply.

        That constraint could be all sorts of things, but in our case it’s land use restriction.

        “Pretending it’s demand?” Really?

        Also, no I don’t care about developer profits, they’re doing just fine.

        • Foginacan

          No, the constraint is only in the profits. You say you don’t care, but you’re worrying about construction costs like it’s your pocket book involved.

          Land use hurdles exist no matter irregardless of the budget and profit.

          • Dirty Burrito

            Yes I care about construction costs, no I don’t care about the welfare of developers. I’d like to own a home someday, so yes, you could say my pocket book is involved.

            “the constraint is only in the profits”

            That doesn’t make any sense. If the constraint is only in the profits, then I should be able to sell apartments in Winston-Salem for $1000/SF, right?

          • Foginacan

            You’re not very sophisticated if you think your pocket book and ability to own a home is contingent on happy days staying here again for builders.
            I feel bad for you that you’ve been convinced otherwise, but there are a lot of shill brainwashing people when it comes to housing.

            Likewise, I can’t deprogram you from whatever ledge your on, where you your example of Winston-Salem works. Rewire your brain so that constraint, builder profits, supply/demand, aren’t one in the same, then we can talk.

          • Dirty Burrito

            I don’t think my ability to own a house is contingent on building more because we’re not going to be able to build enough to meaningfully impact prices. Under current conditions prices will turn when the economy does.

            Real land use reform will probably only come after a much worse housing crisis, if ever. I’m not waiting around for that, instead I’ll just purchase one your generation’s shitty old overpriced houses, preferably during a downturn.

          • Foginacan

            We agree on the first paragraph.

            On the second, salivating for a recession isn’t provocative. Neither is your ageism about what generation you think I belong to, or your attitude about “shitty old overpriced houses”. It’s impossible to have empathy for you, and your greedy entitlement.

          • Dirty Burrito

            I’ll admit I am ageist when it comes to housing. Most nimbies I encounter are baby boomers, with a couple of exceptions (40+ year old homeowners)

            I’m not looking for empathy, and I don’t believe I’m entitled to homeownership or even a reasonable cost of living.

            Here’s what I believe:

            -Land use regulation in the bay area favors long term land owners over buyers and renters

            -Land use regulation exacerbates inequality

            -if we build enough we can bring market rate prices close to the cost of construction (Gyourko et al. estimate easing land use restrictions could result in prices as low as $278/sf for the city of San Francisco)

            -Building more is a way to make the bay area more inclusive

            -The character of the bay area will change dramatically whether we build or not

            -Density doesn’t make a city inherently bad

          • Foginacan

            “Land use regulation exacerbates inequality”

            You want this to be true so badly, don’t you. SF has now shortage of minority owners, and don’t have red lining. You want the very things that are killing diversity, and any chance at equal opportunity in the housing market. You need to reevaluate who sold you this bill of goods.

            “Building more is a way to make the bay area more inclusive”

            We’re seeing the opposite results.

            “if we build enough we can bring market rate prices close to the cost of construction”

            You’ appear bright enough to realize this is crazy talk. I’m sorry but this is really flat out dumb. The cost of construction isn’t contained in a capsule.

            “Density doesn’t make a city inherently bad”

            Density and change for the sake of it, at the expense of the city you claim you want to better, isn’t inherently good. I think you know that.

          • Dirty Burrito

            Re: land use and inequality, that’s the opinion of Jason Furman, former chair of the council of economic advisors to Obama. The argument goes something like this: Land use restriction drives up cost of housing relative to the cost of construction (the difference in prices are called economic rents). These economic rents allow transfer of excess wealth from renters and buyers to land owners.

            “Building more is a way to make the bay area more inclusive” – “We’re seeing the opposite results.”

            Yes, exactly. We’re not building much relative to demand, so the relatively small amount of housing on the market is essentially auctioned off to the wealthiest segment of the population.

            “You’ appear bright enough to realize this is crazy talk. I’m sorry but this is really flat out dumb. The cost of construction isn’t contained in a capsule.”

            I assume you’re saying supply and demand is crazy talk? The only argument I repeatedly see against supply and demand in housing is “I look around, I see a lot of stuff getting built, yet prices are still rising, ergo S&D doesn’t work.” Again, supply must rise relative to demand for prices to fall. If supply rises rapidly, but demand rises faster, prices will still rise. If you have a better argument I’d love to hear it.

            Yes, the cost of construction is complex. High land costs affect labor prices, as well as the cost of materials. Still, the cost of a 4-7 story mid rise build was $225/sf in SF in 2013 (RSmeans data). That includes 25% profit for the contractor (not the developer) and 6% for the architect. The biggest cost is land, and the value of that land is largely determined by zoning. Gyourko and Glaeser estimated in 2013 the implied cost of land in SF was $500k per unit, but under free market conditions the same land would be worth about $50k.

            “Density and change for the sake of it, at the expense of the city you claim you want to better, isn’t inherently good.”

            No, not density for the sake of it, density for the sake of reasonable housing costs, inclusivity and reduced inequality. There are some good things inherent in density, like substantially lower per capital carbon footprint and lower water usage.

            I’m not saying density will make San Francisco a nicer place, I’m just arguing that supply and demand works.

          • Foginacan

            I take it back, based on the canned bullshit about supply and demand it’s likely you are stupid. On what planet do land prices control the cost of labor, and materials? Clearly your concept of supply & demand is too faulty to base any conversation around. You fundamentally do not understand what you’re talking about.

            > $500k per unit, but under free market conditions the same land would be worth about $50k.

            No. Just, no.

          • Dirty Burrito

            Again you call me stupid, call my logic faulty, yet fail to produce any non-anecdotal evidence or arguments.

            “On what planet do land prices control the cost of labor, and materials? ”

            Are you arguing the cost of land doesn’t affect the cost of living, and that an increased cost of living doesn’t put upward pressure on wages? Or that lumber prices aren’t affected by the cost of rent for the yard and the wages of the employees? If that’s the case, why are construction costs in North Carolina 40 percent lower than the Bay Area? (Identical structures, excluding land cost)

            “500k per unit, but under free market conditions the same land would be worth about $50k.

            No. Just, no.”

            If we zoned the entire bay area for high rise construction, what do you think would happen to land prices?

          • Foginacan

            “If we zoned the entire bay area for high rise construction, what do you think would happen to land prices?”

            Land prices would get astronomical.

            Please tell me you’re not boneheaded enough to think the supply would drown out the advantage of a newborn unrestricted market for construction.

            “why are construction costs in North Carolina 40 percent lower than the Bay Area? ”

            You think cost of living dictates land values for builders that don’t even reside in the Cit?. Contractors spend the same amount on hammer and nails here as they do in North Carolina.

          • DragonflyBeach

            “Land prices would get astronomical.”
            In the short-term due to the current restrictions yes. In the long-term they would drop with over-saturation. You don’t seem to understand that limited availability spikes prices, it doesn’t drop them: proof: the Bay Area.

          • Foginacan

            No, the value bump isn’t a short term one it’s a relatively permanent one. Upzoning has value. Suburban land is worth less than urban downtown land.

            I have to laugh when someone like yourself mistakes more with more availability, and with more affordable available.

            The exception is when that suburban land gains cache and exclusivity, which is what happened in the Bay Area, creating markets that weren’t influenced by the city, and held their own values. As a result, other mall markets increased and we saw this pattern during the recession too.

          • Dirty Burrito

            Didn’t forget about this conversation, will try again 🙂

            “Land prices would get astronomical.”

            That’s likely true for some pieces of land.

            We’re talking about housing costs, so what’s important is the cost of land on a per unit basis. The bottleneck in the supply chain is really entitlements on a per unit basis, not land.

            So again, what would be some concrete effects of removing land use restriction?

            1. A massive increase in the supply of land that allows mid-rise and high rise construction
            2. A decrease in the supply of land where single family home construction makes financial sense
            3. An astronomical increase in the number of entitled units. (An order of magnitude? Again, that’s entitled, not necessarily “economically feasible”)

            And in my opinion, the effect on land prices:

            1. A decrease in the value of land for mid-rise and high-rise construction due to the dramatically increased supply of building sites
            2. An increase in the value of underutilized land, e.g. many lots that are currently zoned single family
            3. An overall decrease in the per-unit cost of land due to the massive increase in entitlements

          • Foginacan

            You can’t discuss land on a “per unit” basis until the units are planned.
            If you want to discuss bottlenecks, you sure as hell can’t do so by talking about unbuilt units without specificity.

            The zoning on land is based on the land.

            There is no such thing as a “decrease in the per-unit cost of land due to the massive increase in entitlements”. Even the way you’re using the word “entitlements” is mixed up. Say you’re building floor through apartments – the cost to build them as it relates to what you’re calling “entitlements” is not amortized according to how high you can stack the cake. The builder knows they can break even after 2 layers, and everything else might as well be icing.

          • Dirty Burrito

            “There is no such thing as a “decrease in the per-unit cost of land due to the massive increase in entitlements”.

            This idea is central to your flawed ideology.

            Developers think of lot costs in terms of buildable square footage, which means in essence they are paying for entitlements. So entitlements have concrete value, and if you think they’re not subject to the law of supply and demand you are mistaken.

            If we removed zoning, entitlements would no longer add value to land. You wouldn’t have the case of a two identical adjacent pieces of land with dramatically different values due to different approved uses.

            Land varies dramatically in cost per acre, yet cost per buildable square foot is much more uniform and hovers around $150/sf. Funny, don’t you think?

            two random projects:

            First and Mission, ~50 story tower

            $236M per acre, $148 per buildable square foot

            500 Townsend, mid-rise

            $41M per acre, $170 per buildable square foot

          • Foginacan

            You have never met a developer.

            Why would land values ever be identical in a City with SF’s terrain? Never will be.

            Construction groupies like you don’t have the first clue what they’re talking about. There is a huge divide between how builders operate and the reports on Socketsite.

  • Jonathan Bonato

    Welch says SF built enough housing, but in my opinion, that is not true, the exorbitant and outrageous prices and the difficulty anyone, at any income level have finding a place to live is proof we have a housing shortage. Tokyo had more housing starts last year, than the entire State of California, and market rate rents in Tokyo averaged $802 per month, compared to about $3500 per month in San Francisco. Japan’s household income is comparable to USA household income, except families can survive there with just one parent working. From 1960 to 2010, Welch says we built 91,933 new units….Singapore built one million units during same time period, and 90% of their population owns their home, paying around 20% of income to own. We haven’t built enough, and we haven’t given people the opportunity to have an ownership stake in SF, so tenants keep getting evicted and pushed out and prices keep going up and up. I have a personal stake in this issue, as I struggled for years to pay high rent prices, and ended up becoming homeless. I was a civil servant, I finally quit my job out of frustration, despair and hopelessness. In 2008, I managed to get back on my feet and fought like hell to buy a limited equity home and today I work to house homeless and low income people. For me, I’m painfully aware of the housing shortage – Welch has owned his home worth a fortune for many years, if he were actually trying to find a place to live today, I wonder if his viewpoint might change.

  • sebra leaves

    “Poor folks are simply shown the door.”

    Or the sidewalk. If San Francisco poured as much money into subsidizing rents for the homeless as they do into sidewalks and parks and tree removal, we could keep a lot more people in their homes and off the streets. But protecting people from evictions is not the goal. The goal is the make money not help people. There is no growth potential in helping people.