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Politics on Tuesday: Is City Hall under Lee and Chiu more effective?

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Mayor Lee talks to reporters after today's Question Time
Mayor Lee talks to reporters after today’s Question Time

By Tim Redmond

JULY 15, 2014 — Over at the Haight Ashbury Neighborhood Council Thursday night, a group of political observers and activists (including, yes, me) were talking about the meaning of the November election, and an interesting thread emerged.

On panel were Corey Cook, USF political science professor; Connie Ford, longtime labor activist; Chelsea Boilard of Coleman Advocates for Children and Youth, and moderator Calvin Welch of HANC.

And as we batted around the extraordinary number of significant initiatives on the fall ballot, it became obvious that one of the major narratives of SF politics, 2014 is completely off base.

We hear over and over – from the Chron, for example, and the mayor, and certainly from the Assembly campaign of Sup. David Chiu – that the board and the mayor these days are a much more effective group.

The era of the crazy lefties, the time when the likes of Chris Daly and Aaron Peskin were running the show, gets dismissed as “divisive” and “dysfunctional.”

But let’s look at facts. Right now the single most important issue in the minds of anyone in town is the rising evictions and the lack of affordable housing – and the moderate, effective mayor and board president have utterly dropped the ball.

There’s been one piece of critical housing legislation aimed at stopping evictions, and it came from the board’s left flank, from Sup. David Campos. The mayor refused to sign it, even after it won a veto-proof majority.

Mayor Lee has insisted all spring that the only way to solve the eviction crisis is with state legislation – and despite the best efforts of Sen. Mark Leno, that failed. We all knew it would be an uphill fight; the state Legislature is generally terrible on tenant issues. But the mayor put off of his efforts in that one arena, ignoring local efforts, and lost.

So where’s the housing agenda now? It’s on the ballot.

Nothing wrong with ballot measures, but they tend to reflect a failure of policy makers to address critical issues. In this case, an anti-speculation tax and a housing balance measure are both going before the voters. And, in an odd move that I haven’t seen since the Willie Brown days (wait, are they even over?), Lee has put his own measure up that would effectively repeal the housing balance plan.

Does this sound like “consensus” and “functional government?”

The anti-spec tax is actually an increase in the real-estate transfer tax based on how long a property is held before it’s sold (and since it’s a tax, it has to go before the voters anyway). The housing balance law would link permits for new market-rate housing to a city goal that 30 percent of all new units be affordable.

The mayor’s answer: A ballot measure that would essentially remove all roadblocks to building market-rate housing and would prevent any mandates for more affordable units.

Chiu weighed in on the controversy in today’s Chronicle, suggesting that both sides back off and instead work together for a “housing bond” in 2015. Of course, building new affordable housing is expensive; I’m not clear how big a bond he’s talking about, but most estimates put the cost of a new unit somewhere between $300,000 and $500,000.

So let’s say we put a $300 million bond act on the ballot. San Francisco officials have been trying to avoid issuing new bonds until we pay off existing ones, so that nobody’s property taxes go up, but never mind – the voters will probably accept a modest tax hike for a good affordable housing plan.

That bond act would get you – at most, at the lowest price point – 1,000 new affordable units. Nice, good, everyone wants that … but if the mayor wants 30,000 new housing units in the city, and we use the city’s own General Plan as a guideline (it calls for 60 percent of all new units to be below-market-rate), a sizable bond act would produce about 1/18th of what the city needs.

To meet the actual need, we’d have to have a bond act of $5.4 billion – and that’s assuming that land and construction costs don’t go up in the next 10 years, and that the city can build affordable units at the lowest possible price.

Just to meet the Housing Balance Act goals of 30 percent affordability, the city would need to issue more than $2 billion in bonds.

I somehow suspect Chiu isn’t going that far.

During Question Time at the board meeting today, the mayor said that he wants to see 30,000 new housing units in the city, with 50 percent of them affordable. I ran the numbers on my notepad, and if we assume a (low) $300,000 per unit cost, we’re taking about $4.5 billion.

I asked the mayor in the hallway if he was suggesting a bond act in the billions, or where else he could find that money. He said some of the money would come from the federal government and go to rebuild and expand public housing (but that won’t be more than a few hundred million dollars, at best). Some of it will come from the 12 percent to 15 percent inclusionary housing that’s currently required. Some of it will come from the $1.5 billion housing trust fund that the city’s already put in place.

But there’s still a huge shortfall – and the mayor’s current ballot measure contains no new sources of funding. I kept asking: Where are you going to get to $4.5 billion? “Well,” the mayor said, “we have a lot of time.”

A lot of time could be, say, ten years. Fine: $450 million a year. I don’t see where that’s coming from unless we start seriously talking about new revenue.

So while lots of people would support a housing bond in 2015, there no way a single bond act will solve the problems facing this city. Which is why the voters will have a chance to put a dent in speculation and force (not ask, but force) developers to participate in building the needed lower-cost housing.

Remember: In a housing crisis, the most valuable (and cheapest) affordable housing is the housing that already exists, and protecting the rent-controlled stock from evictions and conversions to TICs is way, way less expensive and way, way more effective that trying to replace it.

By the way, if you think that we can build our way out of the problem, spend ten minutes learning why that’s insane.

 

The New York Times had a classic piece of parachute journalism on City College today, an argument that the school is only being allowed to survive because it’s “too big to fail” and has political support.

“Most of City College’s problems have not been resolved,” the story says. That’s entirely wrong; pretty much everyone involved agrees that most of the problems have been resolved.

Nobody says that City College is an educational failure; in fact, there’s almost nothing in the report to suggest that students aren’t learning. The debate over accreditation is all about administration, structure, and the interest of the ACCJC in changing the mission of City College.

You’d think the New York Times could figure that out.

Tim Redmond
Tim Redmond has been a political and investigative reporter in San Francisco for more than 30 years. He spent much of that time as executive editor of the Bay Guardian. He is the founder of 48hills.

6 COMMENTS

  1. It is incumbent on anyone proposing a new tax to first identify the tax saving elsewhere that will be achieved. Without that people will simply see it as a tax hike and vote against it.

    Moreover without an offsetting tax increase, it will increase the cost of housing, as all new and higher taxes do.

    Now, if you are suggesting that we amend Prop 13 to only tax the land and exempt the buildings, and assuming that the overall amount does not increase and continues to be subject to the annual 2% cap, then maybe you can find an audience. But not otherwise.

    And you would also have to relax zoning laws to allow higher buildings.

    But realistically, you idea is a non-starter.Taxing inanimate objects in place of transactions is a retrograde move.

  2. Unlike taxes on wages and salaries and capital, a tax on land values is not a tax on production of goods and services. To tax land values does not diminish or dissuade production of (for instance) housing.

    As a matter of fact Hong Kong did tax itself to prosperity. Under the British rule the land was held by the British Crown and leased. The revenue from land values obviated the need to tax goods and services, which made Hong Kong a desirable location for business. The Chinese have maintained this model to a large degree because it works.

    The surest way to encourage developers to develop is to tax away land values while removing taxes on buildings, building materials and labor.

    The acres of surface parking lots in SF are held off the market by those who are not paying the market opportunity cost of its use.

    To review: The private ownership of nature (urban land, suburban land, industrial land, etc.) and its value is in a separate category of relation to society than the private ownership of goods and services produced by private parties. This is because nature is not produced and is not optional. There is no alternative to using location, location, location in the production of goods and services (except in the sense that one can use less desirable land further from the nexus locations of society, in which case the efficiency of production goes down. This is the other side of the coin of paying higher land values to be further away from lower production efficiency locations.)

  3. So your grand idea is that we can make property cheaper by increasing the tax on it?

    If land is expensive then the solution is obvious. You build higher which, in any event, is the cheapest way to build.

    But no society on the planet has ever taxed itself to prosperity.

  4. Better than a housing bond, better than relying upon inclusionary housing quotas, better than transfer tax increases is, when looking for systemic solutions to the high cost of housing, would be for David Chiu and David Campos to advocate for an increase in the property tax on land values matched with a significant decrease if not elimination of the property tax on improvements.

    The logic is self-evident: we want more housing, so don’t make housing more expensive by taxing it; however, we don’t want windfall speculative income potential to drive higher land values, so it’s good to tax land values heavily.

    Taxing land values is what economists mean when they argue for socializing economic rent. Economic rent is the cost of merely getting “into the game.” It’s the cost of monopoly to the producer. A tax on land values doesn’t tax production since land isn’t produced. And a tax on land values retrieves a value created by community since the mere owner of land doesn’t account for the value of land, the growth of community does. The producer (and by transaction, the owner) of buildings does account for the value of buildings by having built them/provided them. But no land owner can say he provided land for it exists regardless of his existence.

    Mssrs. Redmond, Lee, Chiu, Campos, and the rest of the well-intentioned citizenry would do well to take a cue from Thomas Paine, Joseph Stiglitz, Adam Smith (yes, that Adam Smith), and our own boy, Henry George, and begin by socializing the economic rent of land, and then take stock of what next to do.

    Instead, our do-gooders first look at the problem, see that it’s all about mega-priced housing (without seeing that it’s really about mega-priced land) and then are left with no choice but to blame builders and techies for the squeezing of the moderately incomed.

    Redmond and ilk are right that no amount of building more will appreciably reduced the price of land in San Francisco. In some places of the country yes, but not where the demand is high and the salaries back of that demand still higher. So Redmond and ilk are left thinking they need to primarily subsidize housing costs. Wrong. We need to remove the subsidy that currently redounds to land owners in the form of the low property tax on land values. That low tax allows people like me who own land to stand clear of the market for land. Land values rise but land owners are largely insulated from that increase in market value by Prop 13.

    The well-intentioned folk who want to revise Prop 13 so that commercial real estate pays on the basis of market valuation are stepping in the right direction, but only kind of. They are motivated, not by principled ethic, but by a sense of traduced justice. They believe that rich people should pay more rather than hewing to a principled position that IF YOU USE NATURE/GEOGRAPHY YOU SHOULD PAY THE VALUE OF THAT NATURE/GEOGRAPHY TO THE COMMUNITY. For these well-intentioned folk, clarity of thought is not the goal, feeling good about going after the rich is the goal.

    The fact is, though, that having everyone who owns nature pay for that privilege, will enormously recalibrate wealth in society. And with that recalibration accomplished, then society can soberly deliberate how much, if any, of earned income should be socialized.

  5. Someone should check the activities of the Mayor’s lobbyists in Sacramento to see if there was any collusion or conspiracy over Leno’s Ellis Act fail. Also, check that energy choice thing that the Mayor keeps harping about.

  6. Your complaint appears to be that Ed Lee, having won an easy election victory, is failing to adopt the policies of the candidate he defeated, Avalos.

    Yes, that’s right, you lost the election and so the policies that you support are not getting implemented. The only question is why that surprises you. What do you think losing an election means?

    (Answer: it means the city gets policies that you don’t like).

Comments are closed.

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