Is unregulated growth the only answer to SF's problems?
Is unregulated growth the only answer to SF’s problems?

By Calvin Welch

DECEMBER 23, 2015 — In a period when our national politics are dominated by candidates on the right that rely on “counter factual facts” (that is lying) without paying any political price whatsoever, it should not be surprising that, locally, our right wing pundits argue that that chaos is, in fact, “change” and prattle on about the “inevitably” of “change” in cities in general and San Francisco in particular.

This is happening at a time when the unchecked real estate market has created a level of social chaos unseen in San Francisco in the last 60 years.

Unlike their national brothers and sisters, our “counter-factuals” should pay a political price for their falsehoods. 2016 would be about the right time to do it.

Let’s stipulate that social change is what cities are all about. Cities historically are the places where peasants are transformed into petty traders, petty traders into industrial workers and industrial workers into post-industrial consumers and post-industrial consumers into…

Into what?

It’s that next step that all the fuss is about in San Francisco and every other city in the world. And while that next step must include a system of economic exchange, it’s both logically and historically absurd to assert that only one kind of economic system can work for all time in all cities regardless of who lives in them, and no matter what the natural and physical conditions are.  In short, to assert that everything else changes but market capitalism is the ultimate rejection of “inevitability” of change.

Yet that is precisely what the constant bended-knee suck-up to market-rate developers does: claim that market forces alone are the mechanism of urban change. It’s as if the human history of the last 300 years never happened: no long expansion of first political rights and then economic and now human rights of the people. No creation of the intermediating power of the state to first enshrine the legality of those rights and then defend them through the rule of law. The innovative power of the many against the inherited power of the few, always fought out in the cities first, always won in the cities first, is the real engine of urban change — not the buying and selling of urban real estate for private profit.

Unchecked, unmediated capitalism creates social chaos, pitting all against each. Effective popular movements for equality, sustenance and sustainability — uniquely possible in urban setting — unite people and create social change.  To confuse one with the other is to confuse dynamic, sustainable urban growth with rigid class stratification and social strife leading to urban decline.

 

While it is true that capitalist social chaos almost always produces social change, it is neither sufficient nor necessary for change to happen.  Historically, urban life — the proximity of diverse people to each other — seems to spark technical, artistic, political and social innovation regardless of (or in spite of?) the presence of urban market capitalism. Indeed, the recent history of San Francisco is that the city was more innovative, more dynamic, open to more change when real estate prices were lower — that is, when urban market capitalism exerted less influence on who lived and worked here.

When the pro-development forces argue that change means more density and more market-rate housing because that’s what market capitalism demands, and that the role of local government is simply to accommodate that demand, they are simply wrong in terms of the well being of current San Franciscans.

Like Trump and Carson, they have to lie in order to advance their cause because what they are really selling would not be popular with voters.

Adding another 200,000 to 300,000 full time residents, which is what they are advocating, would mean the displacement of tens of thousands of current residents and businesses because they are living in buildings that would have to be demolished to build the high-density market rate housing their patrons want. We have nowhere near enough vacant land or “soft sides” to accommodate 100,000 to 150,000 new units. The logical and practical effect of their policy is the demolition of thousands of existing buildings.

Even more devastating is the simple fact that in a Proposition 13 world -market rate residential development doesn’t even pay its own way. It doesn’t generate enough property taxes to meet the demand the new residents create for city services. It doesn’t pay for the new transit services that might make it sustainable.

In a period in which the city has more than 50,000 units in the approval pipeline and plans for another 30,000 units in high-density development proposed for the center and western portions of the city – the overwhelming majority being market rate and therefore unaffordable to all but 10 percent or so of current residents — the Mayors Budget Office is projecting a combined $340 million General Fund shortfall for the next two fiscal years!

SFMTA has only identified about 20 percent of the revenue needed to meet its projected 20-year capital development costs, and of course it has very little idea, other than the General Fund each year, where it will get is operating budget.

General fund shortfalls mean Muni shortfalls — and 50,000 or so of the new 300,000 residents driving cars because there is no Muni service to their new homes spells disaster for the city’s sustainability.

This is not the first time San Francisco faced “change” defined by the folks situated to make personal profit out of demolition and displacement and sold by groups like SPUR and politically ambitious supervisors. Read the history of redevelopment in San Francisco. Understand the role played by the politicians of yesteryear who supported “urban renewal” — which was market capitalism using state power to demolish and displace.

When you do you, will see that the “change” offered then is the same “change” offered now: demolition and displacement for tens of thousands of San Franciscans offered as a “housing opportunity.”  But you will also see the response of the community, a response that lead to real change both at the local and national level.

It is a historic lie that the community, organized and united, did not prevail against urban renewal: thousand of African Americans continued to live in price controlled housing in the Western Addition until the present time, although they are now threatened with displacement as the federal and state government has turned a blind eye to the need for an aggressive affordable housing development program in our nations cities and the Lee administration wrings it hands, hoping for handouts from market-rate developers.

If you follow that history, you will see how seniors, working-class retirees and Latinos in South of Market and the Mission rejected redevelopment’s market-rate housing and devised the city’s first community-based and community-controlled housing development corporations that built affordable housing owned by the community, keeping thousands of low-income residents in the city.

This was real social change: Defeating powerful real estate interests, well funded bureaucracies, and the political establishment while creating powerful community organizations and effective community controlled housing development corporations that kept African Americans, Latinos, and low-income seniors in the Western Addition, South of Market and Mission. Real change required modifying market capitalism, not seeking accommodations to it.

What would real change look like in 2016 San Francisco?

 

It would require regulating and limiting urban market capitalism, redirecting profits away from private investors to a wider community in order to stabilize housing costs.

First, at the state level, 2016 may be the year we see a real run at repealing the part of Prop. 13 that requires counties to charge residential property at the same rate as commercial property. Making this change would mean tens of millions of additional revenue for San Francisco that could be used to buy housing sites for affordable housing development.

Second, again at the state level, Sup. Aaron Peskin’s pursuit of an expansion of rent control to buildings built after 1978 would mean thousands of units coming under price controls so clearly needed in San Francisco’s overheated, speculative housing market.

Third, real change would require the city to aggressively implement the use of city land for affordable housing development as mandated by the voters.  In 2016 that mandate should be expanded to deal with Port property, the hottest property owned by the city.

Fourth, real enforcement of short term rentals could occur by simply banning the listing of any property not registered with the city. Fewer than 900 of the 10,000 STR are currently registered. At that rate it will be 2025 before all the existing units are legal. Since nothing happens if one is not registered, the web site should be fined for listing unregistered units.

Fifth, the city needs a market-rate housing/transit linkage mechanism that links approvals of all market-rate housing to actual funding of public transit.  The Market/Octavia “transit-oriented” development plan, in which increased density was allowed along the “transit-rich” Market/ Octavia corridor, was completed just as the city cut transit service to the area.

Supervisor London Breed sponsored huge density bonuses along Divisidero, claiming that the area was “transit rich” while requiring only minimum transit service or “maintenance of effort” even for the existing service. She initially failed to get any additional affordability for the whopping increase in density — although community outrage caused her to change that (note the source of real change!).  She still refuses to require adequate transit funding for the density bonus given developers.

Sixth, the city would need to require market rate developers to provide at least 25 percent of all new units affordable to households earnings between low and median income ($36,000 to $71,000 for a single person). BMR in the highest-priced market in the nation is not “affordable housing;” it’s simply below an insane market rate. Kim has introduced a version of such legislation.

Seventh, the Planning Department would need to pull back the ill-conceived  and insanely mis-named “Affordable Housing Density Bonus” (no new affordable housing would be built) proposal and actually engage in real planning  with western San Francisco neighbors to take more new housing development in those neighborhoods.  Former Supervisor Jake McGoldrick had a reasonable proposal to link better transit service to the Richmond with increased density on selected corners along Geary along with a stronger inclusionary requirement and an annual Muni service fee.  This could be the basis of honest and real neighborhood planning — not the “top down,” “Nimby bigot” baiting stuff passing for planning in Ed Lee’s Planning Department.

Eight, it’s time to start planning, seriously, for Bay level rise and its impact our city and the regional economy. Throw out the silly assumption about two or three feet rise of sea-level rise by late century and recognize that the increase could be as much as 25 feet by then — with eight or ten feet in 20 years or less.

Oakland Airport and SFO will be underwater. So will Treasure Island, Mission Bay including UCSF, and most of the “eastern neighborhoods” where most of the 50,000 pipeline housing units are slated to be built.  Freeways and bridge approaches, parks and open spaces, most of the financial district, all of Recology’s solid waste facility will be inundated as will the city’s wastewater treatment facilities.

 

And then there’s Muni — its underground tunnels swamped, its maintenance and repair yards at risk. When do we get real about this, start figuring how we get through this, together?  First, we may start by discarding non-sense transit-oriented-development” pipe dreams dominating regional thinking when neither the transit nor the development will be above Bay level.  Should we start planning for this mother of all “changes” now? What’s the “market based” solution to that change?

Lastly, put the housing affordability crisis in it true social context: How do we create, given the climate challenges we face, a sustainable future for our people, ALL of our people?  Housing is a function of income. It’s no surprise that we have a housing affordability problem at the same time we have an income inequality problem. Most jobs in San Francisco (and the Bay Area) simply do not pay enough to afford paying only 30 percent of your income for housing. Tech jobs account for only about 10 percent of the jobs in the city, and most of the other 90 percent earn less — yet the private market sets prices based upon that 10 percent income, leaving the rest of us in crisis. That’s how the capitalist market works. Regulating it aggressively will buy us time — but that time must be spent making some hard and creative changes based upon what we face.

The road ahead leads to change. Does anyone seriously think that simply raising our density to more than the current 18,000 people per square mile will meet these changing realities?