Wednesday, March 3, 2021
News + Politics The Agenda, July 31-Aug. 6: The attack on blue...

The Agenda, July 31-Aug. 6: The attack on blue collar jobs continues …

... as SF may be building housing for international criminals

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I’ve often wondered how much housing San Francisco is building for international criminals. And now it appears the feds are asking the same question.

A federal agency is now demanding access to the real names of cash-only buyers of luxury properties in cities that include New York, Miami, and now San Francisco and LA.

“We are seeking to understand the risk that corrupt foreign officials, or transnational criminals, may be using premium U.S. real estate to secretly invest millions in dirty money,” FinCEN director Jennifer Shasky Calvery said when rolling out the program in Manhattan and Miami in January.

We know that many of the new market-rate high-rise buildings in San Francisco have been sold to people who don’t live there. Many of us have suspected that some of the more pricey units are getting snapped up by people who want to, in the words of the feds, “secretly invest millions in dirty money.”

Activists continue to fight the Beast on Bryant amid increasing concern for the loss of PDR and arts space
Activists continue to fight the Beast on Bryant amid increasing concern for the loss of PDR and arts space

So now will that information be made public? Because this mayor’s housing policy involves building a whole lot of units that most people who work in this city can never afford. And maybe our housing policy is supporting money-laundering. Because nobody at City Hall seems to be tracking whether those new highrise buildings are housing San Franciscans, new arrivals – or anyone at all.

 

The Board of Supes goes into a recess after Tuesday/2. The November ballot is all set – while much of the news media and the conservative supes were whining about a lack of civility, that progressives actually got some things done.

So there will be a Charter amendment to create the Office of the Public Advocate, there will be a tax on high-end property sales which could pay for free City College, there will be there will be a measure to allow non-citizens to vote in School Board elections, the street-tree problem will be solved, and there will be improvements in the Office of Citizen Complaints. Among many other things.

So what’s still left? For one thing, a measure that would require a conditional use hearing for any project that removed production, distribution, and repair space or community arts space – and an appeal of the Beast on Bryant project, which does both.

The Planning Commission approved the massive Mission development 5-2, and community activists have appealed. They are technically appealing the planners’ determination that the plan doesn’t need an environmental impact report and the conditional-use exemption. The supes very rarely overturn the Planning Department on these appeals, and the case may wind up in court.

At the same time, the supes have to decide whether to require a (separate) CU for a project like this that has a huge impact on PDR and arts space. If that measure passes, and this project is delayed by the board, or by a lawsuit, the process could in essence start all over again – and the developer’s offer of a deal to the city might not matter.

The builder, Nick Podell, initially wanted to build 276 units of housing, with only 16 percent affordable. About 50,000 square feet of PDR space, including the venerable Cell Space arts center, were evicted last year and most of that would be, and still will be, lost.

By the time the community made a huge fuss, Podell offered another plan (message here, particularly as we discuss “by right” development: No developer ever, ever comes forward with the best offer up front, and community opposition almost always leads to a better project). He cut the number of market-rate units to 199, and offered to give a third of the site to the city, which would then pay to build about 136 affordable units. He’s agreed to restore some of the PDR – but not necessarily at the lower rents that allowed places like Cell Space to thrive.

So it’s still a Beast, that will transform a part of the Mission that was once affordable not just to residents but to businesses that provided decent jobs to people who don’t have computer-science degrees. The attack on PDR space continues, unabated – and the displacement impact of new market-rate housing in working-class neighborhoods remains a profound issue in the Mission. While those won’t be the technical issues before the board, they will be the background under which this appeal will be considered.

Meanwhile: More PDR space is on the chopping block every week, including Thursday/4, when the commission looks at (and will probably continue) another plan to replace 20,000 square feet of PDR with more luxury housing, which maybe will provide places for people to live and maybe will provide places for very bad actors to park their money.

 

By the way, we had a bit of a mystery last week when Sup. Malia Cohen appeared to be shaking down a developer during an EIR hearing — and the developer didn’t seem surprised or disturbed and quickly agreed to cough up $800,000 more in community benefits.

So it turns out the developers of the 901 16th St. project have been supporters of Cohen, and appeared smiling with her at a 2013 fundraiser. Check out the picture, then ask: Was this really a surprise? Or was a deal cut to make Cohen look tougher on the project — before she voted to approve it?

Sup. Cohen and Josh Smith and Dan Safier of Potrero Partners LLC very friendly at a 2013 fundraiser
Sup. Cohen and Josh Smith and Dan Safier of Potrero Partners LLC very friendly at a 2013 fundraiser

 

 

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.

18 COMMENTS

  1. Pop in SF couldn’t have possibly gone up 150,000 in 10 yrs

    The Census disagrees.

    2015: 864,816
    2005: 719,077

    864,816 – 719,077 == 145,739

    Sources:
    http://factfinder.census.gov/bkmk/table/1.0/en/PEP/2015/PEPANNRES/0500000US06075
    http://factfinder.census.gov/bkmk/table/1.0/en/ACS/05_EST/S0101/0500000US06075

    The FT article goes into detail on Japan’s habit of demos preceding new development. To bypass the paywall, click through from google or twitter.

    Here is an instructive chart from the article:
    https://next-geebee.ft.com/image/v1/images/raw/http%3A%2F%2Fcom.ft.imagepublish.prod.s3.amazonaws.com%2F3364503a-58b6-11e6-8d05-4eaa66292c32?source=next&fit=scale-down&width=600

  2. What Redmond says about the program is accurate and has been widely reported. The $10,000 limit on cash deposits to U.S, banks appears not to have been an issue and cash transactions for Bay Area real estate are common.

    You may find empty skyscrapers crowding the SF skyline attractive. I don’t.

  3. Pop in SF couldn’t have possibly gone up 150,000 in 10 yrs. 50k, maybe, or even 100k; but not 150k.

    Second, JP has this funny habit of knocking down perfectly good housing to replace it with something more stylish. Old is Ugly.

    And third, if TYO had our pop, then their housing starts might only be abt 9000, instead of our aver 2100 units (oh, gd pt!) (but see #2 above).

  4. Planning tracks new units in the city. From 2006-15, the city built around 21,000 units. Population over that decade went up 145,000.

    Contrast Tokyo. As the FT writes today:

    Here is a startling fact: in 2014 there were 142,417 housing starts in the city of Tokyo (population 13.3m, no empty land), more than the 83,657 housing permits issued in the state of California (population 38.7m), or the 137,010 houses started in the entire country of England (population 54.3m).

    Tokyo’s steady construction is linked to a still more startling fact. In contrast to the enormous house price booms that have distorted western cities — setting young against old, redistributing wealth to the already wealthy, and denying others the chance to move to where the good jobs are — the cost of property in Japan’s capital has hardly budged.

  5. Thank you for bringing the real estate money-laundering issue to the fore.

    Most of these ‘criminals’ in San Francisco are Chinese communists, the ‘princeling’ offspring of first-generation CP leaders, who want to get their money out of China as soon as possible. In a country that has no rule of law, the rich are at the whim of whomever is the Communist dictator du jour. That’s Mr. Xi right now. And none of the rich Swells know if they are next in line for a shakedown by him.

    The Economist reported earlier this year that nearly $1 trillion in funds have exited China in the past year from Communist Party members trying to get funds out of the country.

    The condos should be taxed. Hopefully, at some point, the poor exploited masses in China will rise up via a Capitalist Revolution.

  6. I guess we need to emulate Donald Trump here: We need a “compete and total shutdown” of housing being built until our city’s “representatives can figure out what is going on.”

    That’s the ticket!

  7. There are plenty of source of data that prove PDR space is endangered. Over 1 million square feet is gone already and the affordability factor is a huge part of the problem. By destroying existing relatively inexpensive already built space you are losing the affordable space that needs no government subsidies. The new space they are trying to create will never be as cheap.

  8. <<j:t. ★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★✫★★:::::::!!bc502a:….,….

  9. The number of manufacturing workers comes from the census. The percent of foreign investment comes from Chronicle Real Estate articles. The census also shows the number of vacant units for occasional use, which may be an indicator.

    How would it be possible to protect any occupation or industry. And even if possible, why? I think we tried to protect industry related to the national defense but that did not work out too well.

  10. Buying individual units as a method of money laundering? Isn’t that kinda like going around opening new accounts by depositing $9999.00 to ‘launder’ your cash? Sure, its possible, but awkward.

    OTOH, its been a better investment than a fist load of $9000 CDs, which earn, what, 0.01%??

    So, lets say we have a $5m condo. And, instead of some foreign investor – who probably doesn’t even live here – we took that space, and crammed five ‘working class families’ into it. So “Mr Chen”, the investor, pays $60,000 yr in taxes, and probably uses, what? in services? (not much). Now take those working class families: classrooms, medical clinics, after school programs, police officers, bus trips, more park space – and you can quickly see that $60k doesn’t go v far to providing the services those working class families will suck up.

    Less emoting, more thinking.

  11. Remove rent control “along with restrictions on building and you will see a precipitous drop in rent.”

    And Mexico will pay for Trump’s wall. Got any more jokes for us?

  12. You don’t cite sources for your figures. But if true, endangered species like PDR zones should be protected.

  13. They are affordable to someone or they would not be built. BTW because of so many are being built, the prices are stabilizing, and even lowering, and some landlords are offering incentives to get tenants. There was an article in the Chronicle about this a few weeks back.

    With rent control and the percent of affordable units required going up, the market rate units will continue to be higher than it otherwise would be. I think economists refer to this as the shadow market that exists with price controls.

  14. Where are the “working-class neighborhoods.” I didn’t know any existed. Would that be the Bayview and Vis Valley? Most working class jobs left the City by 1970. As of 2014 there were only around 9,000 manufacturing jobs, 1.5% of all jobs, left in the City. I doubt much can be done to reverse the trend that started many decades ago. Or, for that matter, is there a good reason to reverse the trend.

    Is there any city in the Bay Area where most people who work in that city can afford new units?

    While the percent of foreign investors may be steady at about 4%, I think a third of very high-end high-rise condos are purchased by foreigners. These are multi-million dollar units. They are not competing for condos the typical high-wage worker would be buying. In any case, it would be interesting to have more facts.

  15. Just think how much more there would be if there we didn’t have the most onerous and backward thinking regulations of any large cities. I just finished a remodel for a house that added a unit and had me in permits for *18 months*. It’s great that I can afford this (with a little help from vacation rentals before construction started) but most people can’t begin to do this, given the price of a mortgage and tax payment in this city.

    So yes, the restraints are a big factor in our housing crisis. You can be certain that if people could come in and quickly get the green light to build 4 or 8 condos, in-fill projects, and the like, in 2-4 years we would make a serious dent in demand. In fact all signs point to the fact that this is finally happening. Way too late for many, of course.

    But of course the elephant in the room is rent control which completely distorts the market and keeps rents high for new buildings. Take that out, along with restrictions on building and you will see a precipitous drop in rent.

    Now as someone who worked hard and paid a lot to add a unit, and who will rent it, this is completely against my interest, so please don’t really do it. But if you want things to change, you know what to do.

  16. What puzzles me, is we keep hearing how restraints on building is causing the housing crisis, but I have noticed that there are an awful lot of huge high rise residential buildings, and more going up. These places have a lot of units. Of course, none are remotely affordable, and yet they continue to be built….

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