The conservatives in San Francisco used to blame Chesa Boudin for pretty much everything that went wrong in the city. Boudin, of course, was the district attorney who took a reform approach to criminal justice—and just happened to take office in the midst of a global pandemic. Then-Mayor London Breed blamed Boudin for creating a lawless city. The newspapers and TV stations blamed him for every single crime that anyone ever committed.
Most of it was nonsense; crime patterns shifted in the pandemic, and the cops basically stopped making arrests because they wanted Boudin, who dared to charge killer cops with murder, to fail and lose office.
But the mythology took over the media narrative, and spread nationwide.
Now some of the same groups, led by the Chron, have a new target for everything that’s going wrong in the city: Former Sup. Dean Preston and the Democratic Socialists of America.
In a remarkably inaccurate editorial June 20, the Chron insisted that “progressives,” Preston, and DSA are destroying the middle class by pushing for more affordable housing, not just high-end housing, at a time when tech IPOs are about to create thousands more very rich people in the city.
We need aggressive housing production at every income level, including luxury housing.
A lot of people don’t like this argument; many progressives, for example, push 100% affordable or nothing. But where exactly do they think these Anthropic guys are going to live?
When a company goes public, employees cash out. Bidding wars for homes accelerate. Neighborhoods once considered merely expensive become unreachable. Landlords see opportunity. Longtime residents feel the ground shift beneath them.
The failure to recognize the importance of building housing supply at multiple price points has gotten us into the mess we’re in now.
This, of course, ignores the reality, demonstrated by the city’s own nexus study, that building luxury housing creates a demand for affordable housing, and that anything less than 25 percent affordability makes the crisis worse.
This is one of my favorite sections:
As UC Davis professor and housing law expert Chris Elmendorf told us, the economic gains of previous tech booms were unequally distributed in part because more people couldn’t afford to live in San Francisco to participate in the boom.
“That was the traditional pattern of how things worked from 1776 to 1975,” he said. “There would be an economic boom, people would move there, there was a general trend toward wage convergence … that’s not happening anymore.”
Um, professor: After 1975, the US began repealing high income taxes on the rich and make it easier to keep the gains of stock investments; taxes and unions were the main source of “wage convergence.” It had little to do with housing.
In fact, the opposite is clearly true: The tax laws that allow such great wealth are the main cause of the housing crisis.
The Chron never mentions income taxes, but insists that repealing Prop. I, the increase in transfer taxes on very high end properties, which Sup. Bilal Mahmood has proposed, would get more new projects going:
Elmendorf agreed. “Any developer will tell you that the transfer tax is the single most important problem in the city.” Of all the things the city is doing to incentivize new housing, he argued, this would have been the most helpful.
This is just silly. I have heard many developers discuss the housing crisis in numerous public hearings, and they all say the same thing: No new projects make economic sense right now for three reasons: The cost of building materials, which have more than doubled since the pandemic; the cost of labor (in a city where all this tech money forces higher prices for skilled workers to survive) and the demands of investors for high returns in an era of high interest rates.
The transfer tax has not stopped some 50,000 units that are already approved, shovel ready, and already owned by the developer (no new transfer taxes, they bought the land years ago, in most cases before Prop. I) from moving forward.
From the Chron:
Yet Mahmood’s proposal has been shelved — at least for now. Critics on the left saw it as an unnecessary concession to developers, with former Democratic Socialist Supervisor Dean Preston proposing a countermeasure to sandbag the effort. The Democratic Socialists claim they “will fight to protect the interests of San Francisco’s working class,” but it’s unclear how killing a proposal that was projected to decrease housing costs is going to do that. Instead, the politicization of housing will simply hurt those at the bottom of the economic ladder the most.
Just look what those socialists are doing to us.
Preston makes the point pretty clear in an Examiner oped:
The transfer-tax increase initiated by Prop. I only affects those who sell property for $10 million or more: corporate landlords, billionaires, and, increasingly, private-equity firms. The same billionaires and corporations that have benefited from tax reductions under the federal One Big Beautiful Bill Act would get a further tax sweetener if Prop. I were repealed.
But this isn’t just knee-jerk tax avoidance. It’s an attempt to nullify a competing vision of the city before it gains momentum. If San Francisco successfully builds social housing at scale, rents will finally come down as a result. That would be good news for everyone — except this tiny group of extremely wealthy investors, who much prefer the current situation in which they alone dictate how much new housing is built and what it costs to live there.
On social media, I keep seeing the same old line: The “left,” people like Preston, have blocked all new housing, creating this crisis. That’s just factually wrong: Preston did more to create housing—non-market housing—than any private developers did in his time on the board. He and his progressive colleagues rarely voted against market-rate housing.
(The most famous example of progressives “blocking” housing was the project at 469 Stevenson, which would have been a gentrification time bomb in a low-income Soma neighborhood. The supes didn’t “block” the project, they asked for a more detailed environmental impact report. The project was never going to go forward anyway; the developer didn’t even own the land, and admitted that there was no financing in place to acquire it. That vote was 8-3, with moderates like Myrna Melgar joining the progressives in demanding a better EIR. Two years later, the project was approved again; it remains an empty parking lot).
More important, the progressives weren’t running the city; London Breed, a moderate who loved developers, was in charge. It’s not her fault that she was in office during a global pandemic, but it’s not the progressives’ fault that housing construction stalled.
I don’t know where the “guys” (yeah, the Chron seems to admit that most of these new rich folks will be young men) are going to live. I do know that I didn’t ask to have the new AI hub in my city, and neither did most San Franciscans. Pegging the city’s “recovery” on a handful of speculative ventures creating what Jane Jacobs called “cataclysmic money” might not have been such a great idea.
(Jacobs, from The Death and Life of Great American Cities: “The forms in which money is used must be converted to instruments of regeneration—from instruments buying violent cataclysms to instruments buying continued, gradual, complex and gradual change.”)
If the IPOs go the way SpaceX seems to be going, maybe they’ll do what the first wave of dot-com boomers did: Leave the city with their companies in ruins, and move back into their parents’ basements.
That will not be Dean Preston’s fault.
