Newsom Gets Confused at Davos

by Randy Shaw on February 6, 2006


“If you’re going to solve issues of poverty, you’ve got to focus on equity. You’ve got to focus on creating home ownership opportunities.”

—-Mayor Newsom, Feb.3

In vetoing his second tenant protection measure this month, Mayor Newsom appears to have been victimized by the popular phrase, “ a little knowledge is a dangerous thing.” After ten days of talking world poverty at the World Economic Forum in Davos, Switzerland, the Mayor returned with ideas of micro enterprises, social equity, and third-world economic development strategies fresh in his mind. Unfortunately, the Mayor has mistakenly applied the concept of building equity as an escape from poverty to San Francisco’s housing market, where even tenancies in common sell for from $400,000-$700,000. San Franciscans living in poverty have no ability to obtain “equity” by purchasing property, and for many the eviction protections the Mayor keeps vetoing are their only lifeline for remaining in the city.

Mayor Newsom’s veto of legislation that simply ensured that condo conversions were not approved in violation of city law was not surprising. The Mayor vetoed a mild eviction disclosure measure two weeks earlier, and in 2004 vetoed legislation to prevent the eviction of over 200 tenants from the Trinity Plaza Apartments.

What was unexpected, however, was the rationale for the Mayor’s action.

Instead of simply repeating the usual canard about the need to encourage home ownership (which the Mayor believes is the highest goal regardless of the accompanying eviction of tenants and elimination of rental housing), Newsom linked his veto to the elimination of poverty. As noted in the quote above, he viewed Supervisor Daly’s legislation as keeping potential condo and TIC buyers in poverty by denying them the right to become equity owners in real estate.

The relationship between escaping poverty and building equity is a popular one among scholars of third-world development. Micro-enterprises, which usually involve one or only a few workers, are popular with the World Bank crowd because they enable the poor to build equity, and have proven successful at breaking the cycle of poverty.

Investment in micro-enterprises has boosted the economy in long impoverished areas in America like Western North Carolina, and the Mayor may have been thinking of applying this strategy for Bayview and other economically depressed areas of San Francisco. If so, more power to him.

But the Mayor should not confuse condo ownership with an avenue out of poverty.

San Franciscans living in poverty cannot even afford rental housing that is not publicly subsidized, and the down payment on a condo exceeds their entire annual income. Statistics from the Mayor’s own Housing Office confirm that the idea that a family in poverty can buy a condo in the city is ludicrous.

Ironically, the Mayor’s Office opposed providing subsidies for potential homebuyers earning as much as $60,000 a year when it insisted that the 2004 housing bond instead only help homeowners earning between $90,000-110,000. At the time the Mayor’s Office argued that those with lower incomes could not afford to purchase a bond-subsidized house—-and $60,000 is far above what constitutes poverty.

In the March 2004 election, Mayor Newsom tried to get the public to subsidize homeownership through Prop J, his “Workforce Housing Initiative.” Nowhere in this measure was any homeownership assistance provided to those in poverty, or earning anywhere near the poverty line.

When it comes to escaping homelessness, the Mayor understands that SRO hotel rooms are the only available option for single adults. But he continues to insist, against all available evidence, that converting rental units to homeownership somehow helps the poor.

The Mayor also continues to deny any connection between the exodus of families with children from San Francisco and the no-cause evictions of such households. While routinely expressing sorrow for the “tens of thousands” allegedly waiting to become homeowners, he ignores the fact that 98% of San Francisco tenants cannot afford to purchase housing in the city.

The Mayor has expressed concern over the steady eviction of hundreds of longterm tenants under the state Ellis Act, but his vetoes speak louder than words.

Sociologist Leon Festinger is best known for analyzing “cognitive dissonance,” the psychological condition that best explains Mayor Newsom’s surprising poverty– home ownership link. Cognitive Dissonance emerges when someone believes two conflicting facts to be true, and Festinger examined the various ways persons reconciled these dissenting cognitions to avoid the stress and tension caused by holding conflicting views.

Gavin Newsom clearly sees himself as a battler against poverty, and can look to the success of Care not Cash to confirm this self-image. But the Mayor also knows that low-income people are being evicted under the Ellis Act, and that his vetoes of legislation designed to stem these evictions is worsening the lives of those he claims to want to help.

How does the Mayor reconcile this cognitive dissonance? By arguing that the poor are the real beneficiaries of condo conversions, and that his vetoes of tenant protection legislation are not hurting the poor but helping them.

By aligning the vetoes with his self-image, the Mayor experiences no stress from what appears to be conflicting facts. The only anxiety is left for the tenants facing Ellis Act evictions, who cannot look to City Hall for amelioration of their plight.

Assembly member Mark Leno’s bill to address Ellis Act evictions (AB 781) died on January 31, 2006. With Sacramento reform unavailable and Mayor Newsom uninterested and opposed, a November ballot initiative to help stop the ongoing displacement of longterm San Franciscans from their homes is more critical than ever.

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