Progressives Shouldn’t Fear San Francisco’s Housing Boom

by Randy Shaw on June 3, 2013

Over 8000 housing units are under construction in San Francisco, causing many progressives to fear “dramatic implications” for the city’s neighborhoods and political landscape. Affordable housing advocate Peter Cohen notes, “The bitter reality is that the market does not deliver (housing) for most of San Francisco,” but “skews way toward the upper end.” Cohen is right: most new units will house those earning over 100% of the city’s median income, though the boom includes the massive, 1900 unit new Trinity Plaza along with other projects serving earning much less.

But the true impact of the city’s housing boom deserves a closer look. For example, rents on vacant apartments skyrocketed from 2009-2012, when little new housing was built. Ellis Act evictions have primarily jumped in neighborhoods with little new housing, and the lack of newly built ownership opportunities increases tenant evictions for TIC’s. Further, new housing produces the increased city revenues essential to serve the low-income constituencies progressive San Franciscans prioritize; it’s the city’s poor that suffer the most from city budget shortfalls.

San Francisco’s new housing boom has led many progressives to fear the worst. The city’s
economic good times are associated with more speculator driven evictions, capital improvement passthroughs, and steeply rising rents on vacant apartments. In contrast, the city’s economic slowdown from 1986-1995 were good years for tenants, as rents stabilized and eviction threats were reduced.

SF Gentrification Not Driven by New Housing

But often forgotten as we look at San Francisco in 2013 is that virtually all of the gentrification of San Francisco neighborhoods through the late 1990’s was unrelated to the construction of new housing. To the contrary, it was fueled by the existing housing stock attracting residents of higher incomes than those living there before.

When I moved to the city in 1979 and San Francisco was in the midst of its “Manhattanization,” I saw firsthand how longstanding working class neighborhoods like Noe Valley, the Castro and the Haight-Ashbury were being transformed into the primarily upscale enclaves they are today. Some of this occurred through speculator evictions, but these neighborhoods were primarily gentrified through the rising prices of single-family homes and unrestricted rent increases on vacant apartments (facilitated by the city’s Rehabilitation Assistance Program (RAP} in the Haight Ashbury and by lenders freely giving money to speculators seeking to renovate Victorians).

In those days, progressives did not blame new housing development for causing gentrification and/or tenant displacement because the city had gentrified without new luxury or “market rate” housing being built.

This changed in the late 1990’s. Mission District activists identified the conversion of former warehouses and industrial sites to “live-work” lofts and new condo developments as driving the neighborhood’s transformation into a more affluent area. But even though neighborhood opposition to condo development in SOMA and downtown provoked little opposition, the Mission District battles led many progressives to wrongly identify new housing construction as the driving force for tenant displacement and the negative “transformation” of San Francisco.

Crowding Out Affordable Housing?

Some progressives oppose new market rate housing for allegedly eliminating opportunities for affordable housing on the same site. But the federal government abandoned any real effort to adequately fund affordable housing as far back as the 1970’s. That’s why public housing is in crisis, widespread homelessness emerged in 1982, and the number of Americans living without safe and affordable housing has grown ever since.

The “crowding out” theory fails because there is no money for land banking development sites for nonprofit construction. San Francisco’s nonprofit housing groups—which have performed heroically for decades under stringent budget restrictions—are having enough trouble carrying out existing projects.

For example, the Tenderloin Neighborhood Development Corporation (TNDC) owns three major sites that it has been unable for years to get money to start construction. Given the limited funds for nonprofit housing, banning new market rate housing would keep sites throughout the city vacant for decades.

And while some progressive would cheer bringing market rate housing construction to a halt, we rarely hear how this 1. Reduces Ellis evictions 2. Reduces rent increases on vacant apartment units 3. Reduces non-fault evictions 4. Helps low-income people get services they need.

The fact is that if San Francisco banned new market rate housing, evictions of longterm tenants for TIC’s would skyrocket. Those who want to own will find a way, and if a new condo unit is not available, they’ll buy a former rental unit—even without the possibility of a condo conversion (in the converse, the combination of the housing boom and pending legislation to impose a ten-year condo conversion moratorium offers the strongest possible strategy for reducing the market for future speculator evictions).

Increased Revenue, Increased Services to the Poor

We need only look at the last five years in San Francisco to see how low-income people benefit from the revenue from new housing development. After the 2009-2012 city budgets slashed services to the poor, the 2013 and next year’s projected 2014 budget maintained and even increased funding for vital human services.

Progressives opposed to new housing development rarely talk about its budget impacts, arguing instead that we can raise all the money we need by “cutting from the top” and increasing taxes on corporations (which city and state voters actually just did in 2012). But in the real world of San Francisco’s low-income service providers, when city revenue is down their constituencies pay the price.

San Francisco’s revenue stream has become more important than ever for maintaining vital services to a low-income population abandoned by state and federal government. And new housing development provides a huge boost in this vital revenue.

As for the progressive fear that an influx of more upscale people will make San Francisco more conservative, many argued that the dramatic gentrification of the Haight-Ashbury, Mission, Bernal Heights and other areas irrevocably altered the city’s political landscape after the late 1990’s dot-com boom. Yet the Green Party’s Matt Gonzalez was nearly elected mayor in 2003, and on a range of issues San Francisco remains far and away the nation’s most progressive city.

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