Prop K Diverts Funds from Nonprofit Developers, Community Land Trusts
San Francisco’s Prop K authorizes the creation of 10,000 “social housing” units in the city. Its website states, “How can SF drastically bring down rents? Cities around the world – including Vienna, Berlin, Singapore, and Hong Kong – make housing affordable through social housing: deeply affordable housing for a broad range of incomes that is separate from the private real-estate market…. We need to pass Prop K to bring municipal social housing to SF, guarantee deeply affordable rents, and create a structural, internationally-proven solution for affordable housing.”
Sounds great, right? And if Prop K could actually “drastically bring down rents” I would be all for it. After all, I wrote the ballot measure in 1992 that cut San Francisco’s annual rent increases by more than half.
But Prop K does nothing to reduce rents. Nor does Prop K add a single affordable unit to the city that could not be added under existing law.
Not one unit.
Those comparisons to Vienna? I’d enthusiastically back Prop K if it really brought Vienna’s housing policies to San Francisco. It does nothing of the sort.
Nor does Prop K “unlock” affordable housing as its campaign motto proclaims. Prop K’s website says the law currently “requires a local vote before any low-rent housing can be created in a locality like San Francisco.”
That’s completely false. Prop K is not necessary for nonprofit housing groups to continue creating very affordable housing. Just last Friday Mayor Breed announced the groundbreaking for the Maceo May Apartment complex, which provides 100% affordable housing for 104 formerly homeless veterans on Treasure Island (I knew Maceo and he truly deserves the honor).
San Francisco has never had any affordable units blocked or “locked out” by Article 34 of the California Constitution. The only housing ever blocked by voters has been market rate projects; virtually none of the vast numbers of nonprofit housing units in San Francisco were at risk of being blocked by Article 34.
Prop K is necessary for the city itself to produce and manage affordable housing. But the question that Prop K backers never address is this: why is San Francisco’s reliance on nonprofit housing and community land trusts inadequate? Why would creating a new city bureaucracy to run housing either increase affordable housing or reduce rents?
It won’t do either.
San Francisco’s nonprofit sector controls over 30,000 housing units. These units meet all the goals sought by Prop K except they are not “municipal social housing.”
In fact, Prop K makes the city’s affordability crisis marginally worse by shifting funds from housing to administration. That’s because funds obtained from the Prop I transfer tax increase will be diverted from housing to set up the city bureaucracy necessary for social housing (the Board passed a statement of intent to use Prop I funds to implement Prop K).
This new city housing bureaucracy will compete with community based nonprofits and community land trusts for the affordable housing dollars coming to San Francisco (the nonprofit organization I head has no funding impacted by Prop K). Prop K shifts housing resources from these community-based groups to city employees who may have no history in the neighborhoods they will be investing in
San Francisco already has an “internationally-proven solution for affordable housing.” It’s the community land trust model. A new book on community land trusts, On Common Ground: International Perspectives on the Community Land Trust “offers twenty-six original essays, written by forty-two scholars and practitioners from a dozen countries, tracing the growth and diversification of the international community land trust movement.” I’ll be reviewing the book soon.
Prop K seeks to promote the “de-commodification of housing.” It’s a rallying cry for DSA chapters across the nation, including in San Francisco.
But when did housing owned by San Francisco’s many nonprofit groups become “commodified”? Why does Prop K consider nonprofit run housing on land owned by the city and/or subject to extensive regulatory agreements to be a “commodity.”?
Prop K is unnecessary because San Francisco’s thousands of nonprofit housing units are already permanently off the speculative market. This housing has already been “de-commidified.”
Prop K does not explain why the nonprofit and community land trust models are not adequate to prevent housing from becoming a commodity. The measure ignores that San Francisco and other cities relying on nonprofit housing don’t need Prop K to achieve “de-commodification.”
Prop K simply enables the Mayor’s Office of Housing and Community Development to go into the housing management business. And that’s a bad idea for two reasons.
First, it shifts money away from the nonprofit housing sector. This sector has long prided itself on being “community-based.” That’s why its advocacy organization is called the “Council of Community Housing Organizations.”
In contrast, MOHCD is not “community-based.”
Second, MOHCD lacks the property management expertise that nonprofits have long demonstrated. MOHCD can hire property management veterans, but their salaries would come from diverting affordable housing dollars that would otherwise provide people with homes.
Prop K is the proverbial “Emperor that has no clothes.” Nobody wants to oppose “social housing” even if they are not clear what the term means or what the initiative actually accomplishes.
So why is so much effort going to pass a purely symbolic measure? Two reasons.
First, largely gentrified San Francisco is filled with people eager to show their socialist bona fides. “Social housing” connects to the socialist housing strategies of Vienna and other European cities. I would love for American cities to adopt these socialist housing models. But Prop K ignores a major feature of these strategies: high density on transit corridors and the absence of exclusionary single family zoning. Single family or two family zoning is not “socialist,” yet Prop K does nothing to bring Vienna’s housing density to San Francisco.
Prop K is also designed to turn support for “social housing” into a new progressive litmus test for housing politics. Politicians opposing increased density, all housing that is not 100% affordable, and who reject market rate projects that meet existing zoning need a way to identify as “pro-housing.” Backing “social housing” is designed to accomplish this.
“Social” vs. “Public” Housing
If the goal of Prop K is public ownership of housing, why use the term “social” rather than “public” housing? The answer, of course, is that the United States sabotaged its public housing program almost from the very start.
America’s decision to denigrate the most cost effective strategy for housing the poor in favor of the private market is a national tragedy. Instead of following the lead of European nations and creating a large, well-funded public housing supply for the poor and working class, the U.S. steadily reduced public housing support. The U.S. would not have a homeless crisis today had it fully invested and steadily maintained quality public housing for all who need it.
Opposition to public housing was bipartisan. Bill Clinton’s Hope 6 program was backed by Democrats despite eliminating over 100,000 affordable units. The biggest new federal housing funding stream in the past four decades was used to demolish public housing.
To avoid the public’s negative feelings about “public housing” advocates for public ownership turned to the European term “social housing.” But Prop K backers exaggerate the practical differences between social and public housing. Prop K backers also underestimate the superiority of the nonprofit/community land trust model over municipal control as it operates in the real world.Community-based nonprofits have proved far more effective property managers than city government.
In an email exchange I had with Prop K backer Laksh Bhasin, he stated “the City and County of San Francisco did not directly manage or really play a significant role in funding HUD public housing under the SFHA for most of its history. The SF Housing Authority (SFHA) was always separate from the City and County and could never be regulated in any way by the Board of Supervisors (which allowed it to perpetuate anti-undocumented tenant rules, among others).
That’s not correct. The Board of Supervisors had enormous power of the SFHA. In fact, it could have responded to decades of SFHA’s failure to serve tenants by itself becoming the commission overseeing the city’s public housing.
That’s what progressive Matt Gonzalez tried to do after he was elected supervisor in 2000. After hearing a lot of complaints from public housing tenants Gonzalez moved for the Supervisors to replace the SFHA Commission. But his proposal for a Board takeover of the SFHA led him to be attacked as racist. When the full Board voted on Gonzalez’s proposal only D6 Supervisor Chris Daly backed it; both Tom Ammiano and Aaron Peskin supported continuing a status quo that disproportionately hurt low-income Black families.
The mayor made appointments to the SFHA Board. The Board had to approve them. How would “social housing” run by mayoral appointees at MOHCD change this? Instead of community based groups managing and developing properties this would become the job of mayoral appointees and city staff.
Why do backers of Prop K think this is a better for tenants?
Among the most curious Prop K claims is its admiration for Vienna’s housing model. According to the Prop K website, “How can SF drastically bring down rents? Cities around the world – including Vienna, Berlin, Singapore, and Hong Kong – make housing affordable through social housing: deeply affordable housing for a broad range of incomes that is separate from the private real-estate market. These programs have been highly successful. For example, in Vienna, Austria, 62% of residents live in social housing and spend no more than 20-25% of their income on rent.”
If Prop K fully implemented Vienna’s housing policy I would do everything in my power to pass it. But as Seattle’s Mike Eliason explained in two stories for City Observatory—- “Housing Policy Lessons from Vienna Part 1” and “Housing Policy Lessons from Vienna, Part 2—San Francisco politicians, including those backing Prop K, have gone in the exact opposite of Vienna when it comes to housing policy.
Unlike any American city, Vienna is part of a national government that invests heavily in affordable housing. But its local differences from San Francisco and other “blue” American cities are still striking.
Consider single-family zoning, an untouchable land use position for many San Francisco “progressives.” Eliason notes “the amount of land zoned exclusively for single family houses in Vienna is zero. Just 9% of the dwelling units in Vienna are single family homes.” In San Francisco that total is roughly 38%. Another 16% of San Francisco allows only two units.
He also notes that Vienna has “no policies preserving single family homeowners views, street parking, etc.” I have to believe Vienna also lacks a discretionary review process that San Francisco allows to hold up projects.
Eliason continues, “Vienna has neighborhoods, but density isn’t limited to just a few urban villages. The density of Vienna is largely centralized and relentless. Vienna’s zoning is broad and deep – generally 6-8 stories over several blocks – whereas Seattle’s density usually starts well under 8 stories and steps down to single family zoning quickly, making for weak, car-dominated urbanism and high housing prices.” Substitute “San Francisco” for “Seattle” and Eliason’s conclusions are unchanged.
Vienna’s left is totally pro-housing construction. Here’s Eliason: “The SPÖ (Social Democratic Party of Austria) leading the city last year introduced the ‘wohnbauoffensive – a plan to reduce obstacles to construction and permitting, as well as *increasing* annual housing production by 30% in order to meet demand. Yes, that’s right – lefties who don’t deny supply and demand exist, and that the housing shortage must be addressed by building more housing – at all levels – as quickly as possible.”
Vienna reflects the high-density housing on transit corridors that San Francisco supervisors have repeatedly opposed. If Prop K backers really sought to follow Vienna’s lead they would have supported SB50. Instead, San Francisco “progressives” strongly opposed SB50 along with other measures to end single family zoning and bring a Viennese housing strategy to San Francisco.
Remarkably, Prop K sent out an email last week claiming that the measure would be “reducing commute times and greenhouse gas emissions.” They connect this to new construction standards that apply to all new buildings. But infill housing via increased height and density is the chief strategy for reducing commute times and greenhouse gas emissions. Yet “progressive” San Francisco supervisors continue to oppose upzonings of transit corridors even in already gentrified neighborhoods.
Since Prop K does nothing to increase housing density, its claim to be a bulwark against wildfires and part of a Green New Deal is nonsense. In fact, Prop K backer Laksh Bhasin also told me in an email that “the pilot program would likely begin with purchasing existing real property when it comes up for sale, as this is more cost-effective and timely.” That makes Prop K’s claims of promoting “green building” even more cynical if not outright dishonest.
A Distraction from the Crisis
The most important activity for U.S. affordable housing advocates is ensuring a massive increase in housing spending in a Biden-Harris administration. This is necessary both to stop the wave of evictions now delayed until January and to start the process of dramatically increasing the nation’s affordable housing stock. Focusing on municipal ownership via pilot projects in gentrified cities like San Francisco distracts from the essential need to secure more federal funds.
The National Low Income Housing Coalition (NLIHC) has assembled a coalition of over 1000 groups to push for the huge federal funding increase housing has needed for fifty years. This is the wrong time for advocates to be competing for funding with existing affordable housing providers.
San Francisco doesn’t need Prop K. It’s lack of opposition ensures victory, but that does not change the fact that it adds nothing to the city’s existing affordable housing efforts.
Randy Shaw is the author of Generation Priced Out: Who Gets to Live in the New Urban America, now out in paperback from the University of California Press.
Filed under: National Politics