The shape of the housing battle to come – 48 hills

http://48hills.org/2017/03/16/housing-battle/

Safai, Breed pit middle class against lower-income people

March 16, 2017

You could see the shape of the next big housing battle at today’s Planning Commission hearing, where Sups. Ahsha Safai, London Breed, Jane Kim, and Aaron Peskin presented competing plans for mandatory affordable units in market-rate developments.

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Safai and Breed didn’t go into the details of their plans that much – mostly, they argued that the city isn’t doing enough for the middle class. Breed sounded almost like the tenant advocates who opposed her last fall, complaining about how the price of housing is destroying communities. “I miss my friends [who have been forced out of town],” she said. “I miss my community.”

She complained that the city isn’t creating housing for teachers and union workers.

The impression – and it’s one we will hear over and over again – is that the only way to build housing for the middle class is to shift some of the units now set aside for low-income people and move them to higher income levels.

“The market will never again build middle-income housing,” Safai said.

That’s true, at least in the short term – but Safai’s presentation, which simply described the housing price boom as something that came about after the end of the Great Recession – completely ignored the demand side of the supply and demand equation that developers so love.

It’s as if there were no Twitter tax break, no Google buses, no long list of city incentives to turn this into a haven for high-paid tech workers moving from somewhere else and driving up rents. The market won’t build middle-class housing as long as developers can make money selling luxury units.

If the tech industry collapsed next month, the way it did after the first dot-com boom, or some of those companies moved to other cities, property values in San Francisco might fall, and it would be cheaper to build housing. Not suggesting that that pushing tech companies out is a feasible policy option (or maybe it is), but we did the opposite, and are paying the price.

But back to the plans.

What Safai and Breed did not say is that they are proposing to reduce the amount of affordable housing available to people who make less than around $50,000 a year. Overall, they are proposing to demand less affordable housing than Kim and Peskin are.

Safai said that if the city set the affordability levels too high, projects would become economically infeasible and nobody will build anything.

But Peskin noted that he heard the same arguments back in 2002, when then-Sup. Mark Leno introduced the first inclusionary housing policy, calling for developers to make 12 percent of their units affordable at below-market rates.

“We were told the sky would fall, and it didn’t, and it hasn’t,” Peskin said. Kim gave several examples of situations where developers agreed to build as much as 40 percent affordable housing.

The message: Developers always say that any requirements or mandates will throttle them and destroy new housing and jobs and turn the city into an empty wasteland, and it never happens. They can always pay more than they do. Residential development in this city is very lucrative – as Peskin put it, in the past few years, developers “made a shit-load of money.”

And while Safai and Breed insisted that their plan would help “working families,” Peskin noted that most people whose housing would be reduced under their plan “are working people.”

The big differences between the bills: Kim and Peskin want to maximize the amount of affordable housing developers have to build – 24 percent for rental project and 27 percent for condos. Safai and Breed want to set those numbers at 18 and 20.

And while Kim and Peskin want to add middle-class housing without reducing existing requirements for low-income units, Safai and Breed are willing to trade off one for the other.

Their legislation was crafted with the input and has the support of pretty much all of the affordable housing groups in town.

The public testimony went on for more than two hours, and it reflected the political narrative that Breed and Safai are pushing: Speakers who supported their plan talked entirely about needing middle-class housing. Speakers who supported the Kim-Peskin measure argued that all of the affordability levels ought to be higher, and that the city shouldn’t take housing away from one group to give it to another.

Ken Tray, political director at the local teachers’ union, said he was tired of hearing people talk about what teachers needed. “I hear people speaking for us,” he said.

In fact, he said, the union does not support the Safai-Breed plan. “We are all in this together,” he said. “We refuse to have teachers pitted against our lower-income brothers and sisters. There is no moral foundation that will pit classroom teaches against our low-income students and their families.”

Let’s look for a moment at the San Francisco workforce (including some of the unionized workforce). A janitor makes about $34,000 a year. A hotel worker makes about $38,000. A construction laborer makes about $48,000, and a mid-career credentialed teacher makes about $63,000.

Most of those people are well below the income level that Safai and Breed consider “middle class.”

As Fernando Marti, co-director of the Council of Community Housing Organizations, noted, many of these workers “are at 40-50 percent of area median income.” With two-income households, they are at 60-90 percent.

The Safai-Breed plan allows developers to count as affordable housing priced for people who make us much as 140 percent of AMI.

“Are you going to be able to look at those union members and say that you support legislation that takes away half of the units we were going to build for you to build units for people who make more?”

Gen Fujioka, policy director at the Chinatown Community Development Center, noted that the Safai-Breed plan “is a step backward. It shrinks the amount of affordable housing.”

And that is the center of the debate that’s going to be in the center ring of the city’s housing policy for the next couple of months: Do we take housing from one group and give it to another (saying, in essence, that we have built plenty of low-income housing and need to give more to higher earners) or do we demand that developers pay enough to cover both?

And if that means that some luxury condo projects don’t get built, do we really care?