As reported in the Chronicle, the San Francisco Board of Supervisors has passed legislation sponsored by Supervisor Maxwell that “essentially imposes a moratorium on new residential demolitions unless the property owner or developer carrying out the project obtains a special conditional use permit from the City Planning Commission.”
The stated goal of the legislation is to protect affordable housing. The more likely effect is to discourage investment in (and the development of) underutilized properties.
At the same time, Supervisor McGoldrick is sponsoring legislation to extend the scope of San Francisco’s Inclusionary Affordable Housing Program (think BMR) to include projects of two or more units (it’s currently five or more). In essence, it’s a hefty tax on smaller developments and developers.
The legislation would likely discourage the development of additional housing stock in smaller neighborhood projects. Or it could simply cause smaller neighborhood projects to become even less affordable in order to subsidize the increased cost of development.
(Note: Apparently the proposed McGoldrick legislation has been erroneously reported elsewhere as applying to single family homes. Don’t panic. It doesn’t.)
∙ Supervisors vote for 6-month limit on demolishing homes [SFGate]
∙ San Francisco’s Below Market Rate Inclusionary Housing Program [SFGov]
∙ San Francisco Planning Code [SFGov]
∙ San Francisco Inclusionary Housing Fees [SFGov]
Maxwell and McGoldrick need to lose their jobs. First they screw up the Trinity Plaza apartment building deal, now this?
outrageous!
Voting San Franciscan here, who can’t responsibly afford market-rate either, but knows this is not the way to accomplish anything.
It’s shocking that anyone is willing to give them credit for even “good intentions”.
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So true.
I’m not a developer, but if I were, why would I even deal with this type of brain damage when I can make good money building in pro-development cities like Chicago?
This type of legislation is great news for the city….of San Jose. Because that’s where the investment dollars, jobs, and population will continue to flow. That and the east Bay. If these anti-growth policies continue, we might as well just forget the whole city thing and declare San Francisco a living museum. Supes can be the curators and cover costs by charging people $10 at the door.
Holy crap. I’m in total agreement with Dude.
Why is it too much to ask that our local government abandon just some of their misty-eyed idealism in favor of practicality? You can’t legislate affordability.
Perhaps the Board of Supes can take a UC Berkeley Extension class in Economics next time they’re planning to debate and vote on Presidential impeachment? Might be a better use of their time.
TWO or more units??? So a developer that builds a two unit building will be expected to sell one of them (50% of the building) for BMR? That makes no sense at all. What planet do these people come from?
Either that or pay an “In-lieu” fee.
“In-lieu fees for 2-4 unit projects will be calculated based on the fractional result of 20% of the project’s units rather than a higher number reached by rounding up to the closest whole number. In other words, a developer of a four unit project would need to dedicate one whole unit to below-market housing (either on-site or off-site) if they opted to comply via construction, but would owe a fee equal to only 80% (4 x 20%) of the cost of construction of a unit if they opted to comply by paying an in-lieu fee.”
So its a moritorium on the demolition, not the building of already demo’ed, residential buildings.
Outside of what has already been demo’ed, are there major projects (read: high density) planned that are in jeopardy right now becasue of this new legislation? Or does this generally affect smaller projects?
amused – your comment about the econ class is spot-on. This is rudimentary economics that every college freshman is required to take.
When the market for any commodity (housing, cars, pork bellies, whatever) is in balance, price is determined by buyers and sellers in the market. When a governing agency imposes any tariff/penalty/levy into the system, they structure it to increase cost to one party to subsidize the other (tax suppliers to benefit buyers, in this case). What happens in reality is the EXACT OPPOSITE of what they plan. Why? Because rational suppliers will not bear the burden on their own, they’ll pass it on to buyers to the extent possible, or just supply less. The tariff essentially becomes a deadweight loss, hurting everyone. The end result? Suppliers produce less, and costs for buyers rise. Nobody wins.
I don’t want to generalize, but many of our fellow San Franciscans ought to put down the Wine Spectator and 7×7 and pick up an Economist or Business Week once in a while.
Agree with above posts — thankfully it is only for six months (during a housing slump anyway). McGoldrick is a piece of work, in the most sarcastic sense. To think, he was my high school English teacher in the late 80’s, where fortunately he did not preach any of his moronic ideas.
Anyone want to put together a proposition that requires the Board of Supervisors and Mayor attend an economics refresher course before they’re allowed to vote or sign legislation?
This legislation is unfortunately probably more popular among the residents of SF than we think. This is a typical tactic used by the anti-capitalist, sociolist, extreme left wingers that nothing compared to the insane legislation in Berkeley. These people have no idea of how an economy works.
I have friend like this and you can’t rationalize with them. They have some notion that anybody who can afford to own properties are “rich land owners” and should subsidize them and the communuty. Take from the rich and give to the poor. The only problem is that all the people who own, develop small projects, etc. are not rich they are just trying to make a living.
Don’t get me wrong, I am liberal just not stupid.
“2 or more units built on one lot OR on adjacent lots”. This could impact single family residences.
McGoldrick lives in a rent-controlled apartment in the Richmond but owns a home in Alameda which is not subject to rent control. The dude knows how to work the system.
C’mon you guys, try to think a little outside the box rather than calling people stupid. They are politicians. They need to project a perception of solving a problem while impacting (e.g. taxing) as few people as possible. The people want the problem of affordable housing solved without having to pay for it. The socialists in SF think they’ll never be able to afford anything and don’t aspire to, so anything that makes houses more expensive is irrelevant to them, and the homeowners already bought their homes and feel anything that makes housing more expensive only benefits them, and would rather not have their taxes go up to pay for the solution to the problem.
So this “solves” the problem without making anyone but a very few people actually feel as though they paid for it. What this means is the politicians are very clever at their jobs, that’s all.
They understand the economic impact of their actions, but they also understand how to win votes and this plan does that.
I’m not in favor of this sort of thing at all, but stop calling the supervisors stupid, or uneducated: it just makes you look stupid or uneducated. It’s each supervisors’ job to win votes and they are doing their job. We’re all in favor of the free market system, but that tends to come hand in hand with a democracy, so you can’t take the good of one without taking the bad of the other. Sometimes you win under a democracy, sometimes you lose.
But you’d all be better off spending more time understanding various groups objectives, including the politicians, socialists, etc. because only then can you effectively confront them. Calling intelligent people stupid or uneducated doesn’t really help you accomplish anything.
Maybe those people calling for supervisors to take economics classes could take a class in civics (how to win votes) and one in negotiation (how to see what the other guy needs and wants as a way of negotiating to get what you want) and then come back and make a more reasoned proposal on how to knock this market-distorting idea out of the water.
I have to disagree with you, tipster. It’s not their job to “win votes.” Their job should be to represent the best interests of their constituents and the city as a whole. I’m not sure if you’re being cynical or somehow referencing the old Upton Sinclair quote here.
It’s reassuring to know that I can still disagree 100% with tipster. Always. About everything.
Suggesting that the socialists in SF think “they’ll a) never be able to afford anything, and b) don’t aspire to” is plain wrong. Human nature being what it is, these people almost certainly want a place to call “home”, and they want some measure of security. Whether this security is provided by the state or by enterprise is the crux of the socialist/capitalist argument.
Even more wrong is the assertion that more expensive housing is irrelevant to them. There is a direct relationship between real estate prices and rent, and “high rent” is the #1 lament of the non-homeowner in SF. It is here where the practical issue of affordable housing is fought among the majority of the populace. Most people here do not own homes (and won’t, ever. Get over it.) Therefore, most rent. As home prices rise, rents rise, and discontent rises. Not that hard to understand. Feeding into this cycle with ill-conceived legislation doesn’t make you smart.
Your comment “we’re all in favor of a free market system” is a gem… in a discussion of socialism and socialist intent.
Applauding our Supes for cynical, self-aggrandizing, harmful behavior while celebrating their intelligence is a bit odd. To suggest they understand the economic impact of their actions gives them far too much credit. I agree that they’re smart enough to play the game (witness Chris Daly’s BMR home purchased immediately before he gave himself a huge – and BMR disqualifying – raise). It’s the point at which they consider US stupid that they get themselves in trouble.
Last, civics is about the functioning of government, not “how to win votes” (that’s political science and marketing/PR).
Um, hello everyone, but this has already been going on for over 3 years as the SF Demolition Ordinance was passed in December of 2004. Here is the pertinent SF Planning Department page (have fun reading all the legalese and notes from Board of Supes meetings)
http://www.sfgov.org/site/planning_index.asp?id=24995
Let me summarize for you…Basically, it has been difficult, if not impossible, to demolish existing residential units unless they are completely falling down since 2004 in SF. At the very least, it requires a minimum of 12 months to go through the process of obtaining a “soundness report” and having your case approved or denied. The idea behind the “soundness report” is that existing housing is much more affordable than brand new housing, so the preservation of existing housing is better than the development of more expensive new housing. If it is economical to repair a residential property (which it is most of the time unless the property is literally falling down), then a property will not be approved for demolition. This gunks up a lot of developments where there is one unit on a site which can hold say five or six units but you can’t tear down the house because it is a functioning residential unit that can be remodeled. I agree that this legislation is major new direction for land use law and seems to me to be a undue restriction on property rights, but there has not been a constitutional/legal challenge to the legislation yet. It seems that the new legislation makes it a bit tougher to get a demolition permit, but the reality was that it was almost impossible in most cases before this for the last few years anyway.
Alex – Are you sure that’s not referring to a multi-unit development that stretches across more than one lot rather than two homes that just so happen to be next to each other?
tips, the one thing you don’t realize is that many of the self-proclaimed socialists or progressives in San Francisco are just trustafarians.
It’s a grand SF tradition. After all, all those hippies in the 60s were from middle class families.
It’s always hip in SF to pretend you’re poor when you’re not.
Michael,
I got clarification and I will post on my site.
alex
Alex – I think you might have missed the mark on this one. From your site: “Supervisor McGoldrick is now proposing to include ALL housing developments in the Residential Inclusionary Affordable Housing Program. That means that all projects from a single family home up to multi-unit developments will be subject to Inclusionary Housing, no exceptions.”
The summary of McGoldricks’s proposed legislation from the last Land Use & Economic Development Committee meeting agenda: “Extend Inclusionary Housing Requirements to Buildings of Two Units or More – Ordinance approving amendments to Planning Code Sections 315.3 and 315.6 of the Residential Inclusionary Affordable Housing Program to extend the requirements of the Program from all housing projects of five (5) units or more to all housing projects of two (2) units or more.”
“It’s each supervisors’ job to win votes and they are doing their job. We’re all in favor of the free market system, but that tends to come hand in hand with a democracy, so you can’t take the good of one without taking the bad of the other. Sometimes you win under a democracy, sometimes you lose.”
You may be right but I think this is the wrong way to think. I think there is a huge opportunity that will be missed by not allowing market rate housing to follow it course. Think of the long term real estate tax (and other tax) dollars that can come in to the city (that can be used to fund the poor schools etc.) and the rehabilitiation of our streets (usually paid for by the evil developers). Sure this isn’t a “quick fix” solution but probably more sustainable.
I consider myself a pretty liberal person but I guess I’m conservative relative to this city….
“I’m not in favor of this sort of thing at all, but stop calling the supervisors stupid, or uneducated: it just makes you look stupid or uneducated.”
Tipster, the self-proclaimed expert on everything speaks again.
For a lot of people in SF including the politicians–ideology supersedes intelligence. You can call them idealogs, true believers, socialists, utopians, etc., but at the end of the day they are best described as stupid. Their ideology will only harm this city and will have absolutely no positive effects.
Take a look at Berkeley or Santa Monica. Berkeley’s economy is in the tubes and Santa Monica almost went down as a cost for this same type of thinking.
“tips, the one thing you don’t realize is that many of the self-proclaimed socialists or progressives in San Francisco are just trustafarians.
It’s a grand SF tradition. After all, all those hippies in the 60s were from middle class families.
It’s always hip in SF to pretend you’re poor when you’re not.”
Many of the self-proclaimed socialists or progressives in San Francisco are probably living on Russian Hill working hard to save the flatlands for the common people.
What I find strange is the accepted wisdom that San Francisco is a wealthy city, because I would argue it is expensive, but not “world class” in terms of the wealth concentrated here. New York, Tokyo and then Los Angeles (!) are the top three, while our little city is not in the top 25, yet we worry that we are too wealthy. Sure it is expensive here, but that is mainly caused by decades of San Francisco government policies, and not because “everyone wants to live here” or because our land area is so small. Chicago is #4 on the “World’s wealthiest” cities list and yet their housing and living costs are far below ours, yet their urban density is greater. I guess our city officials learned nothing last year when they went to “learn” from Chicago.
According to the study, Tokyo topped the list in 2005 with a GDP using PPP of 1.2 trillion US dollars, followed by New York on 1.1 trillion. Los Angeles was on 639 billion, Chicago and Paris 460 billion and London 452 billion
Article about land use regulations in today’s Chronicle:
http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2007/03/09/carollloyd.DTL
If measured by total GDP, of course San Francisco would not be in the top 25, because it is such a small city. But some small places are very expensive–e.g., Aspen has only 5,000 year-round residents, yet the average home price is over $5,000,000.
Plus, looking only at SF’s GDP misses the wealth of the South San Francisco biotech and the Silicon Valley tech companies, which spills over into the City and the entire region.
The experts over at sfnewsletter are/were confused. McGoldrick’s proposal DOES NOT apply to single family homes.
Actually there are two different pieces of legislation- an ordinace and a resolution. The ordinace lowers the threshold to two units or more and the resolution impacts all “new construcion” which includes single family homes as well as construction where 50% of a structure has been renovated. Very unfortunate and will drive many of the working class out of San Francisco…
Practically speaking, what’s the difference between an ordinance and a resolution?
Seems to me amused’s analysis would be correct in the absence of rent control but in the current enviroment this proposal is inextricably linked
The ability of landowners to go out of the rental business, knock down old underutilized properies and to build new condos is a direct threat to rent control (“affordable housing”) as is condo conversions
“The ability of landowners to go out of the rental business, knock down old underutilized properties and to build new condos is a direct threat to rent control (“affordable housing”) as is condo conversions”
Affordable housing is a problem, but it is not the developer’s or landowner’s responsibility. It is the government’s. You cannot force a developer–especially the small guys–to subsidize affordable housing. They will find a way around the rules or let the building sit empty.
We are currently developing a small luxury condo project in LA. It was originally planned as 4 flats with a price of around $1MM. The city then told us we have to give one unit up for affordable housing. We are not a big developer so we could not afford to give a unit that we paid $250-$300 per sqft up to the city for them to sell.
Guess what? We redesigned the building to have only 3 larger units which we will sell for $1.3MM each. By making the building 3 units we became exempt from the rule. Had the legislation been less extreme such as donating money to an affordable housing program, volunteering design time, etc., we probably would have no problem helping out. Since the law was so extreme, we found a way around it. Now no one gets the affordable unit now and we don’t have to help the city!
The post above from the LA developer highlights the unoriginal and non-creative thinking that happens in local government, wherever that may be.
In most of the country, there is an ebb-and-flow between rentals and ownership, depending on the market, local economy, etc. Properties can cycle between those two states as owners deem necessary.
Because of the onerous restrictions and rent control we have here in SF, that ebb-and-flow no longer exists, which is why we have such a screwed up market.
It’s our local version of starving the wetlands because we decided to line up the creeks and bayous with concrete to control flooding.
Man can’t control nature without unintended consequences. And as we’re seeing — we can’t control the economy without them either.
“Practically speaking, what’s the difference between an ordinance and a resolution?”
I believe a “resolution” is relatively meaningless but could influence/direct future policy. Sort of like guidelines. It’s the ordinance that would actually change the planning code to impact developments of 2+ units (but not single family homes).
Does anyone know the update on the 2 unit BMR fee that Mcgoldrick has been trying to push through. What is the status>? And does any one have a website with updates to the legistlation?