June 26, 2012
Turning To China For Capital To Kick-Start Developments In SF
Seeking nearly $2 billion to kick-start the development of Hunters Point and Treasure Island in San Francisco, according to the Wall Street Journal, developer Lennar is in talks with the China Development Bank (CDB) to provide the capital with former deputy mayor of San Francisco Kofi Bonner leading Lennar's charge.
In recent years, Chinese state money—in large part provided by CDB and its counterpart the Export-Import Bank of China—has been pivotal in funding major infrastructure and resource projects around the world, but the bulk of that activity has been in developing countries in Africa, South America and Asia.
That has resulted in the construction of dams, airports, railways, highways and sports arenas that otherwise wouldn't get built, primarily in developing countries. Funding is typically conditional upon Chinese developers and contractors being used to build the projects. And in order to keep costs down, and in many cases to ensure the necessary expertise, at least a portion of the workforce is flown in from China.
This would be difficult or impossible in San Francisco, where local regulations and deals cut with local governments generally require developers to use local labor and pay prevailing wages.
We'll call that last paragraph an understatement.
∙ Chinese Target U.S. Homes [Wall Street Journal]
∙ Treasure Island Redevelopment Plans Approved! (Appeal Rejected) [SocketSite]
∙ Hunters Point Redevelopment Plan For 10,500 New Units Approved! [SocketSite]
First Published: June 26, 2012 8:00 AM
Comments from "Plugged In" Readers
"And in order to keep costs down, and in many cases to ensure the necessary expertise, at least a portion of the workforce is flown in from China."
We're now flying China here?
What 'necessary expertise' is being referred to that is not available in America?
(And how many more jobs do we lose having this financed elsewhere, and workers flown in?)
Posted by: Invented at June 26, 2012 8:18 AM
Interesting, if it were to happen we would have come full circle from the days of importing Chinese labor to build the railroads.
Posted by: Rillion at June 26, 2012 8:43 AM
This is a new low.
Posted by: lol at June 26, 2012 8:57 AM
Don"t worry American taxpayers- we'll send you the bill!
Posted by: sf at June 26, 2012 9:38 AM
So is this is a tacit admission that we are now a developing nation and cannot find any US investors to invest in our country? What next, we ask Ethiopia for food aid?
Posted by: Live Smart at June 26, 2012 10:00 AM
@Live Smart. This is a tacit admission that finding investors in this country is difficult. How are most people supposed to invest. As a self employed doc my tax rate is 50% right off the top in this town. Add Sales tax (one of the highest in the country), property tax (sky high), capital gains taxes, and my tax rate is near 65%.
How in the hell are people supposed to save for investment around here.
All our money is being stolen to support corruption in the form of public sector unions whose pension and healthcare costs have already bankrupted every city in California. (even if they haven't acknowledged it yet)
So continue with the snarky stupid comments about borrowing money from China.
Posted by: erdoc at June 26, 2012 11:36 AM
What's the point of stimulus packages if the whole thing is being outsourced?
This is akin to making people refinance their homes to be able to consume products produced overseas. We all know how that genius idea ended...
Posted by: lol at June 26, 2012 11:36 AM
well, in the 1950s the effective tax rate for the upper tranche was way higher than yours and they still managed to build roads, finance education, save for retirement, wage foreign wars, etc. And people were more unionized than today, by the way.
I get taxed a lot and often complain about it too.
But then I see what we have for our money and it's still very decent. I can walk around without being robbed 99.999% of the time. I know firemen will risk their lives with adequate equipment for me if I ever need it. The roads I cycle/drive on are not perfect but they're decently maintained. No foreign army has ever set foot on US soil since they kicked out the bloody British.
Now compare that with 80%-90% of the planet.
I'd say things are pretty good. We just need to make sure we keep it that way.
Posted by: lol at June 26, 2012 11:49 AM
Your comment about the 50's is misleading and you know it. Public employee's weren't unionized in the 1950's.
In the 1950's tax money was actually invested in infrastructure, not pension costs. (see SF doing a bond for pothole repairs)
Those institutions that were unionized in the 1950's so cheerfully (according to you) no longer exist for the most part. Having been killed by the parasitic unions that hosted them.
San Francisco has too many public employee's by 2/3rds. Most of the services provided could easily be farmed out to the private sector.
Your daft comments about 90% taxation being Ok would take too long to respond to.
Posted by: erdoc at June 26, 2012 12:32 PM
Most of the services provided could easily be farmed out to the private sector.
Wrong on so many levels. You probably have not tried one of the once-wonderful public services in Britain that have been "farmed out" to the private sector.
Saying the private sector would do a better job than public employees used to be sexy in 1980. We've outgrown that nonsense now.
Posted by: lol at June 26, 2012 1:54 PM
@lol, yes isn't it wonderful that we have MUNI buses that are clean and run on time, with such low fares and helpful, polite drivers! Our public employees do such a bang up job!
Posted by: Patrick at June 26, 2012 2:06 PM
1 - Decently clean. 2 - Drivers see their load of crazies daily, it's a miracle they're not going bonkers themselves, plus they're saying hi before I do 70% of the time. 3 - Muni is cheap. 4 - They'd run more efficiently on dedicated lanes and with better car control. 5 - Wanna step into a private bus without any government oversight on safety or work conditions? Nope.
Not happy with Muni? Go see the crazy buses of Panama.
Posted by: lol at June 26, 2012 2:37 PM
Sending construction workers to work in the US is quite different than sending the same to Africa. The costs of hiring domestic construction workers will likely be less than bringing the workers from China.
Posted by: Shane Davis at June 26, 2012 3:04 PM
muni buses are filthy. they are even more dirty than BART and that's saying a lot. take a look at the private buses in china. they are way cleaner, better run, and actually get you somewhere faster than you can walk. the muni fare is fair, but service levels, speed, and atmosphere leave a lot to be desired.
Posted by: yao at June 26, 2012 3:12 PM
private buses in china
Beware of comparisons. It could be a different context.
1 - For how long have the equipment been around? 2 - How much is the fare compared to the median hourly income? A MUNI fare is roughly 8% of one hour of work of the typical SF worker. 3 - Are buses given priority over car traffic? 4 - Are the drivers working in similar conditions with regard to benefits?
We can always chase other countries' successes and lower our labor standard, but we have to acknowledge that our overall working and living conditions will quickly deteriorate.
Posted by: lol at June 26, 2012 3:24 PM
If the private sector could do a better job than Muni/bay area governments, then Google, Genentech, and a lot of the other local employers would run their own buses. Oh...wait...
Face it, lol, your're the only person in SF who thinks that Muni does a great job. Which tells me that you both live and work along Market Street, because that's the only part of the city that Muni covers with any kind of order or frequency. The rest of us tend to see Muni for what it really is: incompetence in slow motion.
Posted by: Legacy Dude at June 26, 2012 3:28 PM
re: LOL @3:24 Beware of comparisons.
I agree, even when it comes to HSR, density of NYC, London, Paris,
Maybe lol has not used those comparisons in support of HSR, urban density, car-less streets, higher high rises but many on SS have.
SF is not those other places, it is unique and the more it is made to emulate other places, the sadder it becomes.
Posted by: guest at June 26, 2012 4:05 PM
I think Muni does a good job. It isn't perfect but it's far from terrible. Commuting to downtown from the north side of the city is efficient, cheap and the drivers are polite and friendly. Same can be said about taking the Muni line from Mission Bay/SOMA. I think some people have a delusional expectation of what public transportation is suppose to be. If you want limo service.....pay for it, but don't expect a $2 ride on Muni to include a free drink, breath mints, stimulating conversation or door to door service.
Posted by: K&L at June 26, 2012 4:16 PM
Good guess on the "live and work along Market Street". We need more underground transportation.
About Google et al, I do not agree. This is a niche segment. If you expand this you'll have to choose between a single-provider system or multi. If you pick single, then you'll become prisoner of an uncontrolled quasi-government with no regard to the customer (like our current overpriced healthcare mess of a system). If you pick multi, then you'll need to have a government entity piloting and policing this thing, and all the interfacing and inefficiencies that come with it. Then the private sector has a strong tendency to find shortcuts and weak points in government (read "bribes") to maximize their profits and get oversight in check.
Posted by: lol at June 26, 2012 4:31 PM
^^^ or we could get the industry to self-regulate. LOL. That always works.
Posted by: lol at June 26, 2012 4:34 PM
Some of you seriously need to spend some time on the 38 Geary, or ride the 45 through c-town during morning rush hour a few times. Take the N train in from the Sunset, or that shiny new T train from Potrero. Then we'll revisit this topic.
Is an average speed surpassing 5 mph considered a luxury as well? Do I need limo service and "bribes" to get that?
Posted by: Legacy Dude at June 26, 2012 4:42 PM
Bus traffic will move as fast as car traffic if they share the same lanes. Do not blame MUNI, but our collective lack of will to put transit first.
Posted by: lol at June 26, 2012 5:02 PM
Beware of comparisons. It could be a different context.
yes, the context is different: one is run by the government while the other is self supporting and run by private enterprise.
1 - For how long have the equipment been around?
why does this matter? can you only compare transit systems of the same age? these are buses--technology that has been around for decades. that said, the bus fleet age varies... because there are multiple companies.
2 - How much is the fare compared to the median hourly income? A MUNI fare is roughly 8% of one hour of work of the typical SF worker.
the bus fare varies, but obviously is something people think is worth paying give the high utilization.
3 - Are buses given priority over car traffic?
no, this is an advantage that some buses in SF have. even for these buses i find that walking is sometimes just as fast.
4 - Are the drivers working in similar conditions with regard to benefits?
i have no idea, but i suspect that they aren't paid as well, given the fact that MUNI drivers make a generous $30 an hour.
Posted by: yao at June 26, 2012 5:05 PM
I am pretty skeptical of your claim of an overall tax rate of 65% or an income and payroll tax rate of 50%. Can you break that down for us?
Or even plug it into Turbotax and tell us what the real rate is.
Posted by: NoeValleyJim at June 26, 2012 10:19 PM
erdoc's 65% total tax rate could be pretty close if he owns a very expensive home relative to his income and he saves very little of his earned income, thus incurring lots of property and sales taxes relative to income. A 1.5 million home on a 200,000 income (not unheard of albeit not smart) will result in almost 13% of income going to property taxes, and far higher if he is basing that 65% figure off of AGI rather than gross income.
But this is very easily avoided. And also illustrates why a home is a lousy investment.
His point about privatizing local govt services is off-base. Problem with SF is that about 1/3 of the local govt workers and contractors contribute nothing and could be canned w/o anyone noticing. I'm not talking about cops and teachers. I'm talking about the armies of unproductive admin people and recipients of govt funds for various studies, etc. There's the fat.
Posted by: anon at June 27, 2012 8:40 AM
If you live in CA and have a mortgage, your effective FIT tax rate is almost always 28% if you are a high income earner (thanks to the AMT.) It will be lower if you have investments subject to capital gains and/or dividend rates. You can then add the 9.55% SIT (higher if you earn over $1M) to get to 37.55%. ERDOC, then indicates that he is self-employed so he will be paying 2.9% in Medicare taxes and 10.4% of earnings up to the SSWB. If we assume he earns $300k, then he pays almost 4% in FICA.
We're now at 44.45%. Depending upon spending habits and property taxes, it is possible, but improbable that he pays 60% of income in taxes, but 50% is very possible, even likely.
Posted by: Guest666 at June 27, 2012 9:56 AM
"Some of you seriously need to spend some time on the 38 Geary"
I take the 38 Geary (or one of its varients: L or BX) about a dozen times a week. I find it to be one of the most reliable busses. During commute hours I just head to the stop and check the times to decide which one I want to take, local or limited, or if there is a 38 headed the other direction I occasionally jump on it to go two blocks in the other direction to an Express stop. Evenings and weekends if I need to head downtown or out to a business along Geary I just check nextbus.com to see what the times are like so I know when to leave the house to catch the bus.
Not sure why people complain about the drivers as I've rarely had any issues with them and I don't blame them for trying to get the best pay and benefits they can out of management (I blame management for giving in to them).
Vast majority of the buses are clean, certainly cleaner then some of the riders.
Posted by: Rillion at June 27, 2012 10:27 AM
I have time for only answers:
- Yes age does matter. China is investing massively in new infrastructure which sets a great example to the US but the key now will be upkeep. Buying a 1B system is the "easy" part (cough, cough). Paying 50M/year to keep it in good shape is the hard part as politicians are often attracted to the next shiny thing. A few years of disrepair can kill 20 years of investment.
- We can always wish people who are providing us service would be paid less so that we would pay less for the service they provide. But I myself am providing services to someone else and would hate to be paid less for the same service. At some point you have to set standards as a country which is why we're still at the top. We are trying not to cheapen ourselves there. A downward spiral does not bring anything good long term. You have the quick one-time profit the first few years then you have to live with your choice.
We experienced globalization. There are very good things that came out of it, but we need to tweak the bad part.
Posted by: lol at June 27, 2012 10:54 AM
The workers could be shipped in to lower costs. Some of the discussion above assumes they'll be flown in. Cheaper to ship.
I don't see why people are opposed to bringing in low cost labor for housing. This happens all the time in agriculture.
Posted by: tenuki at June 28, 2012 3:12 PM
tenuki, please read the second bullet point from commenter "lol" just above. The workers brought in, to the extent that they also live their lives in San Francisco during the construction project, are going to interact with others who expect to be paid going rates, not some super special cut rate based on the price level in the imported worker's home country.
To understand this, ask yourself what would happen if, overnight, you were recategorized as "import immigrant laborer" with your current employer and your wages were cut by twenty percent. Are you going to be able to turn around and negotiate an immediate corresponding 20% reduction in your housing costs, food costs and transportation expenses? Of course not.
You'd have to take extraordinary measures to reduce your personal discretionary expenditures. You'd wind up living in some else's illegally converted garage with no kitchen, eating ramen noodles heated by a portable electric hot plate and so on.
Posted by: Brahma (incensed renter) at June 28, 2012 5:00 PM
"We're very close," Lee said Wednesday when asked about the possibility a Chinese state-owned bank will invest up to $1.7 billion in the Hunters Point Naval Shipyard and Treasure Island redevelopment projects.Emphasis mine.
"We're not all there yet. There's some sensitive language and details about how the money would be used."
Lee…said it certainly won't be spent on imported labor, as Chinese companies are wont to do in other countries.
Lee said he had no objection to the China Development Bank bringing another state-owned company, China Railway Construction Corp., as a general contractor to oversee infrastructure work, so long as it's in a "managerial capacity."
Frankly, if this turns out to be the way large projects get funded going forward, the laws and regulations on the books requiring developers to use local labor and pay prevailing wages will serve their intended goal and I'm glad they are already in place.
Posted by: Brahma (incensed renter) at June 28, 2012 6:04 PM
Chinese finance is totally capable of building big though occupation doesn't always follow as this report of a city created and waiting for inhabitants shows: http://www.bbc.co.uk/news/world-africa-18646243
"Built for people who never move in, they leave those who did with a worthless property they cannot sell."
"There is no middle class in Angola, just the very poor and the very rich, and so there is no-one to buy these sorts of houses."
Posted by: The Milkshake of Despair at July 3, 2012 7:08 PM
Massive confusion between average and marginal values.
Posted by: Robert at July 3, 2012 11:16 PM