For San Francisco’s owners and landlords, constricted supply turns out to be great for business

For San Francisco’s incumbent owners and landlords, constricted supply turns out to be great for business. Unaffordability in these precincts is a boon, not a crisis. Housing capital tends to oppose policies aimed at easing prices.

With the City’s natural vacancy incrementalism embodied in Prop. J itself, advocates for the poor decried the region’s high home prices and rents, deluding themselves and their constituencies into believing that markets respond more readily to activist harangues than sound policy interventions.
Platitudes of urban desperation ultimately carried the day. A good example: “No on Prop J” estimated that the minimum necessary household income for workforce families to purchase homes developed under the measure would be $87,500 for couples and $109,800 for families of four.

Even with only a cursory rate capped at tolerable levels by the mere fact that it is, after all, San Francisco, local owner-occupiers and suppliers of rentals enjoy the advantages of relatively price-inelastic demand. The surge in home prices and rents has made residential real estate investment in the City more lucrative than ever. Nothing matches the glee of a first- time purchaser enjoying a windfall spike.

That a reasoned approach toward relieving housing unaffordability can still be shanghaied, in 2004, by an urban electorate bent on total revolution is actually somewhat quaint.

Understanding of Bay Area real estate markets, the opponents no doubt could count the hundreds of additional moderate-income workers in the City who thereby might be able to finally attain the promised land of homeownership.

To housing progressives and advocates, this logic could not compete with the vapid in regional home prices after escrow closes

But to housing progressives as well as homeless advocates, this logic could not compete with the vapid in regional home prices after escrow closes. To this sizeable constituency, “workforce housing” is a ready buzzword for “equity depreciation” and “lost revenue.”

Even more unlikely as leaders in the coalition against the initiative, tenants’ rights organizations and homeless advocates distributed a series of devastating anti-J pamphlets in key neighborhoods. In the waning weeks of the campaign, these materials and a well-crafted website and media effort upended what scant hope remained for the measure’s passage. The proposition’s well-intentioned supporters were simply outslugged by better organized forces. The conquerors of Prop. J seemed intent on retaining control of the city’s housing agenda for its own sake; their tactics revealed a frustrating lack of seriously considered policy alternatives with which to bolster their positions. It was as if maintaining their high perch in city politics were a far greater priority than engaging in any principled debate about practicable solutions to the City’s pesky supply problem.

Housing progressives in the City all acted to protect the status quo from the slightest hint of new profit sources for participating developers

Despite being among the initiative-sponsors’ intended beneficiaries, housing progressives in the City all acted to protect the status quo from the slightest hint of new profit sources for participating developers. They demonized the very builders that civic leaders were trying to entice into the City with measured incentives. Rather than applauding the pronouncement that the poor and homeless would, even after Prop. J, only remain poor and homeless.

The corollary benefits of expanded aggregate supply, so familiar to market analysts, appeared completely lost on this constituency and its representatives. “Affordable Housing For The People” went the screed, without any accompanying notion of how to get that housing built and paid for. Within the left-skewed political domain of San Francisco, a no-tax, intellectually founded and carefully balanced regulatory-reform proposal like Prop. J failed to attract progressives precisely because it did not redistribute real-estate wealth drastically enough.

That a reasoned approach toward relieving housing unaffordability can still be shanghaied, in 2004, by an urban electorate bent on total revolution is actually somewhat quaint.

Meanwhile, planning technocrats and neighborhood preservationists muttered their typical obloquies against “ballot box planning,” choosing pieties of process over urgent action on the paucity of new units. Others belittled the supposed end-run pulled by Prop. J’s sponsors, as if the pure democracy of a plebiscite were necessarily inferior to interminable “visioning” sessions and the cacophony of consensus decision-making. But these cavils stuck.

In the face of this overwhelming coalition – all seemingly agreeing that new workforce housing is not that esperately needed after all Prop. J was doomed almost from its inception.

FOR ROBERTA ACHTENBERG, fighting the good fight for her brainchild Prop. J unfortunately became the nadir of an otherwise sterling political career.
As a prominent gay member of the San Francisco Board of Supervisors in 1993, Achtenberg was just the kind of lightning-rod undersecretary candidate President Bill Clinton dreamed of in his quest to craft a squadron of political appointees which “looks like America.”

During more than fifteen years as one of the City’s leading civil rights attorneys prior to her entry into local politics, Achtenberg had ascended to serve as a teaching fellow at Stanford University Law School and eventually as dean of San Francisco’s progressive New College of California School of Law.

When Clinton nominated Achtenberg as assistant secretary of Housing and Urban Development in charge of fair housing, she immediately drew fire

When Clinton nominated Achtenberg as assistant secretary of Housing and Urban Development in charge of fair housing, she immediately drew fire. In an emotional debate on the Senate floor, Jesse Helms of North Carolina boomed, “I’m not going to put a lesbian in a position like that.” To which Edward Kennedy of Massachusetts thundered in reply, “Bigotry should not disqualify her.”

Achtenberg survived as the pawn in that fleeting, wholly symbolic national debate over homosexual leadership in Washington. She served admirably as assistant secretary and then as senior advisor to HUD Secretary Henry Cisneros. On her return to San Francisco after President Clinton’s first term, Achtenberg brought a newfound appreciation of the key role localities must play in an era when socialized housing for the poor is a political impossibility and federal subsidies for vouchers and new construction alike are vastly insufficient, and shrinking. In 1997 she settled into a cozy office high above the Financial District as the San Francisco Chamber of Commerce’s new senior vice president for public policy.

In Prop. J Achtenberg seemed to have found an ideal cause for her and the Chamber to back: a win-win proposition for the working poor and the construction industry alike. Best-practice research she commissioned for the Chamber had indicated that San Francisco lagged far behind more progressive places like Austin, Texas and Boulder, Colorado in using local regulators to encourage affordable residential development and to finesse barrier ordinances and neighborhood resistance.

Even in her private role as a high-profile lobbyist at the Chamber, Achtenberg fancied opportunities to turn government into a progressive tool while fostering the attractiveness of the local business environment. The City could become a model for urban leadership on such reforms, Achtenberg hoped, and she assumed that the cause of new housing construction for the working poor, unfairly stuck in tenancy without any real chance at homeownership, would be a slam-dunk winner across neighborhoods and interest groups.

The gadgetry of relabeling was a key insight. Achtenberg and others have concluded that “affordable housing” has become anathema to entrenched interests in both cities and suburbs. The once-innocuous term is now freighted, even for some moderates, with images of unwanted poor and minorities, slovenly garden apartment complexes, and unwelcome facilities for the elderly, mentally ill, and even families living with AIDS/ARC conditions. Mentions of affordable housing at city council hearings had become sure to douse policy innovation and return all constituencies to their familiar, hardened positions on a dead- end subject.

The new coinage, “workforce housing,” would lend fresh flavor and focus to the specific needs of the police, firefighters, nurses, teachers, and service industry workers for whom homeownership in the City had become an outright fantasy. For the voluble Achtenberg, the new name was just the kind of rhetoric she felt comfortable with, as she navigated the lunch and dinner circuits now customary for a referendum’s sponsoring den mother. Housing the City’s own workers seemed a matter of civic pride around which a broad swath of voters and community groups could rally. The innovative label alone was sure to breathe new political life into a crucial issue which lately had become tiresome and marginalized. Or so Prop. J’s sponsors mistakenly thought.

Achtenberg and the Chamber managed to build a formidable network of support around the initiative’s natural supporters. Aside from Mayor Newsom himself, who appeared willing to make workforce housing and Prop. J the centerpiece of his new administration’s early platform on housing generally, they won endorsements from major newspaper editorial boards, unions, and various neighborhood groups.

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