IN SAN FRANCISCO, ballot initiatives promising to ease the City’s renowned housing crunch come and go. From the article The Tragedy of Proposition J: A Policy Parableby Larry A. Rosenthal.

Housing bonds pass and fail in the City by the Bay, subsidy programs ebb and flow, and the “affordability crisis” as a catchphrase pervades the political agenda in one form or another, and has continuously since World War II.

But few ballot measures in San Francisco have ever suffered so catastrophic a defeat as Proposition J in March 2004, the ill-fated “Workforce Housing Initiative.” Read about what is Workforce Housing.

Prop. J was unceremoniously dispatched by a unified electorate, voting a lopsided seventy percent against. Despite the efforts of its mainstream supporters – the City’s popular mayor Gavin Newsom, Senator Dianne Feinstein, the Rev. Cecil Williams of Glide Memorial Church, both major daily newspapers, prominent municipal and business labor unions and trade associations, and the proposal’s main sponsor, the San Francisco Chamber of Commerce – Prop. J cratered spectacularly, joining the ranks of the most embarrassing referendum defeats in the City’s history.

For the Chamber’s Roberta Achtenberg – an experienced San Francisco politician and Prop. J’s foremost proponent – the outcome was particularly dismal.

A ballot measure failing to garner thirty percent of the vote is the urban-political equivalent of D.O.A.

On its face, Prop. J credibly promised, without a penny of new taxes or public borrowing, to ease regulatory barriers impeding new construction. It would have gradually increased housing supply and densities in only certain neighborhoods – the depressed areas of downtown and the now-vacant parcels of the formerly bustling Central Waterfront district where new stock is sorely needed and surely can be accommodated. Required environmental impact reviews would have been consolidated and expedited. Slight height and bulk bonuses would have rewarded developers willing to risk building mixed-income projects. Approximately 10,000 new units, 39% of which would have been set aside for moderate-income San Francisco workers, would have been added to the stock. For the most worthy projects, fast-track approvals would have replaced protracted tie-ups at the Planning Department. Prop. J was no cure-all, to be sure, but rather a nuanced, incremental set of tax-free policy steps entitled to legitimate chances at implementation and success. Its defeat derailed a genuine opportunity for constructive policy change.

Prop. J was proposed on the heels of statewide Proposition 46, a popular $2.1 billion California housing bond

What’s more, Prop. J was proposed on the heels of statewide Proposition 46, a popular $2.1 billion California housing bond, which passed by a comfortable margin in November 2002. Prop. 46 seemed at long last to have heralded the arrival of housing affordability as a mainstay on the California political scene. Its bond proceeds are leveraging millions more in housing construction funds from a variety of public and private sources.

Ultimately, however, the exciting momentum the state bond’s success seemed to lend local housing efforts foundered on the shoals of San Francisco politics. The last thing state housing leaders needed in Prop. 46’s wake was a high-profile political disaster like Prop. J.

To their credit, the referendum’s opponents successfully assembled a powerful coalition of owners, landlords, tenants, neighborhood groups, housing activists and homeless advocates. Uniting landlords and tenants on housing policy is no mean feat, and the resulting voting block against the measure proved insuperable. The “No on Prop J” forces managed to depict its authors as architects of the affordability “problem,” writ large, not the designers of a creative solution likely to benefit the working poor.

In the Adobe-Photoshop world of politics in the City, the measure’s sponsors morphed from purveyors of incremental policy change into scheming construction barons and their unscrupulous proxies, exploiting the downtrodden at every turn for profit. And most disturbingly, a real chance at constructive policy change may have been commandeered in a cynical play for political payback after a hard-fought mayoral race four months earlier.

The story of Prop. J’s demise is a cautionary tale mired in the complex and divisive politics in San Francisco. Many of the same anti-J voices had tarred candidate Newsom as a conservative patsy well to the right of Arnold Schwarzenegger, just weeks before Mayor Newsom was to secure permanent progressive-hero status around the world for his stand on gay marriage.

Perhaps little can be learned when good policy collapses in the cranky crucible that is San Francisco. Yet despite its parochial particulars, the conundrum of Prop. J illumines the quandary faced by any policy innovation in urban housing: persuading owners, tenants and the dispossessed that they all have something significant to gain.

New Yorkers lament the sweltering summer and envy each others’ weekend getaways to the Hamptons and Fire Island

AS SURE AS New Yorkers lament the sweltering summer and envy each others’ weekend getaways to the Hamptons and Fire Island, San Franciscans bemoan the exorbitant cost of housing.
All residents of the City by the Bay have their story to tell. First-time homebuyers contemplate lottery tickets as a rational means to afford a downpayment. Stockbrokers ponder whether six-figure salaries really do disqualify them from receiving government housing subsidies.

Commuting from distant suburbs in San Joaquin Valley, San Francisco fire captains and police lieutenants roll and the region’s rather languid emergence from the recent recession. Job growth remains flat in the Bay Area, but among the employed, incomes are outpacing growth trends seen nationally and statewide. Even in this stunted economy (by late-90’s standards), prospective renters and buyers can bid up housing prices, well beyond the reach of the City’s least well-off families. San Francisco’s healthy vacancy rates since the Internet bust have not brought commensurate price relief.

Household formation patterns are dominated by young, wealthy, mobile workers. The City’s to a halt in traffic outside Livermore at 5:00 a.m., praying the City’s victims-in- waiting will postpone their calamities until after rush hour.

As unharmed spectators, San Francisco’s longest-standing tenants rhapsodize about their Reagan-era rent levels, permanently capped by the population continues to grow – almost 17% since the 1980 census – and has now exceeded post-war levels after a substantial dip. But the housing stock remains stagnant. Overcrowding is an increasing public health concern in the City’s poorest, most ethnically concentrated neighborhoods. On top nation’s most vigilant rent control regime.

Meantime the most elderly among them keep the rent board busy staving off all manner of eviction threats, since landlords stand to quadruple their investments by selling their buildings. These section 8 residents see the writing on the wall – if they owned their buildings in this market, they’d sell too. The landlord’s contract with federal regulators to continue foregoing substantial profit in favor of housing the lowest-income retirees provides precious little security for elder renters.

According to a September 2004 report by the California Association of Realtors, just 11% of the City’s households can afford to purchase the region’s median-priced home (as of July 2004, the tidy sum of $660,000).

The National Low- Income Housing Coalition’s most recent “Out of Reach” report lists the least affordable counties nationally, and San Francisco, Oakland, San Jose and their suburbs speak for seven of the top ten slots. Fewer and fewer families can afford to buy in the City, but those who manage to become homeowners invariably hit the jackpot. From the standpoint of real estate capital, San Francisco merely lives out its legacy: the gold ran out long ago, but the gold rush never really ended.

The causes of the City’s housing squeeze both perplex and dismay. Demand remains extraordinarily robust despite natural (and worsening) transit bottlenecks on the peninsula of these problems, San Francisco continues to be plagued by its national reputation as homeless capital of the West, and the City’s own data bears out the grim reality. A 2002 count found more than one percent of the City’s population living on the streets, in shelters, in treatment facilities, and in transitional housing.

Far from targeting all these problematic conditions at once, Prop. J sought to ameliorate supply constraints at the margin, by adding moderately priced for-sale units in neighborhoods rich with infill-construction opportunities.

The measure would have brought mixed-income developers into needy neighborhoods. Econ 101: structural market-shortages warrant reasonable government action inducing firms to boost production. The notion represents such a fundamental policy stricture that it would appear to render debate pointless. But basic logic has never been much of a constraint in San Francisco.

ALL FACTIONS ON the City’s famously fractious political scene agree, if only facilely, that new housing supply is desperately needed. The conditions for shortage are rampant: more than a generation of rent control; great seismic risk, scarce construction insurance, sophisticated claims institutions and related transaction costs in construction; highly unionized construction labor markets; the City’s moratorium on new “live-work” loft units; a vibrant environmental movement brandishing the spoils of grand legislative triumphs to oppose all new development in whatever form; and a sluggish recovery from the dot-com bust and recession. Understandably, new housing construction in the City has slowed to a trickle.

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