There are three arguments floating around as to why the rent is too damn high in San Francisco, all of which just happen to serve the interests of local real estate developers:

• San Franciscans make it hard to build!
• Rent control actually causes rents to go up!
• This has been happening since the Gold Rush!

All of these arguments hinge on the assumption that what’s happening right now in the Bay Area generally is somehow unique to San Francisco specifically. This morning, an article about the “yuppification” of San Francisco from the L.A. Times, published in 1985, was making the rounds on Twitter, and plenty of people making these arguments have cited it as proof of one, or all, of the above. It certainly does sound familiar!

Whatever its name, its result is spiraling housing costs, clogged traffic, an exodus of middle-class and poor families and declining black and Latino populations. And the trend seems certain to continue despite a new effort by the city to limit growth, restrain housing costs and preserve neighborhoods.

But it doesn’t just sound familiar to San Franciscans, because it’s happening all over the country.

It’s true that by 1985, the impact of the de-industrialization of American cities and increasing income inequality was first starting to reshape the streets and skyline, helped in no small part locally by then-Mayor Dianne Feinstein (who’s husband, incidentally, is investment banker Richard Blum, chairman of the board of commercial real estate developer CB Richard Ellis). Not to mention the economic policies of the Reagan administration, neo-liberalism’s legendary benefactor and hero. Economic policies which have thrived through the following Republican and Democrat administrations, including the current one.

What is new is that it’s accelerating. And as the divide between the haves and have-nots grows larger, the haves are concentrating their wealth and the have-nots are either clinging to ever-more-precarious perches on the one hand and following the money in a desperate search for economic opportunity on the other.

Earlier this week, Jeremiah’s Vanishing New York, a blog which documents the passing of that city’s urban institutions, populations and traditions, published a lengthy article on, frankly, Manhattanization, partly in response to Spike Lee’s recent remarks on what’s happened to the Fort Greene, Brooklyn neighborhood of his youth. It’s as colorful an illustration on the impacts of real wage decline since the 1970s as the above graphs.

Many New Yorkers today, across racial and class lines, do wish for old-fashioned gentrification, that slow, sporadic process with both positive and negative effects—making depressed and dangerous neighborhoods safer and more liveable, while displacing a portion of the working-class and poor residents. At its best, gentrification blended neighborhoods, creating a cultural mix. It put fresh fruits and vegetables in the corner grocer’s crates. It gave people jobs and exposed them to different cultures. At its worst, gentrification destroyed networks of communities, tore families apart, and uprooted lives. Still, that was nothing compared to what we have today.

I want to make one thing clear: Gentrification is over. It’s gone. And it’s been gone since the dawn of the twenty-first century. Gentrification itself has been gentrified, pushed out of the city and vanished. I don’t even like to call it gentrification, a word that obscures the truth of our current reality. I call it hyper-gentrification.

If you want a window into what that earlier era of gentrification looked like, Mission Local also reached back to their archives for an interview with author Michelle Tea about her experience moving to San Francisco in the early 90s (shortly after the Loma Prieta earthquake momentarily relieved pressure on the San Andreas fault, population in-migration, and real estate prices).

Mission Local: Why did you move to the Mission?

Michelle Tea: It’s not that it was a particularly cool neighborhood, although I later found out that it was. This is just where the cheap rents were. I moved here in 1993, and when the bus let me off on Valencia, I remember the street felt deserted — like almost all of the storefronts were closed.

But somewhat tragically, wherever artists and activists go, real estate developers tend to follow, often because they lead the artists and activists there in the first place. Before moving to the Bay Area, my apartment in Brooklyn was at Underhill and Washington Avenue in a community largely composed of immigrants from the Carribean—“because that’s where the cheap rents were.” The year was 1998, and my girlfriend had found the place through a broker, who told her straight out, “We’re trying to move white people here.” Less than ten years later, a Richard Meier-designed condominium had sprouted up on the site of an old synagogue at Grand Army Plaza. A few more years after that, “New York’s first steampunk bar” opened a few blocks from my old place.

The units in the Meier building were sold from a realty office in SoHo, which had itself been transforming from a former light-industrial neighborhood with a heroin problem into a chic retreat for couture boutiques by the time that L.A. Times article was published in 1985. The denizens of the downtown art scene who survived and succeeded kept their pied-à-terres well after moving their families to the North Fork. One couple had me score some cocaine to save them the trip to Washington Heights, which now is actually being called WaHi by apartment brokers presumably looking to move white people in.

By then, the only “art” actually still happening in SoHo was sometimes even funded by venture capital like Josh Harris’s legendarily profligate failure Pseudo.com on Broadway. Which is to say, the process of reshaping neighborhood demographics and urban industry was no longer an ad-hoc effort led by a handful of privileged but tolerant middle class white people fleeing the cultural homogeneity of the suburbs. Now it’s funded by institutional investment in startup businesses and real estate development and enabled by local governments interested in attracting the middle class refugees from the rust belt who can afford to relocate and learn professional skills (which all sounded harmless enough when it was called “brain drain” in the old dead tree media).

We moved to Oakland’s Temescal in 2000 largely because it was pretty clear that we weren’t going to make much progress toward any kind of financial security on artist incomes in New York. Here, there was well-paid, if very temporary, web development work for me and a job at a non-profit with low wages but good health insurance for her. We did our part for displacement, certainly, but like the many techies in Silicon Valley’s lower contractor caste who sometimes get to ride the private shuttles, we might have had more stylish lifejackets than most, but we were just trying to keep our heads above water by swimming along with the currents of global capital like everyone but a few.

•••

Let’s go back to that article from 1985, and the plight of the Brandolino family’s experience having to move from their rent-controlled apartment North Beach after “a group of lawyers bought the 17-unit Victorian building in which they had been living to convert it into offices.” They couldn’t afford units in their old neighborhood at the going rate of “$900 or $1,000 a month” on their combined income of $30,000 a year, so they moved to Brisbane—which has no rent control, and could hardly be characterized as “anti-development”—where they found a place for $500 a month.

In today’s numbers, according to the inflation calculator from the Bureau of Labor Statistics, their income would now be near San Francisco’s median around $65,200, presuming it rose in step with inflation (which they haven’t). That would also put the apartments in North Beach out of their reach around $1,950 to $2,150 and the place they found in Brisbane at more like $1,100. But what are rents in North Beach and Brisbane right now? Based on an average of listings, one bedroom units are $2,995 and $1,839, respectively. And that’s assuming the Brandolinos were living in and looking for a one bedroom.

Granted, the average of units in Brisbane is from a very small sample, but again, if the reason real estate developers won’t build is because “the system is intentionally designed to make it as difficult as possible to build new housing,” according to Supervisor Scott Weiner, then why haven’t they been capitalizing on the massive demand by building units in Brisbane? Back in 2006, the suburb was the last stop on Google’s shuttle bus route, and a wave of Googlers were moving in.

But these were people who’d presumably already paid off their school loans and saved a down payment, if not cashed in on the 2004 IPO. The latest generation haven’t had time to make that progress for themselves, and the only they have of doing it is by working themselves to exhaustion at some fly-by-night mobile app startup, so necessarily they’re flocking to the region looking for places to rent. So why weren’t thousands built in Brisbane built during the last boom?

We can look back to that old L.A. Times article for some ideas. The second section leads off with, “a few years ago, there were no vacant offices here. Now, there is a 10% vacancy rate.” What happened was, as the vacancy rate increased, the value of the commercial real estate that companies like CB Richard Ellis were building began to drop. But it was still more expensive per square foot than building in San Mateo County, and because municipalities in California have more to gain for their tax base from commercial development because of Prop 13 restrictions on property taxes, among other reasons, the next twenty years did see a building boom. It’s just that it was corporate campuses and office space sprawling along the peninsula, not apartments.

What housing was built pushed further and further into the exurbs as people chased the home ownership dream, even as transportation costs rose and infrastructure spending dropped. And we all know how well that worked out.

Meanwhile, in San Francisco, real estate developers actually turned coat and allied with planned growth advocates because, by limiting new construction, they could bolster the value of what they’d already built, as detailed in Richard Deleon’s San Francisco political history “Left Coast City.” So the optimism in the following paragraph from our archived article, it turned out, was misplaced — much of these buildings never happened:

The first glass and concrete downtown high-rise sprouted in 1960, [California historian Kevin Starr] said. Now, there are 120 buildings of more than 10 stories in the 470-acre downtown area, with 60 to 70 more expected by the year 2000, the Planning Department says.

Keep that in mind when you read articles from the likes of New York Times technology reporter Nick Bilton, who wandered off the reservation to chime in on local real estate development and parroted pro-development advocates like Wiener’s quote above. Bilton reported that Redfin’s numbers showed homes selling for, on average, 60 to 80 percent above asking. Hard to believe? That’s because it isn’t true, as Priceonomics pointed out. The New York Times had to issue a correction, because in fact over the last two months it’s true that 60 to 80 percent of homes are selling for above asking, but the average premium is only six percent.

Which isn’t necessarily reassuring if your housing is insecure, but it’s useful for illustrating sensationalist bias. Incidentally, Bilton’s characterization of a Tech Workers Against Displacement Happy Hour at Virgil’s Sea Room last week as “an expletive-fueled yelling match between tech workers and people running nonprofits” has been challenged by multiple local reporters who were also there. So when the casual reader at home reads a Gizmodo piece blogsplaining to San Franciscans that we have to build our way out of this mess, keep in mind that you’re basically reading real estate propaganda filtered through two levels of reporters with no expertise on the issue and a pro-development ideological agenda.

The fact is, even if you remove the permitting costs from the process, it’s not profitable to build anything but luxury housing. So no capitalist in their right mind would start building any if they weren’t lured by subsidies, probably in the form of cheap city land or favorable lending rates. The reason no one was building housing during 2009 is because, as you might remember, the entire real estate market collapsed. In fact, the second residential tower on Rincon Hill which is now being finished was already approved years ago but the developer didn’t feel like bothering until market conditions improved (for the developer, not for tenants).

So to review, when it’s profitable to build, San Francisco’s city government has been more than happy help, and right now developers are doing everything in their power to relax building restrictions they themselves supported when the were trying to protect the value of their earlier investments.  We can not build our way out of this problem. Besides, even if we tried, the same people will be back to crying for height limits if over-supply or another economic downturn starts to negatively affect prices per square foot.

When it isn’t, rent control can help people stay in their homes, but thanks to vacancy decontrol and the fact that the Rent Ordinance only covers buildings from before 1979, there’s no reason landlords can’t keep up with the market by cashing in on empty units or be discouraged from new residential construction. And almost more importantly than controlling increases, what the Rent Ordinance does and eviction restrictions do is preserve rental stock—something even the market-oriented urbanists at SPUR say is critical right now.

As for the last point, yes, San Francisco has been a witness and participant in the perpetual boom-and-bust cycle of industrial capitalism since 1849. As economies worldwide are forcibly liberalized to a 19th century laissez faire model, wealth has once again concentrated in cities as it did during the robber baron era. In fact, it’s even worse now!  And it’s not just happening here.

To review:

• Real wages for the middle class have been declining for forty years.
• The class that has captured that wealth is concentrating in cities.
• The process is accelerating faster than anyone can build.

So yes, this has all been going on forever, and it’s more terrible than ever before. Both!

[Photo: klwang]

Election years are meat for political wonks: countless reports on position jockeying, candidates spewing tragically butchered sound bites, the occasional Republican defending rape, poverty blinders, and the endless stream of campaign mailers flowing straight into our recycling bin.  And here we are, eight whole months before we hit the polls and make a marginal impact on the direction our country takes, and mailers are already hitting our mailbox.

What fun! This mailer has such promise. Cost of living! Escalating rents!! Evictions!!!! It even depicts City Hall as drenched in the blood of a thousand puppies horrifically mowed down by Google buses.

For the San Francisco political junkie, the heart-pounding excitement felt by opening this mailer can only be matched by a young boy’s discovering of his first crusty porn stash.  Such suspense!  What is City Hall’s plan?…

The fuck is this?  Sure, I like a good cheap soda as much as the next miserable asshole struggling with control issues, but the mental gymnastics you have to go through to make this a cost of living issue is exhausting.  The horrible details, from this past November:

On Monday, three weeks after Supervisor Scott Wiener unveiled a proposal for a 2-cents-per-ounce sugary beverage tax, Supervisor Eric Mar stepped up to a podium to announce his own tax — and standing next to him was Wiener.

Mar, along with supervisors Malia Cohen and John Avalos, has been working on a soda tax proposal with public health advocates for the past year and said Monday they wanted to put the legislation they have been crafting forward. The two proposals, however, are remarkably similar: Both target sugary-drink distributors, both impose a 2-cents per ounce tax, and both would use the estimated $30 million a year for health and nutrition programs to fight diabetes and other health issues associated with sodas, energy drinks and other sugary drinks.

The mailer is put out by “The American Beverage Association, Member of Stop Unfair Beverage Taxes - Coalition For an Affordable City,” which is just an elegant way of saying “Coke” and “Pepsi,” who are rightfully worried about our concern for children’s obesity affecting stock prices San Francisco’s affordability.  And maybe they have a point: if we stop all those 2 cent taxes, anyone who drinks 195,000 ounces of soda a month will suddenly be able to afford a nice two-bedroom.

State Senator Mark Leno believes that there just might be the political will to reform the Ellis Act. At least, that’s what he told the audience assembled at the California State Capitol for the Tenant’s Together Renters’ Day of Action yesterday.

A coalition of tenant and affordable housing advocacy organizations across the state, Tenant’s Together was also there to lobby for the restoration of funding the Renter’s Rebate for low-income senior and disabled tenants in California and show support for SB-391, otherwise known as the California Homes and Jobs Act, which would levy a fee on real estate filings to fund affordable housing construction.

A lot of familiar faces from the San Francisco Citywide Tenant Convention held recently at the Tenderloin Community School were joined by activists from Fresno, Merced, Oakland, Berkeley and host Sacramento for a turnout that numbered around 300 or more by my count — including media and elected officials.

Why is a statewide organization lobbying against the Ellis Act, which nominally only applies to a few municipalities including San Francisco? Nevermind that it effectively undermines any future local efforts to prevent the loss of rental stock across the state, it clearly seemed relevant enough to the legislature in 1986 to take action to undermine rent ordinances being passed in the Bay Area and Los Angeles. So ask them.

Ellis, and the entire affordable housing debate, is a lot bigger than San Francisco. Rents (and home prices) across the state have been outpacing real wages for decades. And many of the issues tenant activists have been organizing against are not new, it’s just that conditions have gotten so bad on the ground that campaign donor landlords may not be able to buy incumbents enough votes to stay in office—according to the annual San Francisco Chamber of Commerce public opinion poll, housing issues emerged as the top concern among San Franciscans—especially if the people who actually bother to show up at the polls during off-year elections get evicted from their respective districts before November.

The Renter’s Rebate, which was defunded after decades of helping tenants by former Governor Arnold Schwarzenegger in 2008, could put up to up to $347.50 in tax credits into the pockets of elderly Californians across the state sooner rather than later now that the state has a budget surplus again. Endorsed by both business and labor lobbies, SB-391 is meant to raise funds to build affordable housing now that city and county redevelopment agencies are gone. More importantly, the ultra-right Pacific Research Institute absolutely hates it, which is usually more than enough to garner any bill my critical support.

From the sound of things, Leno’s effort seems to have the most traction, especially after last month’s visit from Mayor Ed Lee indicating maybe pragmatism, or at least protectionism, from the real estate and business lobbies locally. Even SPUR’s Gabriel Metcalfe is calling for efforts to preserve rental stock these days. “I don’t know if there’s the political will to eliminate the Ellis Act. But can can amend it,” said Leno. He framed it as trying to hold the bill accounting to the language about protecting landlords who buy rental properties and later want to the leave the business. “If you’re a speculator, you don’t want tenants. So the Ellis Act doesn’t apply to you.”

The proposal to keep rental units from being converted into Tenancies-in-Common for five years through an Ellis amendment was again floated to combat the evict-and-flip, an increasingly common practice among landlords like The Dirty Dozen. Assemblymember Tom Ammiano followed Leno and took a harder line. “I have a limp wrist, but I’d rather punch with that limp wrist than compromise with the likes of Wells Fargo.” Which? Love you, Tom!

Assemblymember Phil Ting, who represents the west side and Daly City, and State Senator Leland Yee who also represents the west side as well as San Mateo County couldn’t be bothered to attend. San Francisco Supervisors David Chiu and David Campos—who are competing for Ammiano’s seat once he vacates due to term limits—were joined by John Avalos, who subtly promoted his in-law amnesty plan and Jane Kim, who largely supported Leno’s position by framing the Ellis Act issue in similar terms.

Both Ammiano and Leno have until Friday to introduce bills, and while they might seem rather far apart on this and other issues, Ammiano’s principled stance at least make anything Leno proposes seem even more moderate by comparison. It also makes clear the stakes in the race to replace him between the pragmatist Chiu versus the idealist Campos. After all, Ted Gullicksen from the Tenant’s Union (where I volunteer as a counselor) pointed out at the Tenant Convention that buyouts backed by the threat of an Ellis now outnumber the evictions five to one. Meaning any amendmentments might not even ultimately slow displacement or the removal of rental stock from the market entirely. So we’ll probably need more legislation if we’re going to paper over the inequality gap long enough to get us to the next real-estate downturn.

I’ve been in and around left activism circles for far too long to every really get my hopes up, but on the ride back to San Francisco with friends from the The League of Young Voters, I’ll admit to some cautious optimism that some progress can be made on tenant issues amidst the most recent Rentpocalypse, which is now trending into its third year.

Following a year of roaring criticism of tech buses, ranging from Rebecca Solnit's “alien overlord” essay to December's blockades, Mayor Lee and SFMTA today laid out a proposal to legitimize the shuttles that have been accused of illegally using Muni stops and enabling exorbitant rent increases.

“These shuttles provide more than 35,000 boardings per day in San Francisco, eliminating at least 45 million vehicle miles traveled and 761,000 metric tons of carbon every year from the region’s roads and air,” SFMTA wrote in a press release.

The release went on to detail the agency's 18-month pilot program for the shuttles, which will be voted on by the MTA Board on January 21st:

• Charging a daily fee based on the number of stops that a shuttle provider or employer makes in order to fully cover the SFMTA’s cost of administering and enforcing the program and includes private investment to improve select stops. Fees are estimated to raise tens of thousands of dollars monthly to the largest transportation providers.
• Approval of 200 bus stops (out of more than 2,500 total in the Muni system) to be used by providers;
• Private shuttle providers will pay to use Muni bus zones, based on a per stop, per day, cost recovery schedule. Due to Proposition 218, the SFMTA cannot create a fee structure that goes beyond the cost to provide such a service or policy;
• Providers would operate in accordance to agreed-upon guidelines, such as yielding to Muni and pulling to the front of the zone making more room for other vehicles, and avoiding steep and narrow streets;
• The Agency would enforce these rules to ensure only participating companies are using shared zones. It will be illegal to use all other bus zones;
• Each commuter shuttle will be issued a unique identification placard so enforcement personnel can easily identify vehicles; and
• Providers would share data with SFMTA to ensure that location information is available for complaint follow-up, enforcement and to support the agency’s transportation system management.

SFMTA didn't detail how much the shuttles will be charged, but reporter Sarah G McBride tweeted it would be “around $100k a year”—far shorter than the $1 billion protesters were demanding last month.

However, the agency promised some community input into the routing of buses, writing “[we] will ask shuttle providers to propose stops for inclusion into the bus zone network and will ask San Francisco residents for their input to determine specific bus zones that can be used.”

The Housing Rights Committee issued a press release in anticipation of the Mayor's announcement, in which the group reiterated their demands that “the [tech] industry must contribute significantly for its impacts on local infrastructure and neighborhoods.”

“We are prepared to be demand more of City Hall if it appears that Mayor Lee's plan is not realistically aggressive enough to address the concerns of poor, working, and middle-class San Franciscans,” wrote Eviction Free San Francisco organizer Jennifer Cust. “The tech industry has fueled soaring rents and accompanying evictions that have uprooted longtime residents, families, artists, teachers, and many others. The industry must step up and contribute to help San Francisco retain its diversity, culture, and affordability.”

We'll update as this story develops.

UPDATE 4:15pm: Reuter's reporter Sarah G McBride further clarified the $100k/year amount, tweeting that companies with shuttles will pay “around $100k each for a total of about $1.5 million over 18 month pilot program.”

[Illustration by Lincoln Smith]