San Francisco’s loss

Pub date April 10, 2012

San Francisco is increasingly losing its working and creative classes to the East Bay and other jurisdictions — and with them, much of the city’s diversity — largely because of policy decisions that favor expensive, market-rate housing over the city’s own affordable housing goals.

“It’s definitely changing the character of the city,” said James Tracy, an activist with Community Housing Partnership. “It drains a big part of the creative energy of the city, which is why folks came here in the first place.”

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Now, as San Francisco officials consider creating an affordable housing trust fund and other legislative changes, it’s fair to ask: Does City Hall have the political will to reverse the trend?

Census data tells a big part of the story. In 2000, the median owner-occupied home in San Francisco cost $369,400, and by 2010 it had more than doubled to $785,200. Census figures also show median rents have gone from $928 in 2000 up to $1,385 in 2010 — and even a cursory glance at apartment listings show that rents have been steadily rising since then.

Tracy and other affordable housing activists testified at an April 9 hearing before the Board of Supervisors Land Use and Economic Development Committee on a new study by the Budget and Legislative Analyst, commissioned last July by Sup. David Campos, entitled “Performance Audit of San Francisco’s Affordable Housing Policies and Programs.”

“There’s a hearing right now at City Hall about our housing stock and how it’s been skewing upward toward those with higher incomes,” Board President David Chiu told us, noting that it is sounding an alarm that, “Creative individuals that make this place so special are being driven out of the city.”

Oakland City Council member Rebecca Kaplan said that San Francisco’s loss has been a gain for Oakland and other East Bay cities, which are enjoying a new cultural vibrancy that has so far been largely free of the gentrifying impacts that can hurt a city’s diversity.

“You can add more people without getting rid of anybody if you do it right. Most of development is looking at places that are now completely empty like the Lake Merritt BART station parking lot, empty land around the Coliseum, and the West Oakland BART station,” Kaplan told us. “We have to commit to revitalization without displacement.”

Yet the fear among some San Franciscans is that we’ll have just the opposite: displacement that actually hinders the city’s attempts at economic revitalization. “What’s at stake is the economic recovery of the city,” Tracy said. “You can’t have such a large portion of the workforce commuting into the city.”


A big part of the problem is that San Francisco is building plenty of market-rate (read: really expensive) housing, but not nearly enough affordable housing. The report Campos commissioned looked at how well the city did at meeting various housing construction goals it set for itself from 1999 to 2006 in its state-mandated Housing Element, which requires cities to plan for the housing needs of its population and absorb a fair share of the state’s affordable housing needs.

The plan called for 7,363 market-rate units, or 36 percent of the total housing construction, with the balance being housing for those with moderate, low, or very low incomes. Developers built 11,293 market rate units during that time, 154 percent of what was needed and 65 percent of the total housing construction. There were only 725 units built for those with moderate incomes (just 13 percent the goal) and just over half the number of low-income units needed and 83 percent of the very low-income goal met.

“We have to do a better job of monitoring and evaluating each project,” Chiu said. “Every incremental decision we make determines whether this will be a city for just the wealthy.”

The situation for renters is even worse. From 2001-2011, the report showed there were only 1,351 rental units built for people in the low to moderate income range, people who make 50-120 percent of the area median income, which includes a sizable chunk of the working class living in a city where about two-thirds of residents rent.

“The Planning Commission does not receive a sufficiently comprehensive evaluation of the City’s achievement of its housing goals,” the report concluded, calling for the planners and policymakers to evaluate new housing proposals by the benchmark of what kind of housing the city actually needs. Likewise, it concluded that the Board of Supervisors isn’t being regularly given information it needs to correct the imbalance or meet affordable housing needs.

Policy changes made under former Mayor Gavin Newsom also made this bad situation even worse. Developers used to build affordable housing required by the city’s inclusionary housing law rather than pay in-lieu fees to the city by a 3-1 ratio, but since the formulas in that law changed in 2010, 55 percent of developers have opted to pay the fee rather than building housing.

Also in 2010, Newsom instituted a policy that allowed developers to defer payment of about 85 percent of their affordable housing fees, resulting in an additional year-long delay in building affordable housing, from 48 months after the market rate project got permitted to 60 months now.

Tracy and the affordable housing activists say the city needs to reverse these trends if it is to remain diverse. “It’s not even debatable that the majority housing built in the city needs to be affordable,” Tracy said.

Mayor Ed Lee has called for an affordable housing trust fund, the details of which are still being worked out as he prepares to submit it for the November ballot. Chiu said that would help: “I will require a lot of different public policies, but a lot of it will be an affordable housing trust fund.”


San Francisco’s problems have been a boon for Oakland.

“With much love and affection to my dear SF friends, I must say that Oakland is more fun,” Kaplan told us. “Also I think a lot of people are choosing to live in Oakland now for a variety of reasons that aren’t just about price. We have a huge resurgent art scene, an interconnected food, restaurant, and club scene, a place where multicultural community of grassroots artists is thriving, best known from Art Murmur.”

There is fear that Oakland could devolve into the same situation plaguing San Francisco, with rising housing prices that displace its diverse current population, but so far that isn’t happening much. Oakland remains much more racially and economically diverse than San Francisco, particularly as it attracts San Francisco’s ethnically diverse residents.

“We’re not looking at a situation where the people moving into town are necessarily predominantly white,” Kaplan said. “We’re having large growth in quite a range of communities, including growing Ethiopian and Eritrean and Vietnamese populations…If you don’t want to live in a multicultural community, maybe Oakland’s not your cup of tea.”

According to the 2010 census, a language other than English is spoken at home in 40.2 percent of Oakland households, compared to 25.4 percent in San Francisco. “Almost every language in the world spoken in Oakland,” Kaplan said.

African Americans make up 28 percent of Oakland’s population, compared to only 6.1 percent in San Francisco, and 6.2 percent of the population of California. In San Francisco, the number of black-owned businesses is dismal at 2.7 percent, compared to 4 percent statewide and 13.7 percent in Oakland. The census also finds that 25.4 percent Oaklanders are people of Latino origin, compared to San Francisco at 15.1 percent and 37.6 percent statewide. San Francisco is 33.3 percent Asian, compared to Oakland at 16.8 percent and all of California at 13 percent.

Both cities are less white than California as a whole; the state’s white population is 57.6 percent, compared to 34 percent in Oakland and 48.5 percent in San Francisco.

Gentrification shows its face differently depending on the neighborhood. Some say Rockridge, a trendy Oakland neighborhood where prices have recently increased, has gone too far down the path.

“Rockridge has been ‘in’ for a long time, but the prices are staggering and it isn’t as interesting any more,” Barbara Hendrickson, an East Bay real estate agent, told us.

The nationwide foreclosure crisis didn’t spare Oakland and may have sped up its gentrification process. “The neighborhoods are being gentrified by people who buy foreclosures and turn them into sweet remolded homes,” observed Hendrickson.

Yet Kaplan said many of these houses simply remain vacant, driving down values for surrounding properties and destabilizing the community. “I think we need a policy where the county doesn’t process a foreclosure until the bank has proven that they own the note,” said Kaplan, who mentioned that the city has had some success using blight ordinances to hold banks accountable for the empty buildings.

And as if San Francisco didn’t have enough challenges, Kaplan also noted another undeniable advantage: the weather. “The weather is really quite something,” she said. “I have days with a meeting in San Francisco and I always have to remember to bring completely different clothing. Part of why I wanted to live in California was to be able to spend more time outdoors, be healthy, bicycle, things like that. So that’s pretty easy to do over here in Oakland.”