[URBAN NOTE] "San Francisco Progressives Declare War on Affordable Housing"

[rfmcdonald]

If Noah Smith's account in Bloomberg View is correct--if--then San Francisco and the whole Bay area will face an unsolvable problem.

San Francisco provides a cautionary tale. In the last decade, the city has been flooded with technology workers, pushing rents into the stratosphere -- a one-bedroom apartment costs around $3,500 a month to rent. Rent control is in effect, but that has just increased the incentive for evictions. Despite efforts by anti-eviction activists, the sheer size and persistence of the economic incentives involved are impossible to resist for long.

Unlike progressives in New York City, who are often big supporters of density, San Francisco progressives have decided to focus on kicking the tech industry out of the city. Booting tech back to wherever it came from seems like a natural way of restoring the old equilibrium. Sadly, efforts to push tech employees out will fail, and will end up hurting the city's low-income residents even more.

For example, activists have proposed levying a 1.5 percent payroll tax on tech companies only. The initiative will probably not become law, but it clearly indicates that tech-bashing is the order of the day.

They’ve also tried to raise tech workers’ transportation costs. The city recently reduced the number of places where private tech company buses are allowed to stop, and is considering forcing all tech buses to stop only at a few “hub” locations.

But the most powerful weapon for bashing the tech industry is also the most destructive -- a general restriction on the supply of housing itself. Progressives on the city’s Board of Supervisors recently called for certain height limit restrictions to be lifted only for developments that include 100 percent below-market-rate housing (the current policy sets the number at 30 percent). Obviously, developing housing at entirely below-market rates is impossible without heavy government subsidies, so this proposal would effectively stop all new construction in many areas of the city. The progressive supervisors also want San Francisco to be exempt from a possible new statewide policy to expedite regulatory approval for new housing development. This is essentially a scorched-earth policy -- raise rents enough to drive tech out of the city, then lower them again once the industry gives up.

The problem is that other cities in the Bay Area will simply respond in kind. If transportation hassle and high rents start pushing high-earning workers to the South Bay or to Oakland, those cities will likely restrict their own housing development. In fact, South Bay suburban towns have done this for a long time, which is one reason tech workers moved to San Francisco in the first place. Oakland shows some signs of following suit.