San Francisco

San Francisco Has Added a Lot of Jobs but Not Enough Housing. City Voters Approved a Ballot Initiative That Cuts Back on the Jobs.

The city's voters, politicians, and activists should stop trying to dictate how exactly their city will change over the years. They’re not very good at it.


San Francisco has created a lot more jobs than housing in recent years, helping to make it one of the most expensive places in the world to live. To fix this imbalance, city residents have voted for a ballot measure that would restrict the development of new office space until the city starts building enough affordable housing. Whenever it gets around to that.

On Super Tuesday, 55 percent of San Francisco voters ticked yes on Prop E. The complicated ballot measure would revise the city's existing cap on large office developments (set at 875,000 square feet per year) downward by the same percentage that it falls short of its affordable housing goals.

So if San Francisco builds only 90 percent of the affordable housing units it has given itself the goal of completing (which is currently about 2,000 units a year), the amount of office space that can be permitted that year will also fall by 10 percent.

"Either we're going to significantly increase our affordable housing or reduce our office development," John Elberling, the sponsor of the initiative, said to CityLab in January. "It's going to be one or the other."

It could also be neither.

Prop E doesn't appropriate any new money to build affordable housing (a technical term meaning income-restricted units that are rented out at below-market rates). Nor does it streamline permitting or remove zoning restrictions that would make it easier to build such projects.

"All [Prop E] could do is reduce future office development," notes SPUR, a Bay Area think tank, which also points out that less office development would also mean less money for affordable housing. "Reducing office development would also reduce impact fees that pay for affordable housing—precisely the opposite of the measure's goal."

Proponents made a couple of arguments for the ballot measure. One is that it boosts affordable housing production in the short run by grandfathering in several large office developments that are already in the pipeline and that come with an affordable housing component.

More broadly, Elberling has argued that linking housing and office development will give commercial developers and business interests an incentive to support more affordable housing funding in the long-run. So even if the measure itself doesn't create affordable housing, they think it could create the political will to get the job done. Four-dimensional chess by ballot measure.

It is possible that Prop E will succeed in creating this powerful pro-affordable-housing coalition, which will then go on to get the hundreds of millions of additional funding needed to build all the affordable housing the city needs, and then triumph over the NIMBYs who frequently delay these projects. But there is also—how shall I put this?—a fair chance that this won't happen.

Meanwhile, Prop E comes with some pretty concrete costs. Given the city's chronic inability to meet its affordable housing goals, City Controller Ben Rosenfield found that Prop E would have reduced allowable office space development by a cumulative 5.6 million, and net tax revenues by $4–7 million per year, had it been in place for the last decade. Alternatively, the city would have had to spend $200–500 million more each year over the same time period to meet its affordable housing goals, and thus avoid any reduction in allowable office space development.

Opponents of Prop E argue it would reduce impact fees paid by office space developers by $600–900 million over the next 20 years. A report from the city's chief economist estimates that city GDP will be 8.5 percent lower by 2040 than it would have been without Prop E.

Artificially capping the amount of new office space that can be built would also likely raise office rents, pushing out smaller businesses that can't outbid deeper-pocketed corporations for existing space. After all, that's what supply constraints have done to the city's housing market.

The city is still counting mail-in ballots from Tuesday's election, so Prop E's victory isn't official yet. But "barring unforeseen lunacy", as Mission Local put it, the measure will easily pass.

That really is a shame. San Francisco has continually tried to plan itself out of its housing affordability problems through limits on the "wrong" kinds of development, whether that's buildings that are too big, too luxurious, or now, come with too many jobs. These efforts have failed to work. San Francisco voters, politicians, and activists should stop trying to dictate how exactly their city will change over the years. They're not very good at it.

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  1. Another sterling example of government fucking up a market, then passing one unwieldy regulation after another in a futile attempt to emulate the market they destroyed.

    1. “Reducing office development would also reduce impact fees that pay for affordable housing—precisely the opposite of the measure’s goal.”

      Exactly! Everything government does is contrary to the stated goals.

      This will be fixed next year in proposition F, to automatically raise impact fees by 10%.

      Eventually proposition G will recognize the difference between division and multiplication.

      1. “San Francisco voters, politicians, and activists should stop trying to dictate how exactly their city will change over the years. They’re not very good at it.”

        Ah, Liberal’s Syndrome. The belief that somehow one more ordinance, law, rule or regulation will magically fix all the things the previous ordinance, law, rule or regulation effed up.

    2. I think about this the same way I do about rent control. The ideal scenario is a free market but if you’ve already decided against that for some reason (as California so obviously has) then this is a policy that makes sense. You’ve already restricted the supply of housing. Now restrict demand for housing too. I may not agree with those policies but at least they’re intellectually consistent for people that supposedly don’t want more growth and aren’t just looking for windfall profits on their house.

  2. God I love watching that city destroy itself.

    1. It really is a shame, though. It’s a beautiful place, if you catch a neighborhood right after the homeless have been cleared out and before the next group moves in.

  3. Maybe more business will stop doing business in SF by moving to other locations and the employees will follow leading to a glut in housing just like Detroit which now has a glut of empty homes and no tax base and high crime

    1. Real world example:

      I cofounded a corporation in 2018 with one other partner initially. We each made competing proposals for our HQ location, and decided on a matrix for evaluating the choices. I wanted Washington state, he wanted the Bay area. We looked at tax rates for the business and ourselves, cost of payroll taxes, regulations, rents, etc. I knew there was no fucking way I was moving my family with young kids to the bay.

      It wasn’t even close. We are HQ’ed in Washington.

    2. Hmm, so lots of bums without homes in SFC, lots of homes without bums in Detroit. We could solve this in a week–any not by shipping homes.

      1. Haha. You caught that monkey’s paw version of your wish in the last sentence. The city councils of those two places would undoubtedly decide to ship 10,000 homes from Detroit at $10B which would be covered by raising property taxes.

      2. I’m certainly not pro-bum but I don’t think inflicting Detroit on them is going to help anyone.

        1. Let’s try. What’s the downside?

        2. Giving houses in Detroit to the mentally-ill homeless might serve to drastically reduce their numbers – just as soon as the temperature goes below 10 F after they’ve failed to pay their heating bills.

  4. Any word on how many square feet of shit on the sidewalks will be allowed under the new rules?

    1. That’s where San Francisco embraces the libertarian moment.

    2. I believe it’s regulated by depth and density.

      1. Once again, a diet high in fiber pays dividends.

  5. On the bright side, Covid-19 may do an excellent job of freeing up housing supply and reducing housing demand.

    1. Certainly in the skilled nursing facilities.

    2. Typhus is probably the bigger threat in SF.

      1. Where’s the Black Death when you really need it?

        1. The Black Death is treatable by antibiotics, and preventable by controlling the rat population. In other words, San Francisco may soon be the only US city where an epidemic is likely.

  6. Joe M
    March.6.2020 at 1:41 pm
    God I love watching that city destroy itself.

    You’re a great American.

    March.6.2020 at 2:31 pm

    On the bright side, Covid-19 may do an excellent job of freeing up housing supply and reducing housing demand.

    Another model citizen and wonderful human being.

  7. “barring unforeseen lunacy”

    Not to worry. San Francisco’s lunacies are all in plain sight.

  8. Could they be any more retarded?

    1. San Francisco City Council: Challenge accepted!

    2. Hold my beer.

    3. You would think repeatedly electing Nancy Pelosi would answer that question.

  9. Remind me why a city, or any government entity, should be building housing for private citizens.

  10. Someone nearly touches on what seems the right answer: that SF doesn’t want any more people or high-paying jobs. They’ve got existing problems to solve. As evidenced by the controversies over ‘gentrification’, etc.

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  12. Cutting back on jobs just gives you more unemployed residents, it does reduce residency. Stupid government thinking.

  13. I definitely agree with the Koch-funded pro-billionaire position that zoning, or any other rule(s) that slightly inconveniences wealthy shitheads, should be abolished. Building codes are horrendous government oppression. The average citizen really wants to live in a favela rather than coerce anyone ever or force them to not do something. My party gets like 4% nationally in Presidential elections maybe??? I am a Glibertine.

  14. There is no housing “crisis”! There’s simply too many people. The correct solution is obvious. Releasing the corona virus and ebola amongst the homeless would also be a great start.

    1. Better pick something that can readily be prevented from spreading to the elites. Perhaps bubonic plague – if you keep the rats out of your neighborhood, you’re fairly safe, and it is quite unlikely to kill you if you aren’t dependent on the government budgeting money for doctors and antibiotics…

  15. Meanwhile, offices will figure out a scheme where they cut the size of cubicles and/or deal spaces and/or mandate alternating work from home to save on office space.

    SF’s next proposed law, ban working from home, because that’s a zoning law violation to do work in a residential area.

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