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Mayor Lee’s delusion: He tells developers the city is doing great

September 29, 2015

By Tim Redmond : 48hills – excerpt

Lots of talk of the business boom, just passing mention of the housing crisis as mayor delivers speech to real-estate industry breakfast

SEPTEMBER 24, 2015 – The news that Uber is moving into a building in downtown Oakland has everyone in the world of commercial real estate, tech – and displacement – talking. The move could be good for a city that needs economic development, supporters say – but one expert at UC Berkeley had a warming:

“I hope Oakland doesn’t make the same mistakes San Francisco did,” Miriam Zuk, director of the Urban Displacement Project, told the Chron.

Yes, the word was “mistakes,” as in moving too quickly to attract too many tech companies without first stabilizing existing vulnerable communities and figuring out where the newly arriving, high-paid workers were going to live.

Even the Chron is now recognizing that there’s a serious downside to what Mayor Lee has done; one story calls it a “detour from paradise to parody.”…

Cory Weinberg, the BizTimes reporter who did a great job moderating the discussion, noted, gently, that there’s an increase in anti-development sentiment, linked to “legitimate pain over displacement.” The developers were having none of that.

It is, Vasquez said, “just fear-mongering.” Arena said it’s “fear and panic.” But they all insisted that market-rate housing development doesn’t cause displacement.

I don’t think they are reading the city’s own studies, which show that building luxury housing actually makes the crisis worse.

But you got a sense of what these folks think is the solution – “our business is a regulated business,” Meany said. “And regulations are dangerous.”

Wow. Good morning to you, too… (more)


Developers Cry Poverty; so Sad

…So along comes developer Oz Erickson, who testified today that the margins on housing are so low a few minor fees could kill all of it. “It costs $800,000 a unit to build housing,” he said, “and the sales price is around $900,000. We are right on the edge.” He insisted that margins are as low as 6 percent.

“A one percent increase in interest rates will put an end to all residential development in San Francisco,” he said.

If that’s the case, why are there so many cranes? Why are developers spending so much money (more than they would have to pay in Muni fees) to stop the Mission Moratorium?

If building market-rate housing (and office space) is such an iffy idea in San Francisco, and can be killed by a transit impact fee, why is this one of the hottest markets in the world for real-estate development?

Both Sups. Scott Wiener and Malia Cohen talked about how the city was growing, fast, and will keep growing – as if that’s the inescapable natural order of things. But if the costs of that growth greatly exceed the benefits to the city – and the rest of us are going to have to pay the difference – isn’t it time to slow things down?

Just a thought… (more)

We have also heard that a 50% affordable requirement will not be worth it to developers. Maybe that would not be a bad approach either. Keep pushing that affordability requirement till they cast their eyes on other cities that want growth.


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