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The Panama Papers and SF’s housing crisis

April 5, 2016

By Tim Redmond : 48hills – excerpt

Dirty money, laundered offshore, is fueling the boom in luxury real estate in US cities. How many SF condos are owned by crooks and despots?

The whole world is talking today about the Panama Papers, the amazing leak of documents from a law firm that specializes in helping the rich hide their money. Leaders of numerous countries are involved. Vladimir Putin is a player. The prime minister of Iceland may have to resign. The government of Pakistan is caught up in the scandal. And there will be a lot more as investigative reporters continue to dig through the terabytes of data…

48hillscondos.png

We know that a lot of the new condos in SF are second homes — but how many are owned by despots and crooks using the city to launder their money?…

On NPR this afternoon, the vice president of Transparency International talked about how the offshore deals impact ordinary people – and the first thing she talked about was housing in cities like New York and SF. See, the shadowy banking system allows people with illegal money – money from arms trading, money from drug sales, money stolen from the people of a struggling country – to launder it and use it, among other things, to buy real estate.

So, she said, the bidding wars that are driving up the cost of housing in cities, and the mega-priced condos that are shoving out other types of housing in places with scarce real estate, are directly linked to this dark money.

The Miami Herald documented this nicely…

We know that a lot of the luxury condos going up are not occupied by people from San Francisco, and that in fact a lot of them aren’t occupied at all. They are places to hide money.

And now we know they are places to hide illegal money…

And if you think that city planning has anything to do with what’s getting built in San Francisco, check out today’s Chron story on hotels. The Planning Department never decided that the city needs more commercial hotel rooms; maybe it does, maybe it doesn’t, but that was never discussed at a commission meeting. There was no public debate over whether hotel rooms are the best use of very scarce land in places like Soma….

No: The capital markets shifted, and decided that, for the moment, there’s more return in hotel rooms than in luxury condos. This has nothing to do with Nimbys opposing housing; in fact, it has nothing to do with any type of land-use discussion.

In San Francisco, the city doesn’t really plan; it responds to what the international capital markets – which, we are reminded today, are often deeply corrupt and venal, want to do.

That’s a key reason we have a housing crisis: We trust in the private market, and the developers who exploit it, and the investors who get rich off it, to solve the problem. It’s never worked in SF, and it never will.

I would love to see the city investigate how much of the new housing we so gleefully allow and the mayor so proudly supports is being purchased by crooks and dictators, and how much of that money has come out of the pockets of poor people the world over… (more)

RELATED:
Icelandic PM to resign amid offshore holdings controversy – (video included)

When buckets of cash are involved, one has to wonder where it is coming from. Now we know what we suspected all along thanks to the investigative reporters who managed to control the largest data leak in history. This is way too big to prosecute anyone and there are way too many players involved in this expose.

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