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Melissa Li
Jaya Dubey
Writing 39C
12 Apr 2014
The Affordable Housing Crisis: Fueled by Gentrification and the Technology Boom
In order to afford the average two-bedroom apartment in San Francisco,
individuals would need to earn $37.62 an hour, which is more than three times San
Francisco's highest-in-the-nation minimum wage, according to data from the National
Low Income Housing Coalition. Housing in San Francisco has become the most costly in
the nation. It has become extremely difficult for modest earners to live in the city and the
disparities of housing and income equity are significantly transforming San Francisco. In
the first dot com boom from 1996 to 2000, San Francisco writer, historian, and activist
Rebecca Solnit describes how service and manufacturing working-class jobs were
replaced with lucrative lofts and warehouses, long-time non-profits, arts and community
centers made way for offices and high-end restaurants. Historically, San Francisco has
continuously attracted waves of people who seek a progressive life. With scenic views,
stunning beaches, year-round free concerts and cultural activities; the high quality of life
in this urban paradise is compromised by the high costs in housing. According to the
Mayors Office of Housing and Community Development, housing is commonly
considered "affordable" if you are paying no more than 30% of your household income
toward your housing expenses. Since San Francisco is attracting technology employees
and companies from Silicon Valley, housing has become an unaffordable luxury even for
individuals in the middle class. The affordable housing crisis in San Francisco is caused
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by the governments prioritization of the technology industry and systematic failure in
providing tenant protection by reforming the Ellis Act. The gentrification and increasing
displacement of visionaries such as artists, activists, and small businesses who have
shaped the culture and history, results in residential segregation of low-income, working,
and middle class and changes in liberal politics that cater to the influx of young and
wealthy technology workers.
The current technology boom which started in the late 2000s is further widening
the gap of housing equity due to Mayor Edwin M. Lees prioritization of the technology
industry. In an effort to spur economic growth and revitalize the blighted Central Market
neighborhood in 2011, the local government approved the Central Market/Tenderloin
Payroll Expense Tax Exclusion, which exempts businesses located within the defined
exclusion area from additional payroll tax as they add jobs during any six years in an
eight-year period. The government provided the tax break as an incentive for Twitter to
move in. Katy Steinmez, a TIME reporter based in San Francisco, explained, Prior to the
IPO, the Securities and Exchange Commission estimated that the [tax] break could be
worth up to $56 million; the city initially estimated that it would be worth $22 million.
By providing a tax break when a company threatens to leave, it leaves a negative
precedent for other companies to follow. Since the tax break was approved, 18
technology companies, 17 small businesses and eight arts venues have opened in the area,
according to Mayor Ed Lee's administration. Twitter's headquarter in the mid-Market
area has become a symbol of gentrification and displacement for housing activists and
long-term residents. Steinmez justifies, Angry residents continue to see the tax break as
an example of politicians coddling the booming tech sector while many low-income
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residents are hurting. The local government provides hundreds of millions of dollars to
the well-off tech industry while the city struggles to provide basic services while bridging
budget deficits. Similarly to the first dot com boom, San Francisco's reliance on a single
sector is prone to severe booms and busts.
The historical cause of the rising housing inequity would be the lack of
government policy in reforming housing legislation of the Ellis Act. The well intentioned
Californias Ellis Act, passed in 1985, is a state law that allows legitimate landlords a
way out of the rental business, is abused by speculators who use a loophole in the Ellis
Act to evict longtime residents just to turn a profit. Many speculators purchase property
with the purpose to flip it
from rent control to luxury
TICs.
Supervisor David Campos
requested that the Budget
and Legislative Analyst
analyze the data and level
of housing displacement in San Francisco.
In Figure 1, the Ellis Act
evictions have occurred is
various neighborhoods in San Francisco and approximately 64.1 percent has occurred in
these seven neighborhoods, which have distant characteristics and are close to tech
companies shuttle stops. San Franciscos Inner Mission has had the most Ellis Act
evictions in the past five years. The rent-controlled apartments face steep rent increases.
Figure 1: Budget and Legislative Analyst, Analysis of Tenant
Displacement Web. 30 Oct. 2013
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Ellis Act evictions have increased due to the influx of technology workers who are able
to afford the high rental costs. The story of an elderly Chinese couple and their 48-year-
old mentally disabled daughter being evicted from their home of 34 years is receiving
national attention. A significant amount of evictions are elderly citizens and families on a
fixed income who are unjustly evicted by the loophole, do not have alternative places to
go. In his article, Gabriel Metcalf, the executive director of SPUR, a nonprofit
organization that promotes good planning and good government, asserts that San
Franciscos housing crisis is due to San Franciscos inability to construct sufficient
housing to meet the increasing demand. Ellis Act evictions often escalate during periods
when home sales increase. That was the case during the dot-com boom that ended in
2000 and again during the housing bubble that peaked in 2005. Ellis Act evictions are
drastically increasing as citys real estate market recovers from the recession and as the
tech boom spurs demand for housing.
Innovators to San Franciscos culture are facing the casualties of the city's
commercial real estate boom. Kenneth Baker, a writer for the San Francisco Chronicles
highlights the impacts on local artists and galleries by explaining that all occupants of 77
Geary St., will be leaving soon to make way for their high-tech neighbor, MuleSoft, an
Internet services company that needed to expand. As an area becomes more attractive to
the wealthy, realtors and apartment managers have been known to select against small
businesses who are unable to compete with the resources of large corporations to secure
and maintain a lease. With steep increases in leases, numerous small businesses in
particularly in the Mission District are adversely impacted.
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The displacement of primarily low-income and minorities causes an economic
burden on neighboring cities due to the influx of technology workers results in residential
segregation. As Google shuttles allow tech workers to live in San Francisco, it has also
contributed to the increasing rents. According to statistics presented to a special hearing
of the Board of Supervisors, only 13.4 percent of San Francisco's approximately
800,000 people are under the age of 18, which is the lowest proportion of kids for any
major city in the United States. The rising costs of living in San Francisco have caused
families to vacate to other cities. Scott Weiner, a San Francisco supervisor who is an
advocate of new housing describes, San Francisco has been unwilling to prioritize smart
housing production of market-rate and affordable units, even while our laws state that
housing is to be encouraged. The most adversely affected are African Americans and
Latinos, who are suffering financially, as well as physically. According to Centers for
Disease Control and Prevention, vulnerable populations are exposed to shorter life
expectancy; higher cancer rates; more birth defects; greater infant mortality; and higher
incidence of asthma, diabetes, and cardiovascular disease.
People who are either evicted or no longer afford housing in San Francisco are
moving to neighboring cities where the environment and social conditions may be
lacking. In their new housing, they are prone to experience food deserts and industrial
pollutants. In her article, Carolyn Jones, a staff writer at the San Francisco Chronicles
explains, Oakland had some of the country's highest rents and rent increases in 2013.
Majority of the Latino population who are displaced have migrated to Oakland seeking
cheaper housing. According to advocacy group Causta Justa, the Mission has lost 1,400
Latino households while adding 2,900 white households between 1990 and 2011. In the
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same period, Oakland lost 40 percent of its black residents. The Mission is the
neighborhood that is drastically transforming due to the relative closeness of technology
company shuttles stops.
San Francisco may no longer be the most iconic liberal city in America due to the
changing political atmosphere. George Mcintire, writer for Salon explains, The reason
why we have San Francisco Values is due to the scores of working-class activists over
the years who fought long and hard for these values. The symbols of gentrification are
causing the treasured historic identity, and reputation as the example for liberalism to
being relegated to the past. San Francisco is currently experiencing a massive and rapid
demographic change like nothing it has ever seen in its history. The demographic changes
also reflects the changing political views, Mcintire asserts, The political conventional
wisdom states that lower-income and middle-class people are generally more liberal and
less conservative than upper-class people. San Francisco activists have enacted the
country's strongest rent control, eviction protection, and housing preservation laws. When
activists who promote liberal causes are forced to leave the city, there will be no one to
fight for tenants rights against conservative policies. The alliance between Mayor Lee
and angel investor Ron Conway will progress further. Now the tech industry, led by
Conway, is beginning to overshadow long-dominant local business lobbies, said Chris
Lehane, a political consultant and former adviser in the Clinton White House. The
increase in wealthy tech workers has caused legislation to become more conservative and
to favor the technology industry.
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The affordable housing crisis continues to persist and is one of the main
challenges in San Francisco. Recently the Office of the Mayor released news of the
launching of the Ellis Act Housing Preference Program for tenants who are evicted under
the State Ellis Act. Even though displaced tenants will now be given preference for the
Citys affordable housing programs, housing legislation needs to be reformed at a quicker
rate. Despite the citys anti-growth culture, the lack of government intervention and
action draws concerns among those who are wrongly displaced.