Hacker News Reader

Comment by yonran | Hacker News Reader

The stupid thing is that the groups that reflexively oppose private housing in San Francisco (namely REP Coalition, CCHO, SFTU) chose “don’t demolish rent controlled housing” as their rallying cry for why they are calling to oppose this ordinance that streamlines new apartment buildings, which sometimes requires tearing down an old building. Which means that they are foregoing the Costa-Hawkins exemption in SB 330 (2019) that allows and requires demolished rent controlled apartment units to be replaced by brand new rent controlled units (which are the type of rental units that they like). They are foregoing win-win solutions due to extreme tribalism and economic illiteracy.

View on HN

How would it even be economical for a developer to build new rent controlled housing? Or is the base set to when the apartments are constructed? If not, you don’t need to be economic illiterate to think something fishy will happen if the math doesn’t work out.

If I had a rent controlled SF apartment, why would I ever want to give it up? That’s like winning the lottery. I can see where these people are coming from.

No the idea is they can replace a 4 unit 2 story rent controlled building with a 4 story 8 unit building that now has 4 rent controlled and 4 market rate units.

This is due to another Byzantine quirk of SF zoning where the neighborhood is zoned 40X (~40ft or 4 stories) but if you try to build a 4 story building you have to notify all your neighbors and they get the chance to demand discretionary review, forcing your project to go before the planning commission for a vote. People also pull this crap for simple additions to existing houses.

At any rate the state is demanding reduced setbacks, elimination of neighbor notification and DR, etc. This would apply to other normal projects too, turning a lot more stuff into "by-right" approval: if you meet the set standards you can get a rubber stamp at the permit desk and no one can block you.

The neighbor notification and design review are nice ideas in theory but in practice they turn building into a nightmare.

I wish new builds weren’t so bland and ugly, but that’s by far the lesser of the evils at this point.

I hope the crazy tall outer sunset tower gets built so it’s a kick in the pants to cut the red tape and at least allow mid rise without any of the BS that even a single family home construction is face with at present.

Actually if anything, single family houses should be banned in the core city including parts of the sunset and Richmond.

Rent control means base rent is set when the tenant moves in, not when the building is built. Its therefore reset with new tenants. It also doesn’t lock you into this rate, but simply to a rate better pegged to wage growth. E.g. outside covid extreme measures rent control could mean rent can be raised 4-5% a year sometimes. Rent control really just prevents huge price gouging more than anything.

They are limited to 60% of CPI growth, so over ten years that adds up to much cheaper rents than market.

It still turns into a huge benefit that no one would want to give up, you have winners (who have rent control apartments) who don’t want to give them up to allow for more density.

How they are structured depends on municipality. Right now in SF its apparently set at 3.6%. Imo CPI is hardly relevant here, what is relevant is wage growth and typically thats always lagged behind. SF interestingly has stated going forward minimum wages will be based on some cpi calculation.

Realistically if you applied rent control over the entire bay area any concerns regarding its ability to disadvantage building is moot at that point. The true limiting factor is probably a combination of zoning as well as onerous permitting and review processes. People in rent control units do get developed upon, they often readily accept buy out offers for example that are a rounding error for multimilliondollar apartment development projects. I believe redevelopment or renovation would count as just cause to evict but ianal.

> you don’t need to be economic illiterate to think something fishy will happen

It’s not the city’s job to make good things illegal because they are too good to pencil out.

But by “economic illiteracy”, I was referring to tenant groups’ reasons for opposing unsubsidized housing. Excuses such as that San Francisco had increased vacancies during the pandemic and thus not need any more housing. Or that San Francisco already met its RHNA housing quota for 2014-2022 (which was way too low since it was calculated based on outdated population growth trends rather than rents). Or denial that housing construction has any affect on rent. These are not fringe positions; these are the canon of the self-proclaimed “progressive” faction in San Francisco (see Supervisor Peskin’s statements in https://sfgov.legistar.com/LegislationDetail.aspx?ID=6412806... and https://twitter.com/_fruchtose/status/1729280621313511602 and basically any article on 48hills.org). The set of policies they support are basically to reduce for-profit apartment development by increasing neighbor veto points, ask for increased funding for favored nonprofits, increase tenant protections, and watch as rents rise.

> to be replaced by brand new rent controlled units.

will it be rent control with new rent price baseline? Where people from demolished apartments will be living until new apartment will be built?..

No, no new price baseline. If the same tenants move back into the replaced unit, they continue at the rate as if their lease had been continuous (plus rent control raise limits)

That's a pretty good deal. Almost as if having gained tenancy in a rent-controlled property is a (non-transferable) asset worth more than the property itself.

Yes, that's exactly why "tenant buyouts" are a thing in San Francisco. They've created a property right for renters, as well as weird concepts like the "master tenant".

Is the new apartment guaranteed to be the same size as before?

SB 330 defines “Equivalent size” as same number of bedrooms. https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm...

> will it be rent control with new rent price baseline?

It would be a new baseline, but at a rent that would be calculated to be affordable to the tenant’s income: “The developer agrees to provide … right of first refusal … at an affordable rent” https://leginfo.legislature.ca.gov/faces/billTextClient.xhtm.... For low-income tenants, this would most likely be even lower than the rent controlled rent. For very-low income tenants who do not qualify for any other program (other programs such as Inclusionary Housing typically have narrow income bands as a % of AMI), they would have a home almost for free. For higher-income renters, they could see a rent increase.

> Where people from demolished apartments will be living until new apartment will be built?

SB 330 requires “Relocation benefits” according to §7260, but I think San Francisco’s local relocation payments are already higher (currently $7,540/tenant, up to $22,618/unit, plus $5,027 per elderly/disabled tenant https://sf.gov/sites/default/files/2023-02/579%20Multilingua...)

Reply on news.ycombinator.com