An interesting factoid with respect to rent control tenants in San Francisco from the City’s Economic Impact Report for the proposed $310 million General Obligation bond to support Affordable Housing in San Francisco which will appear on this November’s ballot: The average tenancy for a rent-controlled apartment in San Francisco is currently 9 years. The rent control on any apartment depends can also depend on where you live as different states have different housing policies, for example, if you looking at los angeles apartments, their tenancy may be less than one from somewhere like North Carolina.

The proposed bond includes $50 million to acquire existing rent-controlled buildings in the Mission and make them permanently affordable (i.e., rents would not reset to the market rate upon vacancy); $80 million for down-payment to first-time homebuyers who are public school teachers or earn less than 120 percent of the Area Median Income; $80 million for the rehabilitation of existing public housing units; and $100 million for the rehabilitation and construction of affordable housing for low income households across the city.

Funded through a property tax rate surcharge, landlords would be allowed to pass 50 percent of their tax increase through to tenants.

The full Economic Impact Report for the proposed bond and program overview:

Comments from Plugged-In Readers

  1. Posted by Joshua

    Wait, what? Now we’re taxing property owners to buy Mission real estate, so the current tenants can receive subsidized housing? Do people realize this will only INCREASE real estate prices? Insane.

  2. Posted by zzzzzzzzzzzzz

    “Funded through a property tax rate surcharge, landlords would be allowed to pass 50 percent of their tax increase through to tenants…”

    I thought the premise of the $310 million total was that this was the maximum amount that wouldn’t result in a rise in property taxes. So which premise is correct – no tax increase and passthrough, or the opposite?

    • Posted by Amewsed

      If this passes, I can tell my tenants that their hard earned money will go to paying for school teachers’ homes, not theirs.

  3. Posted by Amewsed

    A big fat NO! The City can eat the property tax surcharge.

  4. Posted by Futurist

    NO, JUST NO!

  5. Posted by Snark17

    So many reasons to vote this down.

  6. Posted by jamesjr

    Sounds like the public school teacher’s union had a say in this. Teachers got a $5000 per year bonus a few years back thanks to a bond measure paid for by property taxes. They need another hand-out? Why them?

    • Posted by Amewsed

      Because public school teachers are responsible for the U.S. ranking #26 globally in education. More charter schools please.

    • Posted by Flash

      Yeah, why not police officers, firemen, private schoolteachers, etc? It’s bizarre that they carved out this specific exception for just teachers so they qualify “even if their household income exceeds 120% of area median income”. This is absolutely one of the most outrageous bond measures I’ve ever seen in SF, and that’s saying a lot!

      • Posted by Dan

        I think it was just the specifics of the ballot measure, right? If someone wants a ballot measure for another public resource, they can just get the signatures. . . .

        • Posted by Flash

          While many of the dumbest ballot initiatives are proposed by special interests collecting enough signatures, this bond measure was put on the ballot by Mayor Lee and the Board of Supervisors. Of course special interests were apparently still influential, as evidenced by the special giveaways for teachers and the Mission District.

      • Posted by katdip

        Teachers make a starting salary of $48K, and max out at $62K after 15 years. While they technically work 9.5 months of a year, it’s hard to get regular, well-paid employment for 2 months over the summer. Police and firefighters start at around ~$72-85K, and quickly go up into 6 figures as a base salary, with lots of chances for overtime. So it makes certain amount of sense that teachers need more help than other professions, since they may be under the 120% Median Income depending on their household income. A carve out, yes, but I don’t find it too outrageous.

        Buying rent controlled units in the Mission – ridiculous!

  7. Posted by Moto mayhem

    Total BS sticking it to homeowners. The sad thing is this will pass because city is mostly renters. This is total extortion from those who worked very hard to get ahead

    • Posted by Miah

      Renters don’t work hard?

      • Posted by Flash

        Renters do work hard, but they aren’t the ones getting screwed over here. Even though the majority of residents are tenants, and the main beneficiaries of this proposal are a small group of lucky tenants, the slide says that “tenants can be expected to bear approximately 10% of the cost of the debt”. So it’s a blatant wealth transfer from owners to tenants. And since tenants are the majority, they’ll probably vote for it. Boo!

        • Posted by moto mayhem

          yes, but many of them don’t sacrifice to save to buy a home. of course, its a generalization, but i know many people who live paycheck to paycheck, make $200K/yr and are renters. its all about spending. some of us saved for 15+ yrs, forgoed fancy restaurants and bars, and saved. now we are getting fu*ked for our sacrifices

          • Posted by Dan

            How does this development negatively affect you, or your savings, or your aspirations at home ownership? Bonus question: How do you know the future tenants of this potential building do not save/sacrifice?

          • Posted by moto mayhem

            its pretty obvious how it affects me: “property tax rate surcharge”

  8. Posted by katdip

    I’d be interested in how they came up with that 9 year number. It’s been hotly debated here – it would be nice to have a definitive source.

    • Posted by ElitistPig

      Yeah, is it the individual, or the person holding the lease who manages to keep passing it on.

    • Posted by Jake

      I don’t know where they got the 9 year average. They should explain it or someone should ask them. The 2013 Census data for all SF rental units gives an average of about 8 years for leaseholders. With a list of the RC unit counts by census tract someone with basic math/stat skills could estimate the portion for RC only. Notice the precision is only to the whole year, not something like 9.12 years.

      FWIW, if the 9 year average for rent controlled units in SF is about right, then the average for non rent controlled units in SF would be about 6 years or a little less, which is about the average for all of California. Hopefully, they didn’t generate the 9 year figure by assuming that non rent controlled units in SF have the same average tenancy as for all of CA.

    • Posted by SFrentier

      If the average RC tenancy is 8 or 9 years, it’s still a long time, and confirms that people tend to keep RC units at least 50% longer than non RC. And there have been no 8-9 year stretches in SF’s rental history where rents have not gone up significantly. Hence RC tenancies will be lower than market rate, people keep them longer, and the marginal amount of units available, and their average rent will be higher than without RC distortions. That’s pretty much the case I and others have been making here for a long time. And these stats, with logical extrapolations, bear that out.

      The reason this is also relevant to this post is because these unicorn housing bonds are in the same vain, whereby a select few entitled benefit from government imposed handouts. And for the city to pay ~ $500k per affordable housing unit is truly bordering on the theater of the absurd.

      • Posted by katdip

        Yes but…

        1) I agree with Jake that it seems a bit high, given census data about overall tenancy lengths
        2) even though it seems on average higher than non-RC tenancy (based on Jake’s calculation), it puts a lie to the trope that every RC renter is paying 1970s prices. There are certainly some of those in the distribution, but there are also lots of RC units that turn over in 2,3,4, or 5 years, which means plenty of landlords can capture market rents. In fact, if someone rented in the bubble of 2000 and was dumb enough to stay this long, they would likely have been paying market rent already (if you take into account inflation and a LL’s annual allowed rent increases).

    • Posted by Ted Egan

      Hi, I’m the main author of the report. We used Census PUMS data to obtain a sample of SF renter households that lived in apartments built before 1980, and thus subject to rent control, during the 2006-2013 period. The Census asks the household to record how long each resident has lived in the unit. We assumed that the maximum tenure of any occupant is the time period since the unit’s last vacancy, and 9 years was the average period.

      • Posted by moto mayhem

        what was the median? medians are much more useful in statistical analysis. would be great if you could provide quartiles as well.

  9. Posted by 4h clubber

    “According to the Mayor’s Office of Housing (MOH), the City’s cost per unit is approximately $200,000.” Most figures I’ve seen are in the range of $400,000-$500,000. Where do they get this number?

    • Posted by Pioneer

      Closer to $400,000 than $200,000.

    • Posted by Mystery Realtor

      More like $500K/unit when everything is tabulated (land+financing+kickbacks)

    • Posted by Ted Egan

      Hi – from the report’s author: $200,000 is the City’s share of the cost, not the total cost.

  10. Posted by AnnaNg

    NO NO NO! This is ridiculous.
    Unless the City plans to means test rent control, it’s time for rent control – a disastrous subsidy to end.
    And 100% of the Cost should be passed on to tenants! Why stop at 50%?

  11. Posted by confused owner

    So it would raise the property tax? What about those of us that simply own a residence in the city but don’t have any tenants to pass any of the costs too? Am I understanding this correctly?

    • Posted by JR "Bob" Dobbs

      Look at your tax bill. There is all sorts of stuff like this on there. That’s how democracy works – vote in an expense that someone else pays. I believe (but am not certain) that per Prop 13 this would require a 2/3 majority vote.

      • Posted by EcceMorons

        Yes, this IS how democracy works. It’s called the “Tyranny of the Majority”.

        Let’s vote on the following: “All wealth of SF’s 100 wealthiest residents shall be confiscated and divided up among all other residents.” It would pass by a vote of 200,000 to 100.

  12. Posted by EcceMorons

    I swear, the campaign slogan for half of the ballot measures in SF could be “Free Lunch!!!”

  13. Posted by Hola

    Such BS. So sick of paying for the [people] who can’t keep up.

    • Posted by Miah

      You mean people who largely didn’t come from already established means?

      • Posted by moto mayhem

        no, people who didn’t sacrifice to get ahead. some of us came from very poor homes under very bad circumstances. frankly that’s why my world view is so tainted against takers. my mom would literally kic% my a*s if she found out i was taking any subsidies from anyone.

        • Posted by moto mayhem

          but not everyone has a black single mom from the deep south who instills values and work ethic. many in this city expect to be handed things from those who have “made it”. this is called punishing success. most money in SF is not inherited. We are very much a city of “new money” meaning SELF MADE

  14. Posted by EcceMorons

    I can already see how SF would “acquire rent-controlled buildings in the Mission”:

    Building with low-paying tenants is listed for $2 million. Investors know that they can buy it for $2.5 million, Ellis it, and rehab it, and then sell it for a handsome profit as TIC’s. So the City will have to overbid these investors – ensuring a MASSIVE loss on the cash flow – all to be shouldered by the property tax.

    If I owned a rent-controlled building in the Mission, I would LOVE this. The City will pay even more than the market value to me!!!! The ideal buyer is a politician spending someone else’s money to get more votes for himself.

    Let’s do this citywide! I want to cash out MY properties this way as well.

    [Editor’s Note: Speaking of which, City To Pay A Big Premium For Mission District Development Site.]

  15. Posted by Truthsayer

    Charter schools are the worst

  16. Posted by BayviewSF

    So they will ONLY buy rent-controlled buildings in the Mission? What about other places? Why is the Mission getting special deals?

    “The proposed bond includes $50 million to acquire existing rent-controlled buildings in the Mission and make them permanently affordable”

    • Posted by Dan

      I think it’s just Campos lobbying for his district, which might be changing most rapidly. Other Supes could do the same for theirs, I suppose. . . .

  17. Posted by GoBlueInSF

    I’d love to see a dozen of these bond measures just to watch the meltdown of the privileged on Socketsite.

  18. Posted by Mark F.

    The “affordable” housing is not so “affordable” for the taxpayers. And all for the benefit of a very few lottery winners.

  19. Posted by Aaron Goodman

    Buy back Parkmerced from the new developers that they just flipped the property to.

    Than re-design the entitlements as an ALL rental housing family based community, with fixed rents, and taxation of corporations to maintain the property.

    • Posted by anon

      “Taxation of corporations” – huh? What do you mean by this? A new tax only on corporations (based in SF? doing business in SF? etc) to maintain a specific rental property?

  20. Posted by J

    How much would the property tax surcharge be? Did I miss that in the document above? Didn’t see a specific number/percent.

  21. Posted by Ted Egan

    Hi – from the report’s author: it’s a good question and the answer is, it will change from year to year depending on the timing of bond sales and the growth in the city’s property values. It will likely range from 0.004% to 0.010% in any one year.

  22. Posted by alberto rossi

    To the extent the bond money goes to acquiring existing property rather than constructing new housing, it’ll only drive prices up for everyone else.

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