As San Francisco residents and their political, business and social leaders try to get a handle on housing affordability in the city, they must do so at a time when governments large and small in this country have largely tried to wash their hands of involvement with the housing problem. Long gone are the days when the federal government partnered with cities to build and manage homes for middle- and low-income citizens. Today, federal monies have gone elsewhere, as has federal interest in even dealing with the challenges. The key federal tool for helping develop affordable housing is the three-decades-old tax credit set up to help private developers — for-profit and nonprofit — do what the government used to do.
This all happens at a time when there are still many people who need affordable housing — rental or ownership. To learn more about the issues involved, we spoke with affordable housing expert and advocate Andre Shashaty. The former editor and publisher of Affordable Housing Finance and Apartment Finance Today magazines from his downtown San Francisco offices, Shashaty has long since sold his business and now serves as president of the nonprofit Partnership for Sustainable Communities (p4sc.org). He is the author of the new book Rebuilding a Dream: America’s new urban crisis, the housing cost explosion, and how we can reinvent the American dream for all, being published this month. (Full disclosure, this writer worked for Shashaty at his publishing company seven years ago.)
You have covered — as a journalist and as a nonprofit advocate — the housing affordability issue for decades. How does the situation today in terms of need and public policy compare to past eras?
Fifty years ago, Lyndon Johnson said we have to address the housing conditions in our cities, and we have to not only create quality housing but we have to create mobility, so people of lower incomes aren’t stuck in ghettoes. He put forth several major packages of legislation, the most significant being the Housing and Urban Development Act of 1968. He committed the country — with bipartisan support — to create 2.6 million units of housing a year. One-fifth of those had to be for low-income people.
Congress agreed to that. It was Ronald Reagan who basically tore that apart and said, “No, we don’t need to build any affordable housing; we should eliminate all [government-funded] housing production.” Now, he did put the tax credit in place [as part of the Tax Reform Act of 1986], so the net effect of his policy was to eliminate direct subsidies for affordable housing. But that tax credit is really the only thing there is on the federal level, and all the other needs have been put on top of that, without really expanding the program. That includes elderly housing, which used to be financed with Section 202 [for developing housing for seniors], including deteriorating housing under Section 8 and deteriorating public housing.
The long-term trend is that we have retreated from an activist government role in providing public housing.
The recent history is that rental housing has been the stepchild of government housing policy for many years, but it was dramatically illustrated when George W. Bush pushed for a big increase in homeownership, and he did nothing to finance rental housing. I don’t want to put all of the blame on him for the foreclosure problems, but in fact, he wanted to cut programs that benefited rental housing at the federal level. We ended up with a kind of obsession with homeownership, while we failed to address rental housing, and that led to a foreclosure crisis. A lot of people lost their homes, and now they’re back in the rental market and demanding apartments that aren’t there, that weren’t built.
Has it improved at all under President Obama?
The bigger political picture is that we’ve only cared as a nation, or we’ve really only had a government that cared about housing on several occasions over the last century — after World War II, during the sixties when we had civil unrest, and we had it after the foreclosure crisis. But we just haven’t been willing to engage on those policy issues, partly because of budgetary issues and partly because nobody can talk to each other in Washington any more.
So at the federal level we’ve kind of written it off. The last few years have been disappointing, because our current president hasn’t made it a priority to restart proactive policy on these things. He’s dabbled, but there’s only so much [U.S. Secretary of Housing and Urban Development] Sean Donovan can do without budgetary support or congressional support.
You mentioned tax credits for funding affordable housing. Is that still a workable model, or has it broken down?
The tax credit model works very well, mainly because it’s not subject to a lot of excruciating decision-making by bureaucrats and legislating — it kind of runs on autopilot because it’s part of the tax code. We don’t have to apply to the bureaucrats to say, “Can we take this tax break?” Sure you can. You don’t need an exception to the rule.
But the main thing to remember about the housing tax credit is that it’s a shallow subsidy; it only helps a narrow range of people. On its own, it doesn’t really help very many poor people, and you’re not eligible if you’re moderate income; and if you’re in a place like San Francisco and you can’t afford a market-rate place, you’re not eligible for a tax-credit place.
I find it disturbing that we work at cross purposes; we want affordable housing but we obstruct it. Mayor Lee might want affordable housing, John Stewart the developer might want affordable housing, but the people in the various districts of San Francisco who already have housing don’t want affordable housing. That runs pretty deep in San Francisco and Marin County — pretty much everywhere.
Policymakers have to figure out ways to make it palatable to local property owners who are otherwise probably going to prevent it, and if they can’t prevent it, they’re going to probably drive up its costs. Wealthy developers who are developing high-end apartments often have an easier time of it than people who are developing affordable housing.
Are there examples of cities that have done well at developing affordable, workforce housing?
I like the example of Boston, where they’re encouraging development of workforce housing. One of their ideas is micro-apartments, what used to be called efficiencies, that are similar to what used to be called single-occupancy hotels, and of course we had those at one time in San Francisco. They make a big effort in their Innovation District. They’ve worked really hard to make sure housing was part of the plan from the beginning. That’s important. If you’re going to set out to attract jobs, set up an incubator — they had that in the planning from the beginning, and that’s because they had a strong leader.
I think you have to mention New York. It’s a unique marketplace; there’s no place like it, because you can build density with impunity and nobody’s going to hate you.
But they had creative ways of building buildings that had a mix of incomes and served a variety of needs. That was a Sean Donovan thing, when he was commissioner of [the New York City Department of Housing Preservation and Development].
Workforce housing in major cities is very hard to do, because the costs are so high and there are so many people with a vested interest in land in every neighborhood. And then you have the interest in having things be green and the design be good. The most promising megatrend is the idea of reducing or eliminating parking requirements. It doesn’t solve the problem, but it’s kind of a two-birds-with-one-stone thing: reduce emissions while you reduce traffic while you reduce the cost of the building, because underground garages are so expensive. That’s an experiment. Will it work over the long term? It meets a lot of resistance, because people want parking.
Are there any political heroes today who are championing housing affordability?
Are you optimistic or pessimistic? Why?
The honest answer is that it’s hard to be optimistic, because the political direction doesn’t seem to be going in that way. I don’t see anything in the political picture changing that would make it more favorable to addressing housing needs. We still have lots of neighborhoods that were pretty badly hurt by foreclosures and they still need to be cleaned up, and they need reinvestment. We have an improving budget picture in California, but we still have to remember that Jerry Brown eliminated redevelopment agencies, which would be in charge of improving some of these devastated neighborhoods.
And at the federal level, there’s no indication at all of a fundamental change in the political orientation any time soon. it could drift even more into budget cutting and philosophical opposition to helping cities. If they gain power, then budget cuts we’ve already seen under Barack Obama will get even worse.