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Real Estate Reporter

Age of the oligarchs

Dr. Priscilla Chan says solving the housing crisis will take everyone’s involvement. Photo: Ed Ritger

In this housing crisis, can the Bay Area’s billionaires do what its more humble citizens can not?

Marc Benioff told a gathering of techies in October that “there’s a group of people in the city who are willing to give, and there’s a group of people in the city who don’t.” He also told the Guardian, “We have 70 billionaires in San Francisco [regionally]. Not all of them are giving money away. A lot of them are just hoarding it.”

Benioff of course was a major supporter of the voter-approved Proposition C, which will tax mid- to large-scale businesses in the city to provide several hundred million dollars more for the city’s homeless efforts.

One billionaire couple that is putting its money where Benioff’s mouth is is Dr. Priscilla Chan and husband Mark Zuckerberg. Their Chan Zuckerberg Initiative is part of a broad coalition of forces that is bringing $500 million to the region’s housing problem.

That’s a lot of money. And it’s only a drop in the bucket.

Housing in the Bay Area has become such a debacle of insufficient quantity, red tape, bureaucratic blocks, and community delays that we are hundreds of thousands of housing units below what is needed just to keep up with job growth. By at least one calculation, since 2011 there have been 531,000 jobs created in the Bay Area but only about 124,000 new housing units permitted.

That imbalance of course hurts almost everybody. People who are homeless are even less likely to find shelter; low- and middle-income alike struggle to find or keep housing, and often end up with long commutes (made even worse by policies that penalize driving and parking, even if they’re just driving to a suburban BART station). Companies are hit by ever-higher wage demands to compensate for the cost of living here.

“It really has come to a point where we all need to get together and really think about that complex, comprehensive solution that we need in the Bay Area for everyone to thrive, especially the most vulnerable,” Chan said in announcing the housing partnership.

You could, of course, build housing. Like several hundred thousand units of it, for example.

But so far, even stretch goals are inadequate. The Chan Zuckerberg Initiative group, which includes backing from the San Francisco Foundation, some tech giants, and others, would build or preserve more than 8,000 homes in the Bay Area over the next decade.

You could build 8,000 new housing units in San Francisco alone each year for a decade and you wouldn’t solve this problem. That’s not to knock the groups behind this initiative; they genuinely deserve praise for bringing together policymakers, corporations, activists, affordable housing experts, and philanthropists to put some real money and expertise on the table.

It’s just to say, as Benioff might, that it doesn’t let others off the hook. It doesn’t let other billionaires off the hook for solving the problem, it doesn’t let legislators off the hook for helping create the problem and not solving it, and it doesn’t let average citizens off the hook for hating change so much that they refuse to accept the logic that more people need more housing units in which to live.

A UC Berkeley study paper estimated that in the year 2000, it cost about $265,000 per unit to build affordable housing in San Francisco. Nineteen mostly boom years later, you know that figure’s higher, but just for a conservative estimate, $265,000 times 400,000 missing units means a needed investment of about $106 billion. No one is talking about that kind of money to really tackle this housing crisis.

I have previously cited Dr. Peter Linneman’s comments about providing housing for populations — you can either stack them up, spread them out, or kill them (see “Something’s gotta give,”Marina Times, May 2015).

Let’s ditch the third option as of course ridiculous. That leaves us with spread them out (they live in ever-more far-flung suburbs cleared from wilderness and wetlands) or stack them up (build tall). Though my personal preference is to spare the environment and build tall, I think the reality of California flight-from-reality politics is that we will end up doing both. But sooner or later, we’ll have to. That’s 400,000 units we’re behind in the Bay Area alone; statewide it’s even more.

New Gov. Gavin Newsom is reportedly making housing a priority of his first term in office. He has talked about committing $500 million for middle-income housing, and he has challenged companies in the state to match that amount.

Good move, but it’s still just two more drops in the bucket.

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