Forget Affordability: In Defense of Cheap Rent!

Historical Essay

by Chris Carlsson

The Pigeon Palace at 2840-2848 Folsom Street in San Francisco during a May 5, 2015 protest to protect it from speculative purchase.

Photo: Chris Carlsson, November 2015

As a resident of San Francisco’s latest Community Land Trust property—the Pigeon Palace—I am enjoying the new peace of mind that comes from knowing that I will never be evicted from my home. I’ve been happily surprised to feel a subtle shift in my experience of daily life--I hadn’t realized how much I was preparing to leave until I was certain that I wouldn’t be forced out.

Over the past weeks I’ve enjoyed a number of very San Franciscan moments, from the annual SOMARTS opening party of the Day of the Dead altars, our own sidewalk celebration party, to bumping into a stream of friends while on my daily walks across the City. I’ve realized that we’re still here and we don’t have to leave. I’m here for the long haul, and with it comes both possibilities and responsibilities. I’m readier than ever to dig in and make this place truly ours.

Our building has had cheap rents and it is precisely these cheap rents that gave the tenants the safe and stable foundation that allowed us all to contribute so much to San Francisco’s cultural and political life for the past several decades. A low cost of housing is an essential foundation for a full life.

These days, everyone is bombarded by the hype to “do what you love,” and supposedly if you stick to it, the money will follow. Actually, probably not. Most of us have to get the proverbial “day job,” selling a money-making skill to someone willing to buy it. If we’re lucky we make enough money in few enough hours to leave us time to do what we really care about in our “free” time.

In my early 20s I realized that I wasn’t interested in following the normal paths that this society lays out before one. I wasn’t interested in a “career” and making money held no interest for me. I saw myself as a revolutionary and wanted to participate in creating a new way to live, not just for me as an individual, but a full-blown reorganization of everyday life itself. Even then I knew my revolutionary aspirations would probably not be met, so though I’ve continued to pursue that agenda in my own unique way, I also vowed to make sure that I lived the highest quality life I could manage. The key to that was to hold down my regular costs (transit, housing, food, communications, etc.) so that I would have less pressure to “slave away for the man!” In other words, I was way too busy to have a job! The best way I could carry out my self-directed activities (which have always kept me quite busy) was to bicycle instead of owning a car, to eat local and fresh from farmer’s markets and coop stores instead of eating out, and most crucially, to find and hold on to the lowest cost housing I could manage. Not having to make many thousands of dollars every month to be able to pass a large portion over to a landlord or bank gave me something far better than money; I have time, time that is not for sale. “Free” time is unmeasurable “wealth.” Cooperation, mutual aid, solidarity, and imagination all flourish in the absence of economic coercion. Happily, this dovetailed perfectly with my evolving sense of what a revolution might consist of.

Most people haven’t made the same choices that I have, and for many, it is nearly impossible to do so. My parents weren’t wealthy when I left home at age 17, but by the time I was in my 30s they were fairly affluent, and always ready and willing to back me up if I needed it. (I never really needed that backup, but having it available is clearly a big deal.) My chosen path to avoid economic coercion at all costs has given me a lot of freedom, and led to a lot of creative output over the years. But most people are trapped in poverty, or if they are “middle class” (as most people tend to think of themselves) the ball-and-chain of car ownership, the almost inevitable accumulation of student debt, and during the past twenty years radically rising housing costs, have entrapped most people in one type of debt or another. Burgeoning homelessness puts relentless pressure on those “lucky” enough to have an abode. Pay your rent, pay your mortgage, or else. After steadily rising housing costs in the last quarter of the 20th century, the 21st century saw an unprecedented transformation. Housing costs for renters and buyers alike skyrocketed in major cities across the planet, outracing stagnant incomes and becoming a primary conduit for transferring wealth from the majority of working people into the hands of a tiny financial elite.

Every apartment that is still rent-controlled, where long-term tenants pay less than $1000 per month per person (and sometimes much less!), has become a front line in the current battlefield of class war. Our fight to save our homes in the Pigeon Palace represents a victorious skirmish, and temporary reprieve for us, but so far, it is not going to be a working solution for many people.

The Pigeon Palace Story

At 83 our former landlady, who gave each of us very cheap rents because she didn’t believe in “choking people,” has been warehoused in a nursing home and denied any right of return to her home. A serious hoarder who was starting to lose her short-term memory and her mobility, but remained lucid and fiercely committed to her independence, she was declared incompetent by a judge and then relocated against her will by a court-appointed Conservator.

To save our homes we established a low-income, nonprofit housing co-op called Pigeon Palace, Inc. The San Francisco Community Land Trust (SFCLT), our political and economic partner (and benefactor) purchased the building in early September 2015 with loans from a private bank, the Mayor’s Office of Housing, and private investors including the tenants and our friends. With this purchase, we have taken the building off the market forever. But it came at a steep price that has saddled this effort with nearly $4 million in debt, a reality that casts a pall over our project and makes this a dubious model for widespread adoption or replication.

How did we manage to do this? The Pigeon Palace tenants joined with the San Francisco Community Land Trust (SFCLT) to “save” our building from the speculative real estate vultures that were hungrily circling our century-old 6-unit Victorian on Folsom Street in the heart of the Mission. The SFCLT won a probate auction, outlasting and outbidding one of the worst serial evictors in town. The Pigeon Palace was purchased at the height of the market for an absurdly high price. Our story, while inspiring on the face of it, sadly represents many of the worst contradictions that dominate the politics of housing not just in San Francisco but in every desirable city in the world.

In a nutshell, we won a lottery of sorts by getting millions of dollars of City money (2.5 to be precise) to underwrite the purchase of the building in an open probate auction that should have never happened. A building that last changed hands in 1946 for $12,000 (yes twelve thousand dollars!) was allowed by local authorities to be put into an open auction that drove the price from the original listing of $1.5 million to nearly $3.3 million. The widely accepted logic of our culture is that this so-called “market price” is fair and to have sold the building for less would have been a disservice to our former landlady, the ostensible “beneficiary” of this largesse.

The most aggressive bidder was Sergio Iantorno, a man who owns dozens of local properties, and is engaged in negotiations to sell many of them to local housing groups. He had nothing to lose. Either he would get the Pigeon Palace as another property to evict long-time residents from in pursuit of maximum profits, or, having driven the price of the Pigeon Palace far higher than it might have otherwise gone, he bid up the “prevailing price” in the neighborhood and thereby increased the value of all his other properties. This is the everyday kind of organized crime that is a legitimate business practice when it comes to San Francisco property.

Thousands of San Franciscans supported us and many are inspired by our story and excited to know there’s at least one less building of friends being lost to the steamroller of gentrification. But our story is unfinished and a real fight still looms. Our enemy is no longer possible eviction by speculators. We now confront the well-disguised iron hand of the market wrapped in the velvet gloves of “affordability” and “fairness.”

The Affordability Racket—A Back-Door for Gentrification

Affordability is to housing as sustainability is to the environment and economic growth—pleasant sounding bromides meant to cloak a harsh and unforgiving logic. In the case of the Pigeon Palace, the four units occupied by long-time tenants have rents stabilized for now close to the cheap rents we’ve been paying for many years. But two empty apartments, once rehabilitated, are projected to be rented at close to $3,000/month, more than twice what the rest of us are paying. We foresee a difficult internal culture for our co-op when the new tenants are expected to pay so much more than the rest of us. That rent is just too damned high!

During the final days of negotiating with the Mayor’s Office of Housing before they finally signed off on loaning the money to the SFCLT, we faced several surprises when they kept moving the goal posts. Our building was always supposed to be a low-income housing co-op, something we had declared from the beginning of the process. Once they fully grasped the plan (months into the process and days before it almost unraveled) the employees working on housing in the Mayor’s office declared that when we finish our legal conversion to a self-managed co-op, the monthly payments from the four existing tenants would have to be recalculated. Their proposal? To peg our monthly housing payments to one-third of our gross income!

We said no, that’s outrageous. Under enormous pressure to complete the complicated deal, we finally signed papers agreeing to have our payments recalculated when we convert, but capped at 30% of 150% of Area Median Income (AMI). This is still an absurd formula that could lead to rent increases of almost $2,000/month if any of us happen to have had a good year during the period they use to assess us. Basically it’s a silly but oppressive bureaucratic decree imposed by unelected city functionaries that gives us a huge incentive to take a year off, enjoy a sabbatical on the beach, to defer and hide income, etc. This is a political decision to try to force us closer to prevailing “market” prices for housing as we gain de facto ownership through co-op conversion. Knowingly or not, the city employees pushing this are imposing the neoliberal logic that insists that everything has a price determined by abstract market forces and that everything must be paid for by the people who use it, preferably as close as possible to that market price. If they successfully impose this they will also have thrown their own definition of “affordability” under the bus! Our cheap rents, by their illogical and ideological way of thinking, are simply “unfair!”

Like “affordable” the word “unfair” seems self-explanatory, but is in fact a loaded ideological time bomb when it comes to current housing struggles. How could having cheap rent be unfair to anyone beyond perhaps a landlord who thinks they have a right to more money? Other renters paying way too much will not be affected one way or another by the rent we pay. For sure the landlord class would see anyone paying cheap rent as “getting away with something,” and worse, they would fear that it might be a contagious model that would inspire others to demand similar arrangements. Perhaps this is the City’s problem. As the local manifestation of the state, with the overarching goal of preserving a climate “good for business,” Mayor Lee and his employees must oppose tenants escaping the straitjacket of rising rents precisely because of the bad example it would set. People have to think paying exorbitant housing costs is normal and in the words of the Mayor’s Office of Housing, “fair.” There’s nothing “fair” about having a large chunk of your income siphoned off by landlords or banks; there’s nothing “fair” about your home being an abstract commodity to be bought and sold like any other commodity in the marketplace. And there’s nothing fair about imposing this logic on some people but not on others. Why don’t we have wealthy people pay 1/3 of their income for housing while we’re at it?

Mercy Housing built in Mission Bay... fully "affordable" but what does that really mean?

Photo: Chris Carlsson

The concept of “affordable” as applied to housing is also a disguise for an extractive system of exploitation based on private ownership. It is comical to read about new construction in San Francisco, like the new Transbay Transit Center (soon to tower over the City’s skyline) where they are bragging that 35% of the housing will be “affordable!” So I guess that means that 65% is “unaffordable?”

I’m against this slippery concept of affordability—the worst part of it is that it shifts the way we think about housing prices from a simple appraisal of the cost to pegging it to what you *could* pay—that is, what is the “most you can possible afford?” Originally the notion of analyzing housing costs as a portion of household expenses during the Depression concluded that no one could reasonably be expected to pay more than 30% of their income and actually make ends meet. Our current municipal government has latched on to this old concept and turned it upside down. Instead of 30% being an absolute ceiling they are insisting that 30% of your income is the floor and if you are paying less than that you should be brought up to that level to be fair.

This is the public side of the private system of using housing to extract the maximum revenue and profit for the financial sector that was deeply bankrupted by the 2008 crash. The financial sector had grown so large because of the speculative housing bubble, one that only partly deflated after the Fed pumped trillions into the hands of the same banks that profited from the bubble and now are profiting from its crash. Locally the city government is putting itself in the role of enforcing the extraction of revenue from low-income residents, even in the ostensibly alternative project of creating a land trust-based housing co-op.

The affordability yardstick defined as a 30%-of-your-income minimum is a mechanism by which you are forced to subject yourself to annual reviews by bureaucrats who will determine if your income has gone too high to justify your receiving the “benefit” of “affordable” housing. If you manage to eke out a good year financially, this system guarantees that you will be immediately punished in the following year by having your monthly housing costs raised to drain your wealth in direct proportion to the amount that by their punitive formula is deemed “excessive!”

The ostensible purpose of helping people who don’t make a lot of money to be able to rent an apartment in San Francisco was further eroded when San Francisco recently raised its ceiling on those eligible for “affordable” housing to people with incomes up to $150,000/year. Most people I know think they had an incredibly good year if they got to $50,000, and probably a quarter of the City makes $30,000 or less every year. What is this madness?!?

Having enthusiastically supported the boom of luxury condominium construction with its inflationary and gentrifying impacts proliferating unchecked, put forth a dubious definition of “affordable” that never stops moving, the Ed Lee administration is using their long-term loans to projects like ours to try to push us into “normal” (i.e. market-determined) rents as soon as possible. For us, what starts out as a hopeful alternative, one that would actually check and begin to reign in the forces of urban displacement and class cleansing, may turn out to be a pyrrhic victory if debt service and high rents shape our future.

What could be done differently, in our case, and with regard to the ongoing struggles to preserve the cheap housing that still exists? First of all, the City Attorney has to get involved before any further auctions take place, and threaten to seize buildings through eminent domain proceedings unless sellers sit down and work out a reasonable price with the San Francisco Community Land Trust or other nonprofit housing trusts that are beginning to emerge. This will keep future projects from facing unsustainable debt burdens, not just to benefit the residents, but also to reduce the pressure on the City to keep financing these ridiculously overpriced purchases. Secondly, in the case of our building, the $2.5 million loaned by the City can be repaid over a longer time which will allow us to immediately lower the rents on the empty apartments before anyone moves in. Lastly, tenants with low rents need to organize themselves to pursue land trust purchases before their landlords are put into Conservatorship, or their buildings are left to family members with dollars signs in their eyes. People’s homes are not cash machines! There is an overriding public interest in maintaining low cost housing in perpetuity, and we have to fight for it since the City itself lacks the political vision or will to do so.

Three residents of the Mission District of San Francisco: Polo Gonzalez, Sarah Brendt, and Rio Yañez share their stories of eviction. They are lifelong San Franciscans, respectively, a cafe manager, a public school teacher, and an artist. In their narratives they also represent their elders: Ana Gutierrez (Polo’s senior mom), Mary Phillips (Sarah’s 98 year old neighbor), and Rene Yañez and Yolanda Lopez (Rio’s parents and legendary Mission artists). All of them are being Ellis Act evicted from their homes. This short documentary also includes an opening prayer by Catherine Herrera (Ohlone descendant and artist), and a closing prayer by Roberto Hernandez (Mission community organizer and protector of ancestry.) Song "La Mission" by ©2014 Ramon Garcia, Mission born and raised musician. The original footage was captured on January 17, 2014 as part of a storytelling circle called "Campfire: Eviction Ghost Stories and Other Housing Horrors." This mini-clip is part of a series of mini-clips honoring fourteen City storytellers who shared their eviction horror stories that evening around the fire.

Video: Unsettlers.org and Shaping San Francisco