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The Art of Governance and the Economy – by Tony Hall

It seems that all we have read about these past few weeks relates to employment. One politician talks incessantly about how many jobs he has created. Another politician talks about how many jobs he has saved. A third politician talks about nothing but lies associated with the first two. There seem to be only two job categories that get any positive attention. One is the non-private sector positions supported by taxation. The other, and flourishing, is those employed by the various media spin machines out there doing their best to convince the weary and wary taxpayer of a particular point of view. Once again you, the taxpaying voter, are left trying to figure out the truth and what should be done.
As a father, I can attest to how difficult it is for those who are interested in remaining in our City to actually find employment in their chosen field of study, let alone in a meaningful or contributory fashion. This is the sad reality that underlies the flight of our local talent, discourages families, and takes an eventual toll on our quality of life. When we address these problems and offer realistic solutions, we are immediately classified as prophets of doom, or uninformed disgruntled individuals by the ever so politically correct, pseudo-intellectual elitists that are now running the City. The fact is that no one really needs to say anything but only has to look around. Notice the recent proliferation of vacant storefronts, the lack of buyers in the open shops that beg for customers with almost unbelievable sale promotions, the restaurants and diners less than 20% full, or the drop off in attendance of the various galas, social and charitable events for which San Francisco is so well known. No one knows this better than the small businesses trying to survive here in the City…[Full Article on the Westside Observer]


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HOPE Revisited

Hope is a word that has been tossed about rather loosely in political circles the past couple of years. Being a word that emotes great passion for constructive change, it is something that we all must embrace lest we fall victim to the perils of pessimism. Its relevance is most effective in its appeal to the majority of common folk like you and me.

As one of our tabloids recently reported, San Francisco has become a place for the richest of the rich and the poorest of the poor. Shut out are the many people who make the City great, average ordinary working people with average non-descript jobs. City Hall has had an on going war against the middle class for years. Because of high home costs and an anti-family attitude, many of these hard working people have had to choose between the City they love and their future as families and homeowners. As a result we are losing our blue-collar community and the backbone of this marvelous City is weakened.

To combat City Hall’s war against the middle class, In 2002 I introduced a legislative package to the Board of Supervisors entitled the Home Ownership Program for Everyone (HOPE). The Board declined to pass the legislation, instead responding with a barrage of controls that increased rent subsidies and new building requirements and restricted land use, thereby strengthening its political base and increasing the blight of tenant slavery. Subsequently, a citizen’s group called “Renters for Homeownership” began circulating a petition with the goal of placing HOPE, or Proposition R, on the November 2002 ballot. I would like to take this opportunity to explain to you the merits of the HOPE proposal because I believe that it has at least as much relevance today as it did in 2002.

Briefly, this is how HOPE works: If a multi unit-building owner and a pre-set percentage of tenants in that building voluntarily agree, the property owner would be allowed to sell their individual rental units to the current tenants, who would be able to buy their apartments as individually deeded properties, (aka condominiums). Tenants who did not wish to buy, or who were unable to purchase their units, would be granted leases providing them with the same protections they currently enjoy under the Rent Ordinance. HOPE is completely voluntary for landlords, as well as tenants, and both have to agree on the price.

The HOPE proposal, if in effect today, would provide a harmonious and positive solution to the age-old battle between tenants and property owners in San Francisco. It would offer tenants not only a genuine opportunity for affordable homeownership, but also an opportunity to accumulate equity and join the middle class by acquiring a “piece of the rock” so to speak. At the same time, apartment owners, who today are extremely burdened by punitive rent control laws, would get a chance to subdivide their buildings and sell a portion of those buildings as units, thereby adding value to their assets, or the opportunity to use their equity for other investments.
Under HOPE, tenants would have the option of exchanging the security of a rent-controlled apartment for the far superior security of homeownership. As such, HOPE would eventually transform the voter demographic by replacing current renters with homeowners. For obvious reasons, this would have far-reaching effects on the electoral landscape of San Francisco, (not to mention introduce reality to the far-left anti-property zealots that dominate our political establishment today).

Research has repeatedly shown that homeownership is the most important priority for tenants. This is true in San Francisco for 350,000 tenants in 220,000 households. San Francisco has a 34 percent homeownership rate, compared to 72 percent in Phoenix, 68 percent in Atlanta, 59 percent in San Diego, and 63 percent in Seattle. Nationwide, the homeownership rate is 68 percent. San Francisco has by far the lowest homeownership rate of any city in the entire country.

Immigrants, minorities, and those at the lower end of the economic scale are especially hurt by the City’s restrictive subdivision laws, which make homeownership near impossible for lower and middle income working families. According to the Department of Housing and Urban Development, homeownership is the main way for people to accumulate wealth. Homeowner households have an average household wealth of 34 times that of the average tenant household, and the principal source of that wealth is homeownership equity.
No evictions would be caused by HOPE subdivisions, as non-buying tenants would get legal and enforceable leases. Similar programs have been successful for many years in New York, Washington DC, and other cities. Why not in San Francisco?

HOPE is as eminently workable for tenants today as it was in 2002. They would be able to take advantage of a variety of affordable, low-down payment mortgage options that are available by various government agencies and private institutions that are being offered for first time homeowners.

Since the value of an apartment as a rental unit is so much less than its value as a condominium, the renter could buy it, under HOPE, at a greatly discounted price from its condo value, which would still be much greater than its value as a rental unit. The underlying principle is that only when the existing tenant(s), (be they one person, family or entity), is allowed to purchase the unit they are now renting, and the owner would like to sell that unit, the price will be substantially lower than the market price that the unit would sell for if it was a condo in the open market. The average price of all 5,685 rental units sold in San Francisco between January 2000 and April 2001 was just $156,000. Even if the average sale price for each HOPE unit is just $250,000, which is less than half the median price of a San Francisco condominium today, both landlord and tenants would benefit, and would have good reason to cooperate for mutual gain.

You might ask at this point why would an owner want to sell a unit to a tenant at a below market price? Prop R simply provided property owners with more flexibility for his or her investment than they now have under draconian rent-control laws. Since it is a totally voluntary proposal, he or she does not have to sell.
For the tenant, the reality is that in most cases the mortgage under HOPE would be less than the rent they are currently paying as a tenant.

As a result of HOPE, the quality of Life in San Francisco would greatly increase. Consider the following:
Safer Streets: When renters become owners, they gain a powerful incentive to keep their neighborhoods clean and their streets safe. Homelessness, litter, graffiti and drug dealing destroy neighborhoods. Homeowners have a stake in getting involved.

Better Schools: San Francisco has the lowest percentage of eligible children enrolled in its public schools of any city in California. When families buy homes and put down roots in San Francisco, they take on a powerful incentive to work for better schools for their children.

Lower Taxes: Homeowners and property owners shoulder the burden of City property taxes. Tenants don’t pay property taxes. When tenants become homeowners, they reap not only the financial benefits of property ownership, but they also share in the responsibility of paying property taxes that fund vital City services. By creating more taxpayers, the burden per homeowner is reduced. The City would get an increased tax base and much higher property tax revenue without having to increase tax rates.

San Francisco was built by working people from a diverse background. Unless we can provide housing opportunities for the next generation without new taxes or increased bureaucracy we would be ignoring a large part of our heritage that makes us what we are. Middle-income working families and other members of the aspiring middle class and service communities like teachers, firefighters, waiters, carpenters, shop owners, and indeed our own children that grew up in the City, are now forced to leave the City to find homes they can afford to own. Many of the single men and women that have chosen to make San Francisco their permanent home will spend their last years in a retirement or assisted living facility. The profit from the sale of a home in the City can mean the difference between a quality facility and a marginal one. HOPE might well be the last opportunity for those who can afford a $200,000 condo mortgage, but not $750,000 single family home.

HOPE was a win-win-win measure that is certainly worth revisiting. Tenants win a new, affordable means of homeownership, property owners with a new means of investing, and the City wins an increased quality of life resulting from having more rooted, concerned homeowners.

Now for you political aficionados who ask why the HOPE proposal did not pass in 2002 after over 24,000 signatures and some $580,000 were put forth as support for the measure. The answer is very simple and yet obscured in the political mire and deception that is so uniquely San Francisco. As the major proponent for the HOPE proposal, and on the advice of my cunningly deceptive staff aide at that time, who is a sitting Supervisor today, I mistakenly and unknowingly trusted the execution of that campaign to the very same people that were running the Care Not Cash campaign. We all know now what a colossal failure the Care not Cash program is, as it has resulted in over 2.5 billion dollars being spent annually out of our general fund to provide services for the same number of homeless people that we were providing aid to in 2004 at a cost then of only 200 million!
Unbeknownst at the time, the treasurer for both campaigns diverted the majority of the monies raised for HOPE into the Care Not Cash program. (This is the same person who incidentally filed an anonymous and bogus ethics charge against me, causing the City to waste a million dollars investigating me and then dismissing the case because their star witness committed perjury and falsified evidence!) What a Town, what an experience, and what a loss for San Francisco! Fortunately, the truth always comes out, and in the case of HOPE, it wasn’t the anti-private property poverty pimps or tenant activists that killed the measure, as the tenants could easily see that they had so much to gain. It was undermined by those who placed a competing measure on the ballot that was designed for political expediency in their quest for higher office over the common good of all the residents in San Francisco.

Now that we have had the benefit of time in reviewing and reliving our past mistakes, we must re-examine a program like HOPE. There is so much to gain by its implementation. As I said in the beginning of this article, Hope is a fascinating word. In my particular experience, trustworthiness and naiveté may have been my folly in the political arena, but hope is what keeps you alive.

Have a Merry Christmas and a Happy New Year!

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