For anyone else immediately curious: the US's [ex post facto](https://en.wikipedia.org/wiki/Ex_post_facto_law#United_State...) law applies to retroactively deeming acts to be criminal. Challenges to retroactive tax laws on this basis have not succeeded.
Fear of citizens burning down city hall? It's usually difficult enough to pass ordinary tax increases. Trying something outrageously unpopular like that would probably be political suicide.
"Fun" fact: tax law is the one domain where "innocent until proven guilty" does not apply. If the government says you owe money, the burden is on you to prove that you do not.
That is false. The government still has the burden of proof, although in some states it is quite low (preponderance of the evidence). That you need to appear in court does not mean you have the burden to prove your innocence.
In many places in California you have to first pay the fine too contest the fine. Upon your contest being successful you'll eventually get your money back. This may take 9 months. Fronting the court $200 for 9 months might not hurt a software engineer, but for some people that might mean not paying rent.
And asset forfeiture is more insidious. The case is made against the forfeited property, not it's owner. Hopefully the ruling in Timbs v Indiana will help reign that in.
> "Fun" fact: tax law is the one domain where "innocent until proven guilty" does not apply.
No, it's not the one domain. “Innocent until proven guilty” applies only in criminal law (neither “innocent” nor “guilty” even applies outside of the domain of criminal law, much less that maxim about the relation between them.)
Indeed. There's much more symmetry outside of the criminal law. Not sure if applicable to the US, but in my home country you can sue people if you want money from them (as one would expect), but you can also sue "to determine whether a payment is needed", which means you initiate a lawsuit that can result in you paying the money. This may make sense if you deny the claim and are wealthy (i.e. you could pay up) and want to speed up clearing the air. Otherwise the claimant can wait a few years and use the court approved interest rate (high) to hit you over the head a few years down the line.
> Not sure if applicable to the US, but in my home country you can sue people if you want money from them (as one would expect), but you can also sue "to determine whether a payment is needed", which means you initiate a lawsuit that can result in you paying the money.
In the US this would be a suit for declaratort judgement in which formally you asked the court to declare you did not owe money, but functionally it seems generally similar.
Are you referring to civil or criminal law? Innocent until proven guilty is only relevant for criminal and in those cases the burden of proof is definitely on the state.
I'm always suspicious of politicians who either lack this basic understanding of US law or fully understand it, but are posturing. And that doesn't even get into the ethics of changing the rules after the fact.
But passing this tax will affect all future IPO's. If the city wants to take a hard line with Uber, then do that. But don't pass a tax that affects all companies going public. That just puts an incentive for startups to move outside the city before going public. Is that a good thing? Is that what the city of SF wants? I don't know, but giving a reason for all these workers to commute up and down the peninsula seems silly. Especially because CalTrain is already insanely crowded as are the roads.
If SF wants more affordable housing, step one is to allow developers to build more freakin housing! Then sure, you can tax IPO lottery tickets if you want. Honestly it probably won't make any startup leave the city. The companies don't bear the tax burden, the employee does. And I don't think a company is going to lose out on employees simply because the employee doesn't want to lose an extra 1.2% in their stock comp.
>If SF wants more affordable housing, step one is to allow developers to build more freakin housing!
This... it's absolutely astounding how difficult it is to build housing in SF, then everyone complains about the lack of affordable housing and proposes all kinds of pretzel-twist solutions instead of adjusting supply towards meeting demand.
> The companies don't bear the tax burden, the employee does.
When employees increasingly leave the SF Bay Area or refuse to relocate to the SF Bay Area, driving up the cost of acquiring talent, the companies most certainly are bearing the burden.
I hope this dissuades any more startups from locating in SF. It's gotten to the point where even highly paid software engineers cannot afford to live in the city. The Caltrain is packed every afternoon with engineers evacuating to the safety of MTV and Sunnyvale.
The lack of affordable housing is the reason I moved from SF, since my wife and I wanted to start a family. I just wish more companies would do the same.
The rest of the Bay Area from Berkeley to Morgan Hill is not much better in terms of price. Perhaps more livable in terms of less density and less flagrant poverty as S.F.'s urban environment, but the region in general is already glutted.
San Francisco is one of the most mismanaged major cities in the world and it's on such a negative trajectory. It's blessed with an incredibly successful homegrown tech industry, but there's only so much that can do to hide the underlying disfunction and the cracks are starting to show.
As a VC in San Francisco, I've recently given up my residence here, and am increasingly looking outward for tech and culture. I see many of my peers doing the same, moving east, south, or out of the country entirely.
It's bittersweet. I used to love San Francisco, but have recently entirely lost faith in it ever getting better. I've given up. And honestly, I feel a weight lifted from not having to care and constantly deal with the frustration anymore. There's so much tech & entrepreneurship worth promoting outside of SF, and it's so often overlooked.
With the University of Waterloo and Conestoga College, Kitchener-Waterloo is a hot bed of engineering and CS talent. And the whole area is quite underpaid and pretty affordable despite a massive shoot up in housing prices.
I think my point, other than boosting my hometown, is that there's a lot of really affordable talent out there if startups and VCs would just dare to look elsewhere a little harder.
Contrariwise, I see San Francisco as a city that is struggling with some of the worst demographic issues in the nation, mostly stemming from having an absolutely absurd amount of wealth inequality for various structural and temporal reasons, and doing an admirable job of it. The "homegrown tech industry" was intentionally fostered in response to the valley turning the city into its bedroom community, so the idea that the city is somehow corrupting your vision of what SF could be is disingenuous. I suspect the SF in your recollection is the SF you yourself had a hand in changing into what it is today.
Agree entirely, maybe if some of the billions of dollars available went to providing the homeless with good, free mental healthcare they would be a good start to making San Fran a better place. I’ve never seen anything so sad as the streets of San Fran on a cold night, disgusting.
Edit: Go for the downvote button, most of the world thinks the state of the valley , San Francisco and the living conditions and poor infrastructure are a joke given the insane amount of wealth housed there. You can take ownership of it or blame someone else (which it seems many of you are doing a great job of).
People aren't downvoting you because they hate homeless people. They're downvoting because the city already devotes a ton of money to homelessness, and has proven itself extraordinarily inept or corrupt at solving that problem.
There are many possible solutions to what is a horrible and obvious problem. Throwing billions more down the SF government money maw is not one of them.
Much of SF's homeless population is not local to SF. Part of the problem with spending money on the homeless is that it draws more homeless seeking those services. And in many cases, other states and cities have "solved" their homeless problem by shipping their homeless to CA. (Texas, especially, is notorious for this.)
Not saying that SF is well-run or not, merely that the homeless problem isn't simply due to the city's response.
I mean... that's how the cookie crumbles unfortunately. California is the most survivable climate for the homeless and for some reason people applaud local governments busing the homeless to California - as long as those two factors remain in place it's up to California to fix it.
With that understanding there should be more national funding going toward the homeless issue - and if there's one local economy that could actually afford to fix the problem it's SF.
The city uses an expanded definition of homelessness that includes people who are "doubled-up" in the homes of family or friends [1]. The survey referenced in the source you've linked counts people dealing with LGBTQ-related issues that, while terrible, aren't what most people think of when they picture homelessness in SF.
The "man shooting heroin on the street" sorts of homeless folks are, in my limited experience volunteering, generally not from SF but some other part of CA.
Land is pretty cheap in Texas. It’s often unrestricted. SF could buy up a ton of land and start building an eco village with tiny homes; robotic organic food production; etc. and start providing services to the Texas homeless population as way to stop them from coming to SF.
There really are cities that pay for bus tickets to ship homeless out, generally under the banner of a name like "homeward bound." The reality, though, is that SF is a net exporter under those programs: https://www.theguardian.com/us-news/ng-interactive/2017/dec/...
SF spends $400 million a year on what it terms behavioral health (encompassing both mental healthcare and drug abuse treatment). How much more do you think ought to be spent?
To add to this, I'm assuming "twice as large of an economy" must be hyperbole because I'm not finding any data that comes even close to that. Chicago's GDP, for example, is only ~1.3x bigger in total. In terms of GDP per capita SF is actually ~1.5x bigger (for metro areas, because that's the data I could find).
Definitely not arguing that SF doesn't have its share of management problems, but this feels like a pretty poor example.
Then you're not looking at the city proper and we're mixing measures here. The 1.5x I mentioned is at the metro level, while your 1/3 population is city proper. That said, I'm struggling to find any kind of useful data broken down at the city level in terms of economic output, so I certainly wouldn't die on this hill.
Right, I’m assuming the relative ratio is the same for the cities as for the metro areas. Both cities have a lot of their jobs and major companies in the suburbs, so that’s probably not an unreasonable assumption.
Chicago’s problem is that it’s in a state that until quite recently taxed like a red state (3% flat income tax!). But that’s on the revenue side—it has nothing to do with how much money is reasonable to spend on city services.
The top-line figure of the SF budget is misleading because it includes the SFO airport. This arrangement is unusual in the United States. Chicago operates ORD and MDW out of a separate budget, like most US cities do [1].
Notice the large difference in the size of Chicago's enterprise budget [2] and San Francisco's enterprise budget [3]. SFO is considered part of the enterprise budget of the City and County of San Francisco, but it's a separate fund entirely for Chicago.
(As an aside, this setup means that the mayor of San Francisco doubles as the CEO of the SFO airport, which is also unusual.)
I’m not downvoting you but I’m skeptical that the problems with homelessness can be fixed by putting more money toward mental health care. Are there a lot of skilled mental health practitioners who aren’t working due to a lack of demand?
Mental healthcare is absolutely a salve for a lot of homeless folks. We used to have sanitariums and institutes - some of those were terribly abusive (seriously, they were horrific in some cases). Instead of fixing the abuse issues people found it easier to solve the problem by shutting down the evil institutions... then everyone who had been receiving treatment was forced onto the street and expected to take care of themselves.
Anecdotally, my wife (at the time a developmental psychologist) was commuting to SF from central valley every day because her pay wasn't enough to pay both rent and student loans.
In the end she left psych and went into tech. Problem solved!
30 year San Francisco resident. The issues San Francisco faces today are not from wealth inequality. That’s horse shit. It is in fact dysfunctional government. Also, you are mistaken about the genesis of San Francisco based tech versus the Valley. And you are wrong about the history of workers living in San Francisco and commuting to the Valley.
Most of the homeless aren't inbound. They're being priced out of the market that they've lived in their whole life. You're just illustrating the lack of awareness tech people have in the city.
In many cases the homeless have a better net impact on the world than tech people.
Consider carbon footprint, accelerating “progress” toward ecological collapse, building tech used by authoritarian governments, etc.
People of all classes come to SF for similar reasons, the resources.
Instead of being afraid of solving the homeless problem for fear of attracting more homeless, SF Ought to focus its creativity on solving the problem in a way that works for everyone.
The best solution is, give the homeless free housing.
Since SF industry is extracting / creating wealth (depending on your political slant) from all over the world, then it should be ok with people from all over the world coming in to have basic needs met.
Create shipping container / tiny home villages; provide robotic grown organic foods; deploy scalable mental health and community building tech; etc.
Deploy that tech to other surrounding cities which would alleviate some of the pressure for folks to move to SF if they are homeless.
Repeat the process across the USA.
Repeat the process around the world and alleviate the resource gradient.
You want to take a dent out of the universe? Solve homelessness and resource scarcity.
Or, bring back the Civilian Conservation Corps and exchange labor for government income / support. It will provide meaningful work and structure for the lost and is productive to boot. There are many great works from the 1930s (dams, etc.) which still provide immense value to recreational users and farmers today.
I agree with the reply above mine by Captainredbeard, that bringing back the CCC would help to stymie the crumbling of a large portion of America's failing infrastructure.
How has such a shitty local government not gotten voted out? I understand the NIMBYism driving it and perverse incentives for housing owners but the approval rate has to be crazy low
A "shitty local government" that delivers the biggest economic miracle in the world while at the same time advancing progressive values. Surely we must vote it out.
It's not just SF. The whole state of CA is woefully mismanaged. They just have enough money to smooth over much of the stupid stuff. When the money runs out (next recession?) they are gonna get hit really really hard (and they deserve it, stupid should hurt).
While I agree with you that stupid should hurt, I think one of the reasons the situation is so bad is that a lot of the stupid decisions haven't been hurting the people who make the make them and the people who cause them to be made. This isn't just a problem in CA, just look at the Boeing debacle. Tons of bad decisions, the people who made the decisions made 10s - 100s millions of dollars and laughing all the way to the bank. Same think with California's politicians and elite class ... public workers, on the hand, are probably screwed ...
CA is actually quite well-managed. One of the reasons we pay so much in taxes is precisely because CA legislators have a better grasp of financial realities than their counterparts in red states: if you want to spend more, you need to collect more money to pay for it.
And CA voters like to pay for things. Red-state voters do not; they like to pretend that people will do things for free (i.e., teachers) until things break and they accept the reality that nice things cost money.
How are you quantifying (qualifying?) "well-managed". If the metric we care about is along the lines of cost of living, then it's arguably the worst in the county. I could afford to buy a house in pretty much any Red State. What's that a function of? People not wanting to live there? I doubt it. I sincerely doubt it, because every time this topic comes up here on HN we hear stories about people leaving SF/SV for Austin or the South East - and there's plenty of data showing an exodus out of the West Cost corridor. Will housing costs go up in those areas? Maybe - but if/when there's a reshuffling I have a lot more faith in city leaders in those other parts of the country not to use the San Francisco checklist for "how to turn your city upside down".
>And CA voters like to pay for things. Red-state voters do not; they like to pretend that people will do things for free (i.e., teachers) until things break and they accept the reality that nice things cost money.
I think this point is also way off the mark. I should not have to shell out thousands a year for pre-school if I want my kids to be competitive. This is the reality for friends I have in SF. Not so for friends in Houston or Austin.
I don't live in SF, but I turned down a job there entirely because of the cost of living and that, at least from where I'm standing, the city is run by idiots that are completely disconnected from reality. You might think I'm conflating state and city government, and to an extent you're right, I am. But as city leadership is so often a launch pad for state (and then national) government I'm not particularly bullish on California's future.
It is hilarious people think "money will run out" and CA is mismanaged. CA has a $30bn rainy day fund. It is incredibly managed. We have protected our shorelines, our mountains, our nature while other states have sold them off to the highest bidder. Our legislators pioneered equal rights and made LGBT mainstream in American politics. We pioneered action against climate change and kick started incentives towards alternative fuel, solar, and wind energy. We have the most generous healthcare coverage in America. We have the most generous welfare in America. We have invested billions in public transportation. We have the most upwardly mobile population. We pioneered recreational marijuana, and decriminalizing drugs. We are leading the revolution against mass incarceration. We have some of the most generous policies that are pro-women, starting from abortion to parental leaves. And we have the #1 economy in the world. That's quite mismanagement.
Yes, CA is one of the better states in the United States, but it is by no means half of the things you say.
No, it is not the #1 economy in the world (hello, the rest of the US exists, as does China and Japan and Germany)[1].
Neither was CA the first to pioneer recreational marijuana or decriminalize drugs. Other states like WA and CO did it first, not to mention other countries like the Netherlands or Portugal.
Nor was CA the shining beacon of LGTB rights. Do you not remember Prop 8?
Nor did we do a bang-up job of protecting our environment, or do you not remember the drought and wildfires of recent years, exacerbated by our unchecked agriculture which is pumping our aquifers dry for some of the most water-hungry crops (like almonds).
I'll stop here because I have to board a flight and you get the point. Surely you know half the things you said aren't true.
It's interesting that you see yourself and your industry as a blessing, when it's people like you (and me) who have done the most to destroy a quirky, always poorly managed, but interesting and beautiful American city.
My condolences to whatever city the tech swarm of locusts decides is the next SF.
The fun part of the "I'm mad at those wealthy people over there" movement is that the industry the disdain is directed at is hotswappable.
I travel a lot. Pointing at "tech" is a red herring that ensures the most vulnerable people won't figure it out. I would say "tech" is the most inclusive of all the wealthy gentrifiers.
There is no specific university you have to go to, there is no specific fraternity you need to be part of, there is no degree you actually need, very different than high finance or upper class Chinese estate planners.
Having moved from San Francisco to Champaign, IL myself. There’s something to be said for a 5 min commute, lower taxes, a yard. There’s still a fairly large tech community here. Wolfram has its headquarters here, and there’s tons of tech companies, albeit mostly remote offices.
Honestly, I’d have trouble moving back to a large city. It doesn’t have much more to offer, and what I’d have to give up is significant.
LOL at this hilarious post. SF is in a negative trajectory ? SF has absolutely destroyed every city in the last decade when it comes to job creation, economic engine, value creation, startup creation etc. SF is in such a positive trajectory that has very few historical precedence.
San Francisco legislators' complete inability to understand economics never fails to amaze me. There are twenty different taxes and bonds proposed every single year by the city to "build affordable housing." And every year, that money is squandered in regulation and red tape, while housing prices continue to rise.
The issue here is, first and foremost, supply and demand. San Francisco has made the process of building new housing so incredibly onerous that, once a developer finally succeeds in erecting a building, the only ones they can sell to are the wealthy. If it was easier to build in SF, with less regulation, less restrictive zoning, and less expense, then housing would be built for the middle class. Then, the city could apply affordable housing policies to reserve units in middle income buildings, and the housing crisis could be averted.
But instead, our legislature continually enacts nonsense like this, which accomplishes little beyond rabble rousing.
Ah, the "North Korea" strategy to make San Francisco affordable. Yeah, that would probably work. Kind of a roundabout way of doing things with a lot of other bad consequences, though.
Supply and demand issues can be addressed at both ends. The US is a large place and only a few cities have these issues. What's wrong with the jobs being elsewhere in the US in cities with more capacity if people are moving to the jobs anyway?
I moved to California despite the high taxes. In doing so I was able to go from earning $55k per year to $150k a year. No amount of tax cuts would have given me that income boost. As long as people can make more after-tax money in SF and California than everywhere else the place will remain competitive.
Now, I’m not endorsing this particular tax proposal, just merely defending the general high tax policies here.
Edit:
I probably spend about $40/month on transportation. I do not own a car and bike to work and most other places. I spend $2700/month (market rate rent, no rent control) for a 1 bedroom apartment in a very walkable location. While the cost of living is higher, it's not so high as to make my life in the Bay Area worse than back home.
Simply knowing salary tells us almost nothing about the benefit(s) of your move. How much more/less do you spend on:
* Vehicle Registration, Public Transportation, Gas
* Housing (rent/mortgage)
* Sales tax
* Etc.
The housing is a huge factor, given that 30% of $55k is $1300/mo (A decent house in most of America), yet 30% of 150k is $3750/mo (A nice cardboard box in the bay area)
No, they favor the bay area if you are a software engineer who is willing to sacrifice quality of life. That article starts off with this horrific line: "rent a room and move in with some friends". OMG. That is the sad situation we might expect for an unskilled high school drop-out with a felony conviction.
That article continues on with "Start a Family [...] It’s been 10 years". It is indeed common that people in high-cost areas feel unable to start families earlier, but that isn't something to just accept as normal. It is better to have kids when you have energy for them and when birth is safer. Starting earlier also allows for the possibility that you might end up wanting a larger family than you had initially expected. For example, I sure didn't imagine I'd be having 12, but that probably could not have happened in the Bay Area.
In 10 years, one ought to have paid off a house.
The article mentions college, which can be had cheaply, but neglects to mention private schooling. Normally this would be the larger expense by far.
The "middle of nowhere" comparison also seems a bit low for salary. It might be right if you tossed a dart at a map of the USA to determine your location, but not if you chose a low-cost area with a suitable industry.
I agree but people have gotten used to constantly rising house prices and started depending on it to pay off their home. In an environment with rising house prices your best strategy is actually to avoid paying as much as possible. Low down payments and 30 year loans mean that if you spend $50K on a 2 million dollar house and it appreciates by 10% to $2.2 million you have received a 4x return on your investment. If the house price tanks by more than $50k your mortgage is underwater and because you never planned to repay the entire loan, you will have to apply for bankruptcy.
$3700 a month is my rent for a large one bedroom condo in Rincon Hill, SF, with my own parking spot in the building. If you think that making $95k more doesn't tell you anything then you're bad at math. Even if housing costs 3x, the rest is effectively surplus. Why on earth do you think you only get a cardboard box for that money btw? I live in luxury for that price.
$1300 will get you a 1300+ sq ft house with a 2 car garage in many places outside of California. A one bedroom condo does not scream luxury to me, especially at $3700 a month.
Do you have source for calling it an "influx"? According to the city's annual survey (from 2017)[1], 70% of the current homeless population lived in SF county before becoming homeless, 21% lived in another CA county (which may include, say, Berkeley or Oakland), and only 10% came from outside CA. I'd hardly call 10% of the current homeless population an influx.
Isn’t this based on self-answered surveys and not hard verifiable information to establish residency? The homeless and activists/nonprofits advocating on their behalf have an incentive to make it look like they’re mostly local.
> Isn’t this based on self-answered surveys and not hard verifiable information to establish residency?
True, though collecting hard verifiable proof of prior residency from homeless folks seems beyond what can be expected from a one-day citywide survey. :)
If you know of a survey that did collect that information, I'd certainly be interested in the results.
> The homeless and activists/nonprofits advocating on their behalf have an incentive to make it look like they’re mostly local.
I suppose a high out-of-county population might make locals stingier, but getting caught providing bad data also seems like a pretty bad outcome for any of the local non-profits that helped conduct the survey.
Is there any systematic evidence of the oft-repeated idea that homeless are being bussed in from every corner of the country? Besides an anecdotal case or two? If not, why should we believe that it happens with any degree of frequency?
Do you believe that estimates of the total counts of homeless people might be more or less accurate, since there's no supposed incentive for activists to discount it? SF's homelessness per capita is actually not particularly high compared to other major cities, which is not at all what you would expect if homeless were swarming en masse to SF from those other places: https://medium.com/hatchbeat/homelessness-a-tale-of-three-ci... . What's really high in SF and other West Coast cities is the percent of unsheltered homeless. It may be that it only seems like there are more of them because they are more visible because besides SF's dislike of building housing they also don't build sufficient homeless shelters: https://www.sfgate.com/bayarea/article/Bay-Area-homeless-uns...
If you talk to homeless people (at least in Seattle), you'll find that almost all of those you speak with moved here from elsewhere. Bad data is worse than no data, and these surveys are bad data intended to skew the conversation - they have a very obvious flaw, which is that there is no verification of the identity of homeless people and where they lived before. And when most people around you have the same anecdotal observations and the data says otherwise, it is yet another sign the data needs to be scrutinized or tossed out until something better comes along.
> If not, why should we believe that it happens with any degree of frequency?
Why should we believe they are from here by default? We should assume they are not until it is proven, and therefore feel no obligation to create more levies against local law-abiding tax-paying residents to support out-of-town homeless, or permanently nomadic lifestyles, or willful drug abusers who often commit petty property crimes to feed their addictions. We should only provide that aid if we know they are long-term residents of the area, and otherwise enforce laws against them strictly.
> It may be that it only seems like there are more of them because they are more visible because besides SF's dislike of building housing
I'm sorry but if someone moved to SF or Seattle within the last 7 years, they really should have displayed more personal responsibility and known what they're signing up for cost-wise and whether they can afford it. These are some of the most desirable places to live on the planet, and are rightfully expensive. The cities are not obligated to change their character or density to accommodate others who want to move there but can't afford it, just like I don't have a default right to live on the beach in Maui. And as such, I feel these cities don't have to do anything other than enforce the law except when someone is a proven long-term resident who was swept up in increasing costs.
No political angle, but to expand on the data from that report (pages 22-23):
* Sixty-nine percent (69%) ... were living in San Francisco at the time they most recently became homeless... 8% had lived in San Francisco for less than one year.
* Of their previous living arrangements: 32% with friends or family, 11% in subsidized housing, 8% in a hotel, 6% incarcerated, 3% in hospital, 3% in foster care.
So it's probably more accurate to think of at most 50% of the population as having come from stable housing situations in SF.
This is a really strange comment to unpack. On one hand, housing supply and people without homes are related, at least nominatively. So semantically it feels as if you're making a point.
On the other hand, I can't identify any logic or argument to your comment. As far as I can tell your unspoken logic goes a little like this:
"The difficulty in building housing causes a constrained housing supply. Making it easier to build housing would solve part of the problem. The other part of the problem with the constrained housing supply is people without existing housing moving to the city. But I don't mean people without housing who can afford housing. I mean people without housing who can't afford housing. They constrain the housing supply in the city further."
FWIW, when people complain about the homeless, they are usually referring to people who live on the street, in tents, panhandle, etc. This is the vernacular meaning of the word. Not the much larger population of people who are homeless in the sense that they don't have a permanent place of residence, which is what you're referring to. The people who comprise the vernacular sense of the word are primarily afflicted by mental health and/or addiction issues. Fixing the cost of housing will not get them off of the street.
How to make housing more affordable: 1) cut red tape 2) relax zoning requirements. Both are politically unpalatable, so around and around we go appropriating money that governments don’t even know what to do with.
Reducing, maybe not, but stabilizing, definitely. Look at most major cities in Japan, they keep building new apartment towers all the time and prices are more or less stable. Tokyo is an exception right now because of the olympics bubble.
Houston is a nice natural experiment on zoning laws impact on affordable housing. I believe Houston has more net immigration that SF or Seattle, but has much more affordable housing.
To the extent that economics is about how incentives influence behavior, to assume that SF legislators don’t understand economics is itself probably a misunderstanding of economics.
There are people working for the City of SF who know economics, but that doesn't mean the people passing the laws do. I took an urban economics class taught by Ted Egan, the chief in-house economist for the City of SF, who knows pretty much everything about the subject and if he was put in charge of housing laws for the city I am certain housing quality and quantity would improve. However, he and people like him don't get to pass the laws. Instead, we have extremely vocal NIMBYs who lobby to get laws passed that benefit the rich minority of residents and harm everyone else.
> benefit the rich minority of residents and harm everyone else
But is that true? As a Midwesterner, I have no skin in the game. But is it ever OK for city to say "We like the size we are, we don't want drop zoning and turn our entire coastal town into 100 story mega-skyscrapers?"
I don't think the end game of every city has to be to become Tokyo. As prices rise, more industry moves out of the city. Seems like a valid case for a local resident to want?
+1 to that (and I don't live in California either)
It seems more like the proponents of cheap housing want to encourage lots of people to move into the city (which is how the existing supply becomes insufficient), at the expense of the people who were already living there.
Though what I haven't been able to understand is why these groups are not in favor of creating housing further off where the land is cheaper? In the bay area why is "goodness" only measured in distance from downtown?
This is a sincere question, I'd love to understand.
In a free market, wages would raise until either you are paying the guy pouring coffee $30 an hour - or someone is willing to commute the required distance?
In a free market, a developer could demolish a SFH to build a tall building with lots of micro units so that low income workers could live near where they work with relative dignity.
Is the market really free anymore? Supply and demand is so out of whack now that there's so much money flooded into the world economy. The wealthy are buying up real estate and other assets left and right. The middle class and poor can never keep up. There's a vortex sucking money from the middle class straight to the wealthy and everyone seems to be OK with that.
It's important to be a bit more rigorous. What is "the city" in this thought experiment? The city government? The "will of the people" (what does that even mean, does it require a majority or a plurality to decide the size of the city)?
> But is it ever OK for city to say "We like the size we are
Sure, and cities "say" what their preferences through their elected representatives, at the local and state level.
> I don't think the end game of every city has to be to become Tokyo.
Nobody said that has to be the endgame for every city. San Francisco's politicians and residents aren't debating the aspirations of your Midwestern city, they are debating the aspirations of their own city and region. If the balance of political power turns toward pro housing policies in San Francisco, maybe it becomes more Tokyo like. If not, maybe it moves in the other direction.
But dynamic cities by their nature don't stay still, so you can be assured things will move in some direction.
Cities are dynamic, and always changing. They are either growing or dying. A very few may have found temporary equilibrium.
If a city wants to stay the same size, what they usually mean is that they wish to stay the same size at the same affordability level. However, since change is constant, their best attempt regulates growth. The natural result is economic stagnation (leading to eventual death), or city growth in spite of the regulation (leading to runaway prices).
Every city has the right to choose HOW they will change. They do not have the right to insist that they WON'T change, or that such a thing is even possible.
Whoa, whoa, whoa - are you saying that long time property owners should have a say in how their neighborhood and city develop? And that we shouldn’t blindly appease a bunch of people who have just moved to town chasing the almighty dollar and are pissed they can’t rent a luxury appt or purchase a home in one of the most expensive cities in America?!! You do realize you’re logged into HN, don’t you?
For starters, it's never OK for a city with pension plans like San Francisco to reject growth, since that growth was factored in when determining ability to pay those pensions. SF is able to tread water with its pensions while Oakland next door is not[1] almost entirely due to the tech industry.
The above logic doesn't apply to pensions exclusively, either. Much infrastructure, in CA especially which has Prop 13, needs growth to sustain.
Neither is perpetual growth. Observation of nature shows that growth has bust cycles. aka, population grows till resources run out (food) and then the bulk starve and die.
> Instead, we have extremely vocal NIMBYs who lobby to get laws passed that benefit the rich minority of residents and harm everyone else.
My point is that my basic economic understanding makes me expect this to be how the legislators behave regardless of what the legislators know about economics. They may not in fact have any understanding of economics, but I wouldn't expect this to affect their behavior either way.
Oh they understand. They are not actually trying to solve the problem, but inflate the problem. They own real estate, the regulations give them a lever to get contributions from developers, higher property prices equals higher tax revenue, and doing something dumb like this IPO stunt makes foolish property-less people think that they are on the same side of them.
They are not -- they are on the side of property prices going up.
I've long held that if you want to get healthcare costs under control, if you end up impacting provider salaries, you have to tackle the education side of the equation as well.
The most important thing the US needs to do to its healthcare system, is cut costs by 1/3 to match the top end of what the other wealthiest developed nations are spending.
That will require hammering downward what doctors (for one example) are earning. No more radiologists making $650k per year.
The side conflict to that, is you have to simultaneously make it a lot cheaper to become a doctor, otherwise you generate a shortgage of doctors that gets worse by the year.
As the Federal and State governments take on ever larger responsibility in the US healthcare system, I'll be curious to see how this problem is dealt with. I suspect at first they'll simply avoid the conflict entirely, and try to keep paying healthcare workers what they're presently earning. However, you can't have universal healthcare in the US in any manner at the current expense levels, it's financially impossible. Something will have to give, and it ultimately will have to be the costs in the system.
I think the other thing is that it's not only expensive to become a doctor, but fairly grueling as well. Some number will still do it for altruistic reasons, similar to how you get some amazing teachers despite the terrible pay, but it'll probably be a lot harder for most extremely effective people to justify doing that over another, more lucrative field.
One thing that might help is eliminating the undergrad requirement before medical school.
It's not that simple in SF. Lots and lots of neighborhood associations and local groups like that who are really loud and who hold a lot more power than their equivalents in other cities.
There's a whole infrastructure on one half of the political spectrum in SF that you have to defeat.
It’s a one party town. Whoever you vote in does the same as the previous supe. They’re into high-profile, low-impact pet projects the likes of which are reminiscent of ideas high school students would propose to solve issues.
Ban plastic straws, but don’t prosecute people who defecate on the street. That’s SF politics. Nothing of consequence happens except when something has the potential to propel them into state politics, and again it’s a high viz low impact issue.
I dont want people defecating in the streets either, but how you going to prosecute that? If you have reached that level, do you care about a fine you cant pay?
Is govt going to fine them the $250 they dont have?
Also where are they supposed to go to the bathroom, not like there are many readily available in SF, especially at night.
For citywide elections? The choice is usually progressive and lesser progressive, not even “Clinton Democrat”. Some “Mavericks” will run as Libertarian or even Repub (but never win) just to stick out or get in the ballot.
That must be why it’s a problem in other cities... Dog owners know to use a bag and pick up. People can also use a bag and dispose sanitarily, but no. Why, I can just do it on the sidewalk. But, oh no, what’s that, a plastic straw?
If the city can afford injection sites and needles I’m sure they can afford to have bag dispensers or ports johns, if it’s an unmet scute need.
People are pooping in bags, sometimes. Or suitcases.
The city is also putting up portable restrooms. The biggest obstacle is neighborhoods protesting restrooms being put nearby. I guess residents like shit on the sidewalks more than restroom trailers?
You cant vote them out because the process is captured. This was recognized years ago and term limits were created but it is not the individual candidate, those are interchangeable, it is the machine. The machine keeps turning. The only solution is a revolution but no one has the stomach for that. And besides most revolutionaries are hopeless utopian romantics believing in silly ideologies.
Do you have sources for these claims? I feel this narrative is often repeated on HN and it becomes kind of an echo chamber. Then I read in the SF Chronicle that there’s permitted and approved projects that developers are not moving forward with, like around the new hospital off of Van Ness, due to the “tightening of capital markets” and “soaring construction costs.”[1] Not NIMBYs or government regulations.
And then I dig a little deeper into the “it’s just supply and demand, dummy” narrative and find articles that document how luxury housing development actually is associated with a rise in rents for the working class.[2] Who would have thought macroeconomics is complicated?
I feel the narrative here is highly politicized around are particular market-driven philosophy, so much so that people feel comfortable posting unsourced polemics. In the spirit of HN I would like to steer us toward a real analysis of the facts in the ground.
Your first article attributes those quotes reasoning about the lack of construction to speculation by “neighbors”. There is also a traffic problem created in part by construction of a bus line that is 18 months overdue. It seems a bit quick to be using that as justification for SF housing policies, especially as they don’t seem to be working.
Your other article is paywalled, but I imagine that tightly planned cities introducing only new luxery housing is the same general situation and would be similarly vulnerable to the very arguments you’re responding to.
I live a couple blocks away from Van Ness. Here's the project: https://www.sfcta.org/projects/van-ness-improvement-project. They're moving to dedicated bus lanes, allowing the buses to load and unload safely without blocking other traffic. As with all significant projects, they've lumped in a bunch of other maintenance that has been put off for too long, like upgrading utility lines.
Construction generally blocks a lane of traffic on one side of the street, rerouting the other lanes and pedestrians, for several weeks at a time. Then they move on to the next block or to the other side of the street.
Just from a layman's perspective, it seems incredibly tricky to try to construct a housing development with that going on around it. The "bus line" construction has already put additional pressure on traffic up and down Van Ness, and it's got to be very tricky to get permits for parking spots, dumpsters, and other necessities with everything else that's going on. And anyway the city could probably just come through and close everything down for weeks or months so that they can perform another stage of "bus line" construction.
(I'm putting "bus line" in quotes because they haven't even really started on that part. This whole project is a pretty incredibly yak shave that's taking 5 years and hundreds of millions of dollars for a bus line.)
I think the onus is on you to disprove them, not just to merely question their veracity.
Anyone who has built a house in any urbanized area with an highly environmental conscious outlook can tell you that building a house is difficult - I think anyone can also tell you that San Francisco has a large amount of demand - I think there would also be universal agreement that San Francisco is also basically built out. Upmarket housing tends to get built first when market demand is high, and its expensive to build in a place, because its harder to recoup the costs on cheaper housing.
Without significant densification (which has proven untenable politically) no significant amount of new housing will be built - so you can pass all the affordable housing bonds in the world, but until you change the zoning (regulatory) construct - nothing will change.
> I think the onus is on you to disprove them, not just to merely question their veracity.
This generally is not how reasoned debate occurs. The onus is on the person making an assertion to provide facts supporting it, not on everyone else to disprove an unsourced claim.
As if it's possible that some other scenario is not at play. Do you think housing is being erected at a record pace and yet still can't keep up with demand? Is it possible that people just don't want to build in SF, because... reasons that aren't red tap?
I will point out that there is an article on the front page of HN right now in which multiple economists argue that "it's supply and demand" provides an insufficient explanation for, and solution to, the problem of affordable housing in San Francisco: https://news.ycombinator.com/item?id=19872015
So arguing that we must accept the "it's just supply and demand" argument by acclamation with no sourcing seems flimsy. Educated minds are arguing otherwise, and providing evidence to back up their claims. It hardly seems unreasonable to expect the other side of the argument to do similar.
The amount of housing in the most expensive housing market in the world is going down because of lack of capital? That passes a sanity check for you?
Or maybe the regulations are so insane you spend millions in legal fees before you even have a glimmer of hope and eventually say “this isn’t worth it.”
See, this is what I mean. I posted sources that literally interviewed developers and researched the causes for construction delays on approved projects -- "project was approved in late 2016 as construction costs were escalating more than 10 percent a year and lenders were tightening their criteria for loans." And you responded with unsupported political talking points.
Let's bring this back to a fact-based discussion, ok? That's what HN is supposed to be about.
> “For-profit developers have predominantly built for the luxury and higher end of the market, leaving a glut of overpriced apartments in some cities,” said Diane Yentel, president and chief executive of the National Low Income Housing Coalition, an advocacy group.
I can't read the chronicle article, but your wapo article is mainly just the opinions of interested people like this. For example, nowhere does it give the actual number of "luxury" units built in Seattle, SF, or Portland -- those would be important numbers if you're trying to comprehend the argument being put forward.
The Chronicle article is worth reading but you can trust me that it points to capital markets and labor shortages as holding back approved projects.
Here is a deeper analysis of the Seattle market with specific housing construction figures.[1] It argues "there is no general housing shortage, that the catastrophic figures above are a product of the Great Recession and the normal lag in construction. Because the market appears to be duly responding to demand, efforts to 'free' the housing market are not as effective as efforts to shape the market toward more just ends."
This is consistent with the causes cited in the SF Chronicle article that hold back approved projects, as well as the SF Business Times(!) article pointing to the 2008 recession as a cause of the labor shortage, cited previously.
Start with the early 70s. The housing problem started around then. Some years they went up by 20-30% in value. My parents were on track to lose their relatively modest 1800 square foot house in San Jose just 6 years after moving there despite being dual income tech workers at the time.
Note that it predates prop 13, so I hope that doesn't play a central role in this enormous mountain of evidence.
I find responses like this fairly patronizing. I think it’s preferable to not respond at all or substitute a link to an article like Kim Mai’s (in)famous TechCrunch piece instead of this veritable shrug.
Edit: After seeing your profile, I feel even more disappointed. Imagine if a Lambda School student asked a plausibly sincere question and they were met with a response which amounted to, “That is so stupid, I don’t even know where to start.” Let’s strive for better.
There’s a pretty big difference between chatting on a message board and a student asking a question of a school. I’m currently at Disneyland with my family and don’t believe the parent response was earnest, but here: https://techcrunch.com/2014/04/14/sf-housing/
I’ve learned a lot from HN, so perhaps I don’t view the environs as so different. I suspect the parent may not be entirely sincere, but perhaps it’s better to call that out directly. Enjoy Disneyland and best of luck with your company!
I found this to be a very interesting survey of the different things affecting the SF housing market. Whether you agree with all of the points brought up it's hard to deny that it's a complex issue.
Soaring construction costs are in no small part due to government regulations and NIMBYs. Labor shortage is partly to blame, but labor is short partly because of the housing shortage. [1]
Actually your source says "A lack of construction workers is a legacy of the 2008 recession, when many people left the industry as development froze." I.e. a meltdown of the unregulated market was a major factor in the shortage -- again, your source.
Additionally the Chronicle article I posted concerns approved projects still facing delays due to labor and tightening capital markets. That undercuts the "it's just due to NIMBYs & regulations holding up approvals" narrative.
Intuitively, how is it that Seattle can afford to build high rises while San Francisco cannot even though the selling and rental prices of a high rise is meaningfully greater than that of Seattle? Shouldn't all that Seattle capital just move to developing in San Francisco instead?
I read your citation and it does not appear to support that claim with respect to approved projects. In fact it leads by referencing the slow rebound from the recession for skilled labor vs all the demand as the primary driver in labor costs. Where it mentions permit delays it’s only in reference to delayed projects being at a disadvantage, not approved ones.
As for your second question I can only refer you what I’ve already cited on construction costs, tightening capital markets and other factors beyond mere permitting or “NIMBY” issues. Intuitively, approved projects would move forward if the math made sense.
I feel like we’re talking past each other. In the section about labor costs, it cites at least the following:
1. Slow uptake of skills, lower productivity. Related to recession.
2. Hard to get bids due to uncertain approval process. Entirely caused by city policy. Now you say let’s condition on approved projects: however, given that it can take up to half a decade to gain approval (infamous historic laundromat was just under 5 years), controlling for approved projects is misleading. In five years, construction costs doubled and a project that might have penciled out at inception may no longer. The developer would have to propose a more dense, taller, etc. building for the project to make sense, but that would be another half-decade round trip through city planning.
3. City rules about prevailing wage, local sourcing, etc. limiting the available labor pool which directly drives up labor cost. This is entirely a local control problem.
Are you saying 2 and 3 are not consequences of local regulation?
Additionally, most of what you’ve cited is true across the nation. What you fail to provide is a reason these macroeconomic factors seem to have a disparate impact on SF’s ability to build which is evident in, e.g., the number of new housing units per capita it has delivered vis a vis a comparable city such as Seattle.
I hear you on local sourcing but they mentioned it last and didn’t quantify the impact. The stalled project mentioned in the Chronicle article was approved in under two years, not five. So I don’t think these are strong points vs what the source clearly emphasizes as the primary driver of labor cost: “number of workers relative to the number of units being built is still below the historical average.”
Which would be exacerbated if workers cannot afford to live in the region. I once saw a map set that visualized where you could transit to in various metros in under an hour from an affordable neighborhood. Even in NYC you could get to most of Manhattan, from the outskirts of Brooklyn or Queens. SF really stood out. You could only reach a few blocks around the BART stops. The whole city is cut off from a labor supply. It’s affecting staffing at restaurants and retail too — Nopa advertises for cooks in its menu because who wants to ride a motorcycle to San Leandro at 3am.
Construction costs have also gone up due to the fires of last year: Paradise, Ojai, Malibu, etc. We're getting our house remodeled, and it was a royal pain to find architects and contractors. Most were booked up to a year in advance!
Not OP, but Seattle is almost as big as SF [0] (825,000 people in SF compared to 775,000 people in Seattle), Seattle has 2.5x the number of cranes up compared to SF [1] (65 cranes in Seattle compared to 26 in SF), Seattle rents have actually gone down recently because of so much new supply [2], and Seattle's average rent is only 57% of SF [3]. I'm not going to say it's just NIMBYism, but whatever they are doing, they are a prime example of what not to do.
Ah, thank you for the sourcing. I shall read them but I was wondering if you have a response to this critical analysis, "Seattle — A Cautionary Tale for Supply-Side Housing Advocates."[1]
It notes how Seattle is often cited by deregulation advocates, but that "in spite of decades of indisputably strong development, Seattle’s share of cost-burdened renters has barely budged." And "by overbuilding housing for the wealthy, Seattle has achieved some short-term improvement in affordability for the middle class, at the expense of substantial displacement and continued upward pressure on the most vulnerable."
This I think is at the heart of what in SF some call the YIMBY vs. PHIMBY[2] debate. YIMBYs tend to skew towards more privileged techie types (happy to dig up sourcing on this.. I recall the YIMBY national meeting being called overwhlemingly white). Whereas the PHIMBYs or whatever you want to call them, the deeply affordable housing advocates, see flaws in that simplistic trickle-down economics model based on lived experience in working-class neighborhoods undergoing gentrification.
Careful, you’re bringing facts to an opinion fight.
The parent is wrong, and is cherry-picking data. Seattle rents may have gone down “recently”, but they’ve been amongst the fastest-rising rents in the US until about a year ago. They’re far higher than they were a few years ago, let alone a decade ago.
Also, saying that prices are lower than San Francisco is utterly meaningless. San Francisco is a different economy. It was more expensive than Seattle twenty years ago, and it’s more expensive now. You can’t make the comparison without controlling a bunch of variables.
I'm genuinely confused as to why you're being downvoted. I live in Seattle, having bought a couple of houses in the last 10 years, watching the market pretty carefully and you aren't wrong. This is one of the most expensive markets in the country.... fourth or fifth. It's kind of ridiculous. The "drop" is in the last 3 years after a 12 year steep rise, and it's not even really a drop, more of a leveling off instead of a continued steep incline. A lot of that has to do with over investment in companies buying properties for apartment complexes, on speculation that population growth would continue at a steady rate instead of curve like real world models.
The phrase “bringing facts to an opinion fight” is no more or less an “insult” than saying that your argument has no factual basis. People just don’t like to be told that they’re wrong, they really don’t like to be told so in a pithy way, and pearl-clutching provides an easy way to justify censorship.
You need to argue the counterfactual. You can build housing and have rents increase because demand was still greater than supply. None of your links show that rents increased more than they would have without building housing.
I upvoted you, although I disagree with you. You made an argument, deepened the discussion and offered some sources -- it's more than most people do.
Regarding the second site that you linked, and the PHIMBY idea in general -- if it's summed up by "housing is a human right", then there is a certain weakness built into it from the start. If you do not have a house, can you sue someone? Can you sue the government, for example? That is an important part of what a right is -- it provides a "cause of action", a basis for suit, when it is abridged. If it doesn't provide that, then it is not a right.
Freedom of movement within the United States, guaranteed by the Privileges & Immunities Clause of the Constitution, is a right. When someone writes something like "by overbuilding housing for the wealthy, Seattle has achieved some short-term improvement in affordability for the middle class, at the expense of substantial displacement and continued upward pressure on the most vulnerable.", they seem to be operating from a frame where it is the government's responsibility to provide housing, but it's not clear where the government gets that charter. Not every nice or good thing needs to be effected by government agency. However, respecting the right of people to move in -- to buy or rent property on the same terms as non-residents -- would seem to be completely in line with a broad commitment to the equality of all American citizens, regardless of their place of birth, before the law everywhere in the country.
The essential view of PHIMBYs is that government should invest in housing, which is the mechanism by which the postwar generation achieved housing security (HUD had a huge budget).
Thanks for the upvote. Allow me to critique your argument. You focus solely on interpreting the term “right” and suggest that it is beyond the charter of government to provide housing, which is just completely and utterly ahistorical.
I have lived in both places and I think Seattle makes for an interesting, worthy comparison. However, also worth noting that Seattle has a larger land mass. Also, that 57% rent comparison is less impressive when you consider that Seattle has been cheaper than SF for decades - both places have spent most of the current decade raising rents, Seattle starting off at a lower point in the beginning of the trend.
> I read in the SF Chronicle that there’s permitted and approved projects that developers are not moving forward with, like around the new hospital off of Van Ness, due to the “tightening of capital markets” and “soaring construction costs.”[1] Not NIMBYs or government regulations.
No doubt that construction costs exacerbate the problem. But there absolutely are people deliberately blocking housing construction. There was a proposition to outright block private housing construction in the Mission that got ~40% yes votes. For further examples, see the infamous case of the developer that wanted to replace a laundromat with an apartment building:
> And then I dig a little deeper into the “it’s just supply and demand, dummy” narrative and find articles that document how luxury housing development actually is associated with a rise in rents for the working class.[2] Who would have thought macroeconomics is complicated?
This is a fundamentally dishonest objection. New housing is "luxury" housing because the housing market is so expensive that even 1 bedroom apartments rent for $3-4K. Blocking "luxury housing" is blocking all housing, because the market is so expensive that even the smallest units are expensive enough to be considered luxury. Seriously, even 300 sq foot studios rent for 2.5K: https://sfbay.craigslist.org/sfc/apa/d/san-francisco-immacul...
Of course "luxury housing" is correlated with rising rents. When rents rise, newly constructed units get more expensive too and get pushed into the "luxury" price bracket. This is essentially a tautology, and it is not at all indicative that building more housing increases rents.
I investigated into developing in Half Moon Bay, which is zoned by San Mateo County. There's wide swathes of land up for grabs, but the county or the council forbids development unless you buy enough land and come up with a proposal. This ends up costing in $5-$10 million of undeveloped land alone (no sewage line connection and no electricity). And these lands are planned unit developments, which in practicality means homes only for the wealthy.
San Mateo and Marin have always opposed development. It has given us great open spaces up 101 down 280 and along 1. Its an odd position to defend, no development in Marin and San Mateo, but increased developement in San Francisco yet thats my view
San Francisco has build way more housing in the last decade compared to rest of the Bay Area and the state. Look at the entire east side of the City. Areas like SOMA, Mission Bay, Dogpatch were industrial wastelands. Now they have so much housing. Blame really lies in the rest of the Bay Area cities that haven't built their fair share of housing.
I believe you’re misunderstanding the incentives and goals of these govt officials, and the people who vote for them. It’s much worse than a mere ignorance of economics, and totally intractable.
You'd be surprised how many socialist-minded people there are in SF, who always invent some cockamamie reason why more government requirements are the answer. Its always more and more regulation. Like the last twenty years of affordable housing regulation didn't do anything. So lets try another twenty years of experiments.
Though I live in SF, I really hope they do implement some of these asinine punitive taxes and finally kill the tech industry here. Then all these Nimbys can enjoy an empty city devoid of activity.
Of course they understand economics. They just don't think it matters or don't care as long as their constituents support them. Well, their constituents do support them -- it's easy peasy anyway. People in California hate Republicans to the bones. As a result, we don't really have check and balance. Without check and balance, we get all kinds of ridiculous policies.
That's not what he said. You can pass a law to remove/consolidate/correct regulations, which is what they should be doing if they want more affordable housing...
I would be OK with such a law if it only applies going forward, to companies that are headquartered in SF and formed only on this date or later.
But to pass an IPO tax after hard-working employees have put in literally years of longer/more-stressful hours at reduced compensation levels (relative to working at established companies) to get to this payoff is unfair and unjust. Those employees have entered this arena (the startup game) with certain expectations and rules in mind, which made taking on risk and deferring gratification worthy to them. Pulling the rug out last minute to shore up the city's own finances is punitive and unreasonable, especially when the law is targeted so narrowly. And no, the fact that some of those employees will get large sums of money out of this does not make it less unfair or less unjust.
Uber worked so hard at siphoning money from drivers, it would be unfair to tax those gains to support the housing those drivers depend on. Those poor millionaires.
It would actually be interesting if there was at least some reform that made exercising ISOs not have tax implications traded for a larger tax rate in the case of an IPO.
Agree completely, although I'd frame it differently. I'm not sure how much sympathy anyone has for the Uber folks specifically, but this would certainly be food for thought for anyone thinking of starting a company in SF, or contemplating shifting their headquarters.
Congress actually did something similar in 1980 when they passed a Windfall Profit Tax on oil to capture "unfair" profits in the wake of the OPEC oil embargo. It was wrong then, and it's wrong now.
They’re changing the tax rate from 0.38% to 1.5%. That’s not going to make a noticeable difference to these employees. Small fluctuations in the stock price will affect them far more.
The startup/IPO game is already incredibly unfair. How many people put in that same hard work only to be left broke at the end of it because their startup failed? Someone losing out on 1.12% of their IPO riches is pretty irrelevant by comparison.
why, the city sold a fresh batch of medallions to raise funds, took their money, then refused to give them a refund after CPUC legalized ridesharing across the state. Who's really at fault?
You’re suggesting that Uber didn’t have lobbyists involved? My view is that Uber manipulated the system (I don’t agree with the previous system), and the people who suffered are the medallion holders.
The medallion restrictions and lobbying goes back decades before Uber. There would be no Uber without the taxi lobby backed, government enforced, artificial restriction on supply.
From a national security standpoint, it's probably a good thing if hi-tech firms are dissuaded from the SF. A magnitude 9+ earthquake is going to hit the area one of these days. It's simply inevitable. Making the city a critical networking hub is sort of crazy if you think about it.
What datacenters are here? I thought everyone was throwing their servers out in Utah. Would be a bit mad to build a server farm on land you could make millions on building housing on instead.
By networking I meant business social networking. Key people could be killed or seriously injured in the quake. Or just preoccupied with recovery efforts.
A magnitude 9+ earthquake most likely can't occur in California [0]. Even a magnitude 8 only has a very small chance of occuring. We're most likely to see 7.5 and below.
Can someone explain why they are raising taxes specifically for stock-based-compensation and not for all high-income-compensation? What's so special about lawyers and bankers making hundreds of thousands of dollars in cash-compensation, that they deserve an exemption from these tax increases?
In California capital gains are taxed as ordinary income. You don’t get any benefit at the state level for capital gains.
Also, under the new federal tax law, many lawyers are classifying their income as qualified business income so they pay much less than ordinary income. This is something that a software engineer working for a company couldn’t do.
When my stock vests, it is treated the same as my salary, and I get hit with an immediate income tax. Capital gains tax only kicks in afterwards, if I decide to hold on to the stock.
I really hope this brings more jobs and businesses to Oakland. Oakland has a lot more undeveloped space, better major rail access (BART / Amtrak), and is way more open to newcomers (both business and individuals). Does anyone know what happened with the Square office (formerly Uber) in Oakland?
San Francisco's administration is the poster child of corruption and mismanagement. It's a controversial topic because it comes across as a strong and opinionated comment, but decades of failed policies, unaccountability and lies give strength to the truth that the city of San Francisco is inadequate to enforce law and order and help the people who are - in the tech capital of the world - literally dying in the streets. I wish this was a bad dream, a nightmare, but it's the real life.
Banning electric scooters, taxing IPOs, soda taxes are all distractions that prevent the voters to focus on the problems that really matter: the needles, the drug abuse, the human feces, the absolute lack of enforcement of the most basic, essential, rules of society.
San Francisco must enforce the "Broken window policy", and it needs to start from the broken politicians and local administrators that are betraying their fiduciary duty and, by doing so, hurting the community.
Lol. We have the most corrupt President in the Federal government and a corrupt to the bone, bought and sold for Congress and you think SF's government is corrupt ? SF government actually responds to their citizen's demands than any other government. If they were actually corrupt, it would be far easier to take developer lobbying money and issue building permits.
I said it before and I'll say it again... Japan has a great idea: make rent deducible from salary before tax. Then if the city wants some tax revenue they'd better have affordable housing!
If they want to change the law going forward, then sure - they can continue to cook the golden goose. I don't live there, so in the narrow sense it's not my problem.
But changing it retroactively - dated to a few days before a particular company's IPO - is banana republic shit.
It's very clearly targetting Uber's IPO by retroactively applying the tax to May 7th. Though even the legislation seems uncertain that's legal.
It has a provision that if retroactive taxation is "held to be invalid or unconstitutional by a decision of a court of competent jurisdiction" then it will apply as soon as the new law is introduced...which seems the more usual way of doing things.
(Was a pain to find...none of the news coverage linked to it.)
>Opponents argue it will discourage startups from locating in the city
This may not be a bad thing. And not from a cynical, anti-capitalist, “keep SF shitty so poor people can live here” point of view. The country would really benefit if tech companies were more spread out.
Second-order (mostly service sector) would, but the network effects and job flexibility of sector hubs is means concentration is better for the industry. Depends what you're optimizing for; there's pros and cons to specialization.
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