San Francisco faces fiscal chaos(wolfstreet.com)
wolfstreet.com
San Francisco faces fiscal chaos
https://wolfstreet.com/2020/05/31/san-francisco-epitome-of-everything-bubble-faces-fiscal-chaos-boom-and-bust-always/
66 comments
CA has always been about boom and busts. Governor Brown knew this and kept a tight fist on the purse strings... to the chagrin and annoyance of the “we’re rich, let’s spend” crowd. If it were not for his fiscal conservatism it’s be even worse. Of course SF is the poster child for spending copious amounts of money on pet projects while ignoring the big issues.
CA’s booms and busts now, for the state and city governments, is almost purely centered around Prop 13. The NIMBYs won. Unless you have owned a home for decades and have insanely low property taxes it’s extremely hard to weather these cycles. NIMBYs gain from the booms, and relax during the busts.
And as a result of Prop 13 the state relies heavily on income taxes, when people leave or lose their jobs there goes the state income.
And as a result of Prop 13 the state relies heavily on income taxes, when people leave or lose their jobs there goes the state income.
I agree there is a cyclical taxation problem, especially since most of those store fronts are rented. High rents are only part of the problem with Prop13... which is that property owners don't care if their land is profitable or even occupied. In some cases that means a little mom&pop store (or a farm) stays open for a lifetime, but in many others it means that a giant mall is shuttered for decades in the middle of relatively vibrant economy in a sub-urban neighborhood. The owners see enough appreciation in value they see no reason to rent or even maintain it. Eventually homeless move in, because "housing costs are too high", and often there is fire damage. The use of prop13 by multi-generational trusts and perpetual tax avoidance by sale of company rather than transfer of title has led to significant blight in an economic boom lasting decades.
The solution to affordablity of property taxes could have been limited to humans (not trusts or corporations) with deferred taxes (lien) until probate. Instead, it will likely be with local municipalities fining ever larger amounts for unoccupied/rented properties based on market value (rather than assessed). Of course the risk that you would need to pay even 0.5%/yr to keep property would drive prices down, which would encourage people to sell or at least rent.
The solution to affordablity of property taxes could have been limited to humans (not trusts or corporations) with deferred taxes (lien) until probate. Instead, it will likely be with local municipalities fining ever larger amounts for unoccupied/rented properties based on market value (rather than assessed). Of course the risk that you would need to pay even 0.5%/yr to keep property would drive prices down, which would encourage people to sell or at least rent.
And, while new residents and the next generation are paying insanely high property taxes, the NIMBYs pay a small fraction of the real property taxes. And, big businesses like Stanford and all the countless farms that fill up much of the land across CA, are paying a tiny fraction of the property taxes that any resident would pay.
Prop 13 is just homeowner fiscal responsibility. Repeal it and watch as existing homeowners are forced out of their homes onto God knows where, for factors out of their control, and in the hands of government officials who decide how much something is worth.
Also, I’m not sure how many funds this would ultimately raise. Houses will flood the market as existing homeowners can’t afford their taxes, putting downward pressure on housing costs and ultimately decrease tax revenue.
Also, I’m not sure how many funds this would ultimately raise. Houses will flood the market as existing homeowners can’t afford their taxes, putting downward pressure on housing costs and ultimately decrease tax revenue.
> Prop 13 is just homeowner fiscal responsibility.
This argument doesn’t hold up when you consider that Prop 13 applies to much more than single family homes; commercial property is included and wealthy land developers benefit greatly from the measure.
This argument doesn’t hold up when you consider that Prop 13 applies to much more than single family homes; commercial property is included and wealthy land developers benefit greatly from the measure.
You could apply it to new sales —grandfather current owners to minimize that effect.
Isn't that what prop 13 already is? Nominally property taxes reset to market rate at each sale. (Nominally because there are loopholes you could drive a big rig carrying a Falcon 9 through.)
One of the loopholes has been transfers to children and grandchildren. There are residents in our town who pay 1970s property tax rates just because of who their parents or grandparents are. It’s a perversion of the nominal American dream.
You just made buying a home that much more expensive. You think California's elected officials will keep property tax to 1% of assessed home value?
It'd be a double whammy, re-assesment to higher home values coupled with a larger % of home value being taxed.
I'd rather say starting today homes are re-assesed every 25 years to market value, or something of the sort.
It'd be a double whammy, re-assesment to higher home values coupled with a larger % of home value being taxed.
I'd rather say starting today homes are re-assesed every 25 years to market value, or something of the sort.
You don’t know what prop 13 does.
How is children and grand children inheriting their parents property tax rates “fiscal responsibility”?
How is children and grand children inheriting their parents property tax rates “fiscal responsibility”?
Every major city seems to have its own flavor of this. See also:
New York budget crisis [0], Chicago [1], Dallas [2], etc
[0] https://www.politico.com/amp/news/2020/05/31/new-york-budget...
[1] https://www.wbez.org/amp/stories/how-covid-19-could-hit-chic...
[2] https://www.nbcdfw.com/news/local/dallas-budget-crisis-prese...
New York budget crisis [0], Chicago [1], Dallas [2], etc
[0] https://www.politico.com/amp/news/2020/05/31/new-york-budget...
[1] https://www.wbez.org/amp/stories/how-covid-19-could-hit-chic...
[2] https://www.nbcdfw.com/news/local/dallas-budget-crisis-prese...
Don’t forget the pension issue
https://www.sfexaminer.com/news/genuine-solutions-for-san-fr...
https://www.sfexaminer.com/news/genuine-solutions-for-san-fr...
This article appears to be mostly cribbed from SF Chronicle's coverage, which has additional context and some discussion of pension obligations [0]
[0] https://www.sfchronicle.com/bayarea/heatherknight/article/SF...
[0] https://www.sfchronicle.com/bayarea/heatherknight/article/SF...
Curious how local and state governments can face “fiscal chaos” while debt issues by the federal govt. is highly desirable. People say governments run deficits during economic downturns (which is true) but in the US local and state spending is more pro-cyclical.
Cities can’t print money
I’m not an expert in this area but I don’t think the fed funds operations by printing money. They issue debt which people exchange for money.
Although lately the fed just buys that debt back with printed money so...
Although lately the fed just buys that debt back with printed money so...
They create money via debit issuance. You’re not wrong, but they in fact just created 3T+ dollars that kinda went everywhere unaccounted for.
It’s just easier to say they can print money because the common man doesn’t quite understand how debt translates into new money.
It’s just easier to say they can print money because the common man doesn’t quite understand how debt translates into new money.
You're like halfway through the expanding-brain meme. It ends with 'actually, they just add a few zeroes to a few balance sheets, printers don't need to be involved'. All this theory around debt is a rationalization of the money printer.
Or cut off a few zeros and slap on a new name like Iran just did.
Haha o/
Here’s the thing - I have been hearing doom and gloom about SF for 20 years. It will do fine
Bust is an overloaded term. The proposition here is that San Francisco is entering a multi year recession.
The problem has always been the pension obligations, specifically the medical costs. The math cannot be disputed. The reason why it really is different this time is because the Boomers will reach end of life, whether they like it or not, and medical costs rise exponentially in the last few years.
States and localities who were in decent shape until now will be able to weather this storm by raising taxes (even more) on the younger generations. In California, there isn't anymore left to squeeze due to Prop 13.
States and localities who were in decent shape until now will be able to weather this storm by raising taxes (even more) on the younger generations. In California, there isn't anymore left to squeeze due to Prop 13.
I mean California had a $27bn deficit 10 years back, but ended up with a $15bn rainy day fund. Even back then, I heard the exact doom and gloom. I will wait and see how this plays out.
They missed a great headline opportunity: 'Frisco faces fiscal fiasco.
San Fran is a bizarre place.
I'm an Aussie, an Americanophile, and I was in the States for months last year. San Fran was simply unpleasant - the people were rude (young and old) and everything cost too much. The taxes were insane too.
I couldn't bear to live there - Salt Lake City seemed to have the most similar upsides with next to none of the downsides.
I couldn't bear to live there - Salt Lake City seemed to have the most similar upsides with next to none of the downsides.
Canuck here who spends a lot of time in the States (or used to). SLC also has some of the most underrated and inexpensive skiing just 30 minutes out from the airport.
Underrated it is not, just search for Cottonwood Canyon traffic jams to see what skiing really is like here when the snow flies. 30 minutes no traffic, can easily be 3+ hours now.
I'll take three hours over 12 hours which is how long it can take to get to Tahoe from SF on a Friday when it's snowing.
Exactly, a normal drive from my apartment to Brighton or Snowbird is about 45-50 minutes, I've had several times where it was just short of 3 hours one way, this past season.
There they have the sexy underwear in Utah.
https://en.wikipedia.org/wiki/Temple_garment
I used to live in the US, but I'm back home in Germany. I have 0 interest in going back.
https://en.wikipedia.org/wiki/Temple_garment
I used to live in the US, but I'm back home in Germany. I have 0 interest in going back.
kunai(2)
There’s actually people who will be rude or give worse service if they hear it referred to as “San Fran” rather than sf or the full name. I hope that didn’t happen to you.
> San Fran was simply unpleasant - the people were rude (young and old) and everything cost too much. The taxes were insane too.
Tangential, but I feel the same way about NYC. I have lived in SF for ~3 years and have now been in NYC for ~4 years. I guess cities, that are HCOL, tend to exacerbate the (low and high income) class disparities, and maybe also heighten residents' stress and reduce their patience levels?
Tangential, but I feel the same way about NYC. I have lived in SF for ~3 years and have now been in NYC for ~4 years. I guess cities, that are HCOL, tend to exacerbate the (low and high income) class disparities, and maybe also heighten residents' stress and reduce their patience levels?
Are you a west coast native? As a new yorker (and nj native), I've found that west coasters often think we're rude but I see it as just our communication style. We often interrupt and speak over each other, and really don't like being interrupted on a commute (which is often just walking somewhere).
Since working more with west coast devs, I've learned to be "nicer" when communicating. But still have the same habits with my family. To be fair I think that some these habits are good to break.
Since working more with west coast devs, I've learned to be "nicer" when communicating. But still have the same habits with my family. To be fair I think that some these habits are good to break.
I grew up on the East Coast. When I moved to the West Coast, I found folks on the West Coast much nicer.
One of the first people I met on the West Coast was about to move to the East Coast ... "because everyone's so much nicer there".
Either the people are always nicer somewhere else or something else is going on.
One of the first people I met on the West Coast was about to move to the East Coast ... "because everyone's so much nicer there".
Either the people are always nicer somewhere else or something else is going on.
>"I couldn't bear to live there - Salt Lake City seemed to have the most similar upsides with next to none of the downsides."
SLC seems nice in theory, until you realize Utah is a theocracy. Not a great place to live for anyone outside the LDS church.
SLC seems nice in theory, until you realize Utah is a theocracy. Not a great place to live for anyone outside the LDS church.
I assume you're trying to use hyperbole, but there are no theocracies in the US. LDS definitely has a great deal of influence in Utah, but there are plenty of non Mormons who live there and have no issues living there.
Ohh hogwash, I live in Salt Lake for half the year and I am non religious and I love the place. Salt lake city is one of the best cities in the country for people who love the outdoors, particularly mountains.
That’s changing rapidly.
I think a more accurate description would be that San Francisco chooses chaos. I've never lived anywhere more unreasonably governed. It's like the government is actively sabotaging quality of life and squandering its budget. One example--the city spent $15.5m to tear down a McDonalds in the Haight and turn it into a homeless tent camp.
Hmmm. There was a lot of local support for the city to get rid of that very-problematic McDonalds, as the police were being called there on an average of once per day over drug dealing, shootings, etc. And the lot is slated to be developed into high-density housing, which is typically a popular notion in the HN crowd.
https://sf.curbed.com/2018/4/2/17188892/haight-steet-mcdonal...
https://sf.curbed.com/2018/4/2/17188892/haight-steet-mcdonal...
Sure, but a homeless tent camp is a far cry from high-density housing. How long do the locals have to deal with a tent camp and all the associated problems? If you don't understand why spending $15.5m to actively make the lives worse of the locals and not really solve the problem--then I think you're missing why SF has budget problems.
>For some nearby residents, the decision was met with dismay and frustration and a feeling of futility after they had spent weeks pleading with Preston’s office to find an alternative, like parking lots owned by the school district or City College and even Recreation and Park Department property.
>“There are all of these large parking lots not being used that would be so much better than plopping this down in the middle of a residential area — an area we’ve struggled for decades to get control of on this end of Haight Street,” said Ted Loewenberg, president of the Haight-Ashbury Improvement Association.
https://www.sfchronicle.com/bayarea/article/SF-to-open-sanct...
>For some nearby residents, the decision was met with dismay and frustration and a feeling of futility after they had spent weeks pleading with Preston’s office to find an alternative, like parking lots owned by the school district or City College and even Recreation and Park Department property.
>“There are all of these large parking lots not being used that would be so much better than plopping this down in the middle of a residential area — an area we’ve struggled for decades to get control of on this end of Haight Street,” said Ted Loewenberg, president of the Haight-Ashbury Improvement Association.
https://www.sfchronicle.com/bayarea/article/SF-to-open-sanct...
For as long as it takes. We should turn civic center into a giant homeless camp sitting as a painfully constant reminder outside the windows of city hall, the courthouse, the department of public health, and the state buildings.
While I don’t disagree that SF is a mess, your example is completely wrong. That lot will become low-income housing and is temporarily being used as that.
https://sfmohcd.org/730-stanyan
https://sfmohcd.org/730-stanyan
"Temporarily" according to who? And still $15.5m and $XXm still to be spent on the new development, and for now it's a massive tent camp---this is why SF has budget problems is my point. They're squandering the resources they have and not even solving the problems, they're actually making it worse in most cases. Tents tripled in the city in the last few months: https://abc7news.com/homeless-coronavirus-san-francisco-hous... SF could house these people instead of leaving them in tents somewhere else, but we have this ridiculous idea we have to house them in the most expensive city in the country where there's no new supply. We're spending nearly $1m per affordable housing unit.. who is paying for this? It's doomed to fail.
Where do you suggest housing these people. What if they refuse accommodations.
Not sure if sf can legally just ship them to say Modesto where housing is cheaper
Not sure if sf can legally just ship them to say Modesto where housing is cheaper
I don't have all the solutions, but I'd probably find a working model from another country and try to find a way to apply it here rather then this nauseating, arrogant, and ineffective strategy of just dumping money down an unaccountable hole and never demanding any results. SF voters are to blame ultimately for enabling this behavior.
See country = federal government.
If California has a perfect homeless solution that it’s peer states don’t share in. California will see immigration of homeless from other states.
If California has a perfect homeless solution that it’s peer states don’t share in. California will see immigration of homeless from other states.
[deleted]
Not necessarily... SF could copy a policy from Amsterdam or Copenhagen. My point is just look for a working example and model it off that. You're look for an arbitrary semantic difference to invalidate it. SF has the budget of some small countries and California has a budget bigger than actual countries. The money isn't the issue--it's how it's squandered and wasted on unaccountable half-brained solutions.
There is now bidding for developers of the site. Here is a link to some better journalism about this topic: https://socketsite.com/archives/2019/09/city-seeking-develop...
The first comment on your story says it all:
>I mean, the Geneva Towers work, right? Sunnydale Housing is a pleasure to visit and is really well-kept.
>What we need is more government-owned, city-run housing. That’ll make things better.
Show me an example where the SF government has ever done this successfully and affordable. SF government is pretty clearly incompetent and probably fraudulent/criminal.
>I mean, the Geneva Towers work, right? Sunnydale Housing is a pleasure to visit and is really well-kept.
>What we need is more government-owned, city-run housing. That’ll make things better.
Show me an example where the SF government has ever done this successfully and affordable. SF government is pretty clearly incompetent and probably fraudulent/criminal.
but his point about SF funds being squandered, definately has a lot of truth to it. There are a lot of ways to build high density housing in a cost effective manner that are not being used. The city constantly fights against anyone that tries to build any kind of cost effective housing. I've talked to SF residents (even the very people who work in Nonprofits that supposedly help the homeless), and they'll make any excuse they can against building any kind of cost effective housing: i really don't get it.
The fact that it's only a temporary homeless tent camp doesn't do a whole lot to make the situation better. I think you're not recognizing how absurd this sounds to outsiders; most people would not live in a city that formally sanctioned tent camps in residential neighborhoods.
SF problems come from its people and wild economic and cultural swings. Government would love to have more influence, but it really doesn't.
The McDonalds you refer to was a huge problem for a long time and right now the only argument is about exactly how big an apartment building to put there.
The McDonalds you refer to was a huge problem for a long time and right now the only argument is about exactly how big an apartment building to put there.
The government is what tells where and what things can be built. As, as long as that's the case, then gov is almost 100% responsible for this mess. Sure, the geography of SF is limiting.
Look at cities that let people build where there is need to build, they don't have the kind of housing problems SF does.
SF is wealth deprived (wealth is not money, wealth is your ability to Shelter/food/water/necessities etc). It has so much money and yet, 100K income isn't near enough for a family to live there. The homeless rate is nearly 2%! The bottom 20% is at risk of being homeless. The other 70% can barely afford to make rent.
Compare this to Houston, a city that allows things to be built when it needs to be built. Homeless rate is just 0.2%. The bottom 20% is able to afford to live there and so is everyone else. Look people, there's nothing about hot weather that makes it easier to build buildings. It's the attitude of the people. People in SF need to seriously learn something about supply and demand, and the nature housing.
And, let's keep in mind, Houstons yearly growth rate is much faster than SF, it has added over x4 more people to its city per year than SF! and still is able to handle all that, whilst creating a ton of jobs in the process.
Look at cities that let people build where there is need to build, they don't have the kind of housing problems SF does.
SF is wealth deprived (wealth is not money, wealth is your ability to Shelter/food/water/necessities etc). It has so much money and yet, 100K income isn't near enough for a family to live there. The homeless rate is nearly 2%! The bottom 20% is at risk of being homeless. The other 70% can barely afford to make rent.
Compare this to Houston, a city that allows things to be built when it needs to be built. Homeless rate is just 0.2%. The bottom 20% is able to afford to live there and so is everyone else. Look people, there's nothing about hot weather that makes it easier to build buildings. It's the attitude of the people. People in SF need to seriously learn something about supply and demand, and the nature housing.
And, let's keep in mind, Houstons yearly growth rate is much faster than SF, it has added over x4 more people to its city per year than SF! and still is able to handle all that, whilst creating a ton of jobs in the process.
I think saying SF problems are due to "cultural swings" is borderline veiled racism. Sounds like something Hillary would say for sure. No, SF problems come from incompetence. No other city in the country spends as much per citizen and gets as poor results. Quality of life stinks here for the cost.
And no, you're erasing the voices of many locals who don't want more tent camps in residential areas when there are other city lots they could put them in.
Question--do you ever hold the city accountable for its vast and egregious failures? Look at how much money we spend and the results. It's pathetic.
And no, you're erasing the voices of many locals who don't want more tent camps in residential areas when there are other city lots they could put them in.
Question--do you ever hold the city accountable for its vast and egregious failures? Look at how much money we spend and the results. It's pathetic.
I’m not sure how you get race from “cultural swing” in the context of SF Bay Area. The latest cultural swing is to techies with high salaries leading to gentrification, housing disparities, google bus protests.
This article is totally lives in SF. Author should know that this story is same in every city in the world. Not just SF.
He might hate SF or whatever but what happens in SF is happening in every city in the world.
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