Down and Out in San Francisco, on $117,000 a Year

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The threshold for classifying a family as “low-income” in the Bay Area is the highest in the nation — and no surprise…..

It’s beyond laughable that a one-bedroom apartment can sell for $1.5 million in San Francisco — and get multiple offers within a day. Or that dumpsters sport satirical “for rent” signs. Or that the asking price for a side order of brussels sprouts at many restaurants is $16.

Beyond laughable because such stories pass like a Bay Area breeze in the city named for a pauper from medieval Assisi. But the latest assessment of the out-of-reach quality of one of the world’s great places to live came as a real jolt:

A family of four earning $117,000 a year is now classified as low income in the San Francisco area. This threshold, used to determine eligibility for federal housing assistance, is the highest in the nation — and no surprise.

Once upon a time in the American West, the most exclusive places — Sun Valley, Aspen, Lake Tahoe, the San Juan Islands in Washington State — were known as “golden ghettos,” an imperfect term used by trendy demographers.

But now the entire West Coast, from San Diego to Vancouver, British Columbia, is a string of gilded megalopolises. These are the tomorrow cities, the tech cities, the cities of the young and educated. And each of them is struggling with a prosperity crisis that threatens the very nature of living there.

A New Yorker would say, “So what, get used to paying through the nose to live in a tiny space on limited land.” Manhattan, Brooklyn and now Queens have seen it all. But people on the West Coast, perhaps naïvely, are not ready to say, “Fuhgeddaboudit.” Not yet. With varying degrees of success, they are fighting for the soul of their cities.

Residents of San Francisco are troubled by the same things that we are in my hometown, Seattle — the homeless and the high cost of living. The issues are linked, but not entirely.

“Walking the streets of San Francisco can be a frightening, demoralizing, even unhealthy experience for residents and tourists alike.” This commentcame not from the medical association that just pulled its convention because its members no longer feel safe in a city of 7,500 homeless people. It came from the woman just elected mayor of San Francisco, London Breed.

Raised in poverty, and the first African-American woman chosen to lead the city, Breed has vowed to remove homeless encampments within a year. There is nothing compassionate or financially sound in spending $250 million a year on homeless services that still leave thousands sleeping on the street.

In order to do the other thing that Breed wants to do, build more housing of all kinds, she has to secure the social contract. That is: Can people accept more crowded neighborhoods, in a city that is already the second most densely populated among big cities in the nation, if they feel that elected leaders do not have a decent plan — or a clue?

As Breed notes, San Francisco has created only one home for every eight new jobs between 2010 and 2015. She may not be ready to utter a hard truth that some residents already have: that not everyone who wants to live there can.

In Seattle, the nation’s fastest-growing city for this decade, the social contract is nearly broken. The city used to be run by creative problem solvers. Now, an ideologically driven City Council dreams up new things to anger residents while seeming to let the homeless have the run of the place.

The latest backward move was a tax on jobs — quickly repealed after a citizens’ revolt. While the council was trying to target Amazon, the city’s biggest private employer, the tax would have also hurt grocery stores and family-run businesses, as if they had caused the homeless crisis and spike in real estate.

An unholy alliance of socialists and developers threatens to destroy the city’s single-family neighborhoods with a major upzoning — further disrupting trust between residents and politicians. If the intent is to make Seattle more affordable, this approach has failed. The city has built more new units of housing over the last five years than in the prior half-century. And yet Seattle continues to lead the nation in home price increases.

Vancouver has taxed speculation, hitting foreign buyers and those who own homes that sit empty. Prices have stabilized somewhat. But the globalization of the housing market is a problem more particular to British Columbia.

No matter what you hear anecdotally, people will continue to move to the West Coast. The City of St. Francis has seen far worse than the present crisis. More than half the population was homeless after the 1906 earthquake. But by midcentury, it was the American city, birthplace of the United Nations.

We need a new urbanism. For all the grumping about how great the cities facing the Pacific used to be, they can be greater still if the bright minds now trying to “disrupt” a grilled cheese sandwich can focus on the biggest challenge of this generation. We know what doesn’t work. The task is to find a creative mix of solutions that do.

A PR firestorm around Quicken Loans founder Dan Gilbert’s $5.5 billion Detroit project shows that money isn’t the biggest challenge he faces in revitalizing the city

Dan Gilbert, the billionaire owner of the Cleveland Cavaliers, has been transforming downtown Detroit for almost a decade. Since moving his mortgage company Quicken Loans to the neighborhood in 2010, he’s invested $3.5 billion (with $2.1 billion in development) through his real estate firm Bedrock.

With a roster of around 100 properties in or around the downtown area, it’s the most ambitious private project in Detroit, a city that recently survived bankruptcy and had developed a reputation around the world as a ghost town, a post-apocalyptic shell of a once great American city.

But even though Detroit’s downtown is now filled with bright new storefronts, renovated office buildings, and fast-moving construction sites, it’s still a city of around 670,000 people who have dealt with years of strife, corruption, neglect, and poverty. Many Detroiters are rightfully skeptical of change. And that came to a head last year, when a Bedrock ad sparked a major controversy in July.

If you don’t live in Detroit or aren’t aware of its history, the ad, which primarily features a crowd of young adults with the words, “See Detroit Like We Do,” may seem benign. But the lack of context that went into it is exactly why it became such a problem, and why it shows that community relations, not access to capital, is the biggest challenge in Gilbert’s massive undertaking.

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In a city that is 80% black and largely working class, the poster seemed to communicate that Bedrock stood for a new Detroit for and by white people working for their companies, where a white downtown could thrive while minority neighborhoods would continue to languish. Local Detroit media ran with the story and it blew up on social media in the worst way possible.

Business Insider spoke with Gilbert in May, for an episode of our podcast “Success! How I Did It,” and he explained why he publicly apologized for and denounced the poster.

As he wrote in a Facebook post last year, “Although not intended to create the kind of feelings it did, the slogan/statement we used on these graphics was tone deaf, in poor taste and does not reflect a single value or philosophy that we stand for at Bedrock Development or in our entire Family of companies.”

Gilbert told us that Bedrock had developed a variety of ads featuring a diverse group of people around the city (he posted the full ad series on Facebook). A contractor they hired put up the first ad downtown and planned on finishing the rest on Monday. But Gilbert acknowledged that regardless of the images used, he found the slogan itself condescending and had not personally approved it.

“Who cares how ‘we see Detroit’?!” he wrote on Facebook. “What is important is that Detroit comes together as a city that is open, diverse, inclusive and is being redeveloped in a way that offers opportunities for all of its people and the expected numerous new residents that will flock to our energized, growing, job-producing town where grit, hard-work and brains meld together to raise the standard of living of all of its people.”

But even after the poster was taken down and the slogan abandoned, Gilbert needs to convince remaining skeptics in the city that Bedrock and the rest of the Rock Ventures companies. He told us his companies employ 4,000 people in Detroit, and that they have been instrumental in blight removal (destroying abandoned or ruined properties) and the rejuvenation of homes outside of downtown. He also acknowledged that Rock Ventures could have a better line of communication with the neighborhoods outside of the downtown area, and that his Detroit project is indeed holistic.

“There’s no way businesses can be successful by having really bad neighborhoods and a successful downtown,” he told us. “It just doesn’t work that way.”

Ben Carson vs. the Fair Housing Act

27STATE1-superJumbo The contempt of the housing and urban development secretary, Ben Carson, for the Fair Housing Act of 1968 has blinded him to policies that are in the nation’s best interest, and made him a prime target for lawsuits and court intervention. Last year, for example, the Federal District Court in Washington stopped the Department of Housing and Urban Development from derailing an Obama-era program that helps low-income families receiving federal assistance to find homes in middle-class communities with good schools, transportation and jobs. Now, the court would be wise to bar HUD from shelving another set of rules — those that require communities to analyze segregation and submit plans for remedying it as a condition for drawing down billions of dollars in federal aid.

A new lawsuit filed by fair housing groups shows that HUD’s decision last January to suspend the segregation rule — in the absence of notice, public consultation or even plausible explanation — violates federal law. If the suspension is allowed to stand, it will essentially vacate federal oversight of as much as $5.5 billion a year in development money that is being parceled out to nearly 1,000 jurisdictions around the country. Freed from federal scrutiny, jurisdictions with proven histories of using federal money to confine low-income families in impoverished, racially isolated areas would be free to carry on business as usual. The Fair Housing Act, which turned 50 last month, was meant to solve America’s segregation problem by requiring state and local governments that accepted federal aid to “affirmatively further” fair housing goals — which meant making credible efforts to roll back segregation, which the federal government itself had fostered through discriminatory mortgage policies. But elected officials from both parties sold out that promise, allowing state and local officials to continue policies that sustained even egregious forms of segregation without fear of losing access to federal dollars. Governments that received federal aid were required only to produce vague, nonbinding analyses of “impediments” to fair housing. These were essentially filed away and had no real impact on housing development decisions.

The Obama administration wrestled with this issue in a legally prescribed rule-making process that lasted several years and involved extensive consultation with stakeholders. The rule, which became effective in 2015, defined compliance with the “affirmatively furthering” provision of the Fair Housing Act as “replacing segregated living patterns with truly integrated and balanced living patterns, transforming racially and ethnically concentrated areas of poverty into areas of opportunity, and fostering and maintaining compliance with civil rights and fair housing laws.”

The Elusive New York City $1,500 Rental

Finding an apartment in New York that does not drain your bank account can feel like a lightbulb nearly impossible task.

Competition is fierce. And for what? Cramped spaces that deliver little more than a grinding commute to work. But knowing where to look — and when to act — can mean the difference between crummy or cozy quarters. Apartments for less than $1,500 a month do exist, as long as you’re willing to take on a roommate or two or explore neighborhoods that might be less than convenient to your work. Price, of course, dictates most searches. Pay too much and a tight budget can spiral into an unmanageable one. More than half of all New Yorkers are considered “cost burdened,” meaning they spend more than a third of their income on rent.

As the city’s population grows, the number of apartments available shrinks, particularly the cheaper ones. The median income for New Yorkers in 2015 was $56,350 a year, which puts median housing costs at $1,409 a month for rent and utilities, according to the New York University Furman Center. Yet in May, the median rent for a Manhattan apartment was $3,475 a month, according to a Douglas Elliman report. To pay that much without being burdened, you’d have to earn $139,000 a year.

“Rents have gone up, there’s no doubt about that,” said Vicki Been, the faculty director at the Furman Center and a former commissioner of the city’s Department of Housing Preservation and Development. “At the same time, people’s incomes have stayed flat. That’s making housing less affordable.”

And what about recent college graduates moving to New York in search of jobs and housing? While someone starting out in finance is looking at a median starting salary of $70,000 a year, jobs in arts and entertainment, for example, offer a much smaller starting median wage of $29,700 a year, according to data provided by the job site GlassDoor.com. Do the math, and many New Yorkers should be paying considerably less than $1,000 a month in rent.

To find those apartments, renters “are going to have to look long and hard,” Ms. Been said. “People are having to make trade-offs. The cheaper the apartment, the further away from transit it is.”

Know Where to Look

The search for apartments fitting a smaller budget often leads to pockets of the city that are rapidly changing, but often lack conveniences like express trains, shops and restaurants. Although rents have been stagnating over the last two years, they are still near historic highs. And neighborhoods that were considered reasonably priced options just a few years ago no longer are.

“We used to do studios in East Harlem all the time,” said Shawn Hindes, a founder of Teacher Space, a brokerage firm that helps new teachers find apartments. “But that’s not really feasible anymore on a teacher’s salary.” The same goes for many Brooklyn neighborhoods. “Five years ago, someone saying ‘I want a place in Crown Heights’ got the pick of the litter,” he said. But that is no longer the case.

In 2016, only about 14 percent of the one-bedroom apartments listed in Crown Heights on StreetEasy were asking less than $1,500-a-month rent; and in Washington Heights, around 10 percent of one-bedrooms asked less than $1,500 a month, according to data provided by StreetEasy.

But head over to a Brooklyn neighborhood like Northeast Flatbush, an area south of Crown Heights, and about 63 percent of the one-bedrooms were listed for less than $1,500 a month last year; while in Norwood in the northwest Bronx, almost 94 percent of them were, according to StreetEasy.

“These are predominantly residential neighborhoods with older housing stock,” said Grant Long, the senior economist for StreetEasy.

Mr. Hindes of Teacher Space said young teachers who once might have looked in East Harlem are now heading to neighborhoods like Morris Heights in the West Bronx. In Brooklyn, neighborhoods like Flatbush, Prospect-Lefferts Gardens and Kensington are getting more traffic, according to Harley Courts, the chief executive of Nooklyn, a brokerage firm that also helps renters find roommates. “Half of our inventory has shifted south in the last 18 months,” deeper into Brooklyn, Mr. Courts said.