Could Failing Parkmerced Transform Into Affordable housing?
•••••••••• January 7, 2023 ••••••••••
San Francisco needs more housing.” You often hear this comment on TV news and in our local papers. Housing advocates who endorse development often quote the need for “affordable housing.” However, “affordable housing income” varies, and is often between $150,000 and $175,000 a month for an individual. Anyone earning that kind of income, in my opinion, does not need housing support. We need housing for low-income and average-working families. Unfortunately, developers are slow to provide housing units for these individuals and families, and therein lies the problem.
ONE SOLUTION TO SAN FRANCISCO’S HOUSING PROBLEM
Supervisor Dean Preston designed Proposition M and the Vacancy Tax to encourage property owners to lower rents for low-income families and individuals and to generate funds for the City to purchase existing housing to add to the City’s affordable housing stock. As vacancy rates rise and property values drop (as argued by the property owners seeking to lower their property taxes), the City may purchase more existing housing at a considerable discount, keeping more people housed for less.
Parkmerced, or portions thereof, could be a perfect candidate for purchase by the City. Management told Supervisor Myrna Melgar’s aide, Mike Farrah, that 30% of the 3,221 units are vacant. If the Proposition M Vacancy Tax does not encourage Parkmerced management to lower rents and if they claim the properties are worth less due to the vacant units, the City might purchase them at a bargain, making thousands of new units available to the unhoused population.
Management told Supervisor Myrna Melgar’s aide, Mike Farrah, that 30% of the 3,221 units are vacant. If the Proposition M Vacancy Tax does not encourage Parkmerced management to lower rents and if they claim the properties are worth less due to the vacant units, the City might purchase them at a bargain, making thousands of new units available to the unhoused population.”
Parkmerced management is creating a criminal crisis. For example, eyewitnesses have watched car thieves break into cars or take catalytic converters, in the same place repeatedly, for months at a time. When the eyewitness calls Parkmerced security, they are too late to respond, despite the repeated occurrence at the same time and place. The window of opportunity to stop auto theft is five minutes. One police officer said, “Parkmerced is being willfully neglected,” by management. Willful negligence is defined as, “conduct that deliberately disregards the health, safety and welfare of another person.”
One eyewitness has observed that the Parkmerced security police lack focus, and do not conduct themselves appropriately, and he believes they are high at work. This could explain why they are so slow to respond to calls for help when the same crime is occurring again and again. SFPD is often too late to respond to calls for the police. Also, one resident has explained that if San Francisco Police do not catch culprits in the act, they are unwilling to pursue a thief in a high-speed pursuit.
SFPD is aware of up to eleven squatters in Parkmerced. One squatter forged a rental agreement, then pretended to live in an apartment, requesting electric and water companies to provide service. It can cost as much as $10,000 in legal fees to remove these squatters. But Parkmerced management is unwilling to pay for these fees repeatedly because each squatter can easily move to another apartment and do the same thing again.
Residents complain of dog kennels, brothels, casinos and drug dealers in Parkmerced. Residents lament there is no vetting for renters at Parkmerced, including Section 8 residents who now occupy 20% of the complex. Some Section 8 residents have criminal records. But with no vetting process, the criminal element could increase in Parkmerced. One lady, believed to be mentally disturbed, damaged her apartment completely and then was provided another one while her previous apartment was repaired. She was said to have ruined both apartments.
A casino was doing business in Parkmerced for 4 months before it was shut down. During that time, numerous parking stalls had cars parked illegally, creating a parking nightmare for the residents who had no place to park.
THE STATE OF DEVELOPMENT IN PARKMERCED
Construction is occurring in Parcels A, B, C, and D at Parkmerced, but with the vacancy rate as high as 30% today, who would be interested in purchasing these new apartments/condominiums in a tower? Vacancy rates are high throughout San Francisco. It’s ridiculous to think that homeowners will want to purchase homes so far away from downtown.
When I confronted an architect involved with the design of Parcels A, B, C and D, he said if these new towers were not purchased, it would be the end of the development of the Parkmerced Vision Plan!
HOW PROPOSITION M OR THE VACANCY TAX WORKS
The Prop M Vacancy Tax can put more housing on the market by taxing rental property owners with 3 or more units as follows in the year 2024. Landlords have until then to get their act together.
1. $2,500 for each residential unit with sq. footage of less than 1,000.
2. $3,500 for each residential unit with sq. footage from 1,000 to 2,000
3. $5,500 for each residential unit with sq. footage greater than 2,000.
Then, if the residential units are not rented by the year 2026 the rate increases to:
1. $5,500 for each residential unit with sq. footage of less than 1,000.
2. $7,500 for each residential unit with sq. footage from 1,000 to 2,000
3. $10,500 for each residential unit with sq. footage greater than 2,000.
The tax can be as high as $20,000 if the same owner keeps the unit vacant for two consecutive years.
The tax burden can become significant for corporations like Parkmerced that have not been renting their vacant apartments for years. If Parkmerced fails to rent its apartments in the year 2024, the range of annual tax could fluctuate from $2,500 (tax) X 1,000 (units) = $2,500,000 to $5,500,000. In the year 2026, if their failure to comply continues, the vacancy tax could be as high as $20,000,000 if all 1,000 units are not rented.
ENTER THE MITCHEL- LAMA PROGRAM
Parkmerced is currently ripe for purchase by the City of San Francisco. Ideally, the towers and garden apartments could become available for purchase for low- and middle-income residents of San Francisco using a program like the Mitchell-Lama program, introduced in New York in 1955. It enabled residents to purchase an apartment at below-market price. An important feature of this program is that if the property is vacated by the owner, it must be resold back to the cooperative at almost the same price the owners had paid for it. In this way, the property continues to be affordable.
Since traditional banks may be unlikely to lend money to prospective home buyers in a Mitchell-Lama program, the public bank of San Francisco could become the lender. To become a buyer of the Mitchell-Lama property, you must first fill out an application and pay $75 to get on the waiting list or join the lottery. Properties can be rented or owned by individuals depending on the need and structure of the agreement. A person may apply for multiple waiting lists, but they are allowed only one purchase or rental of property. Should a participant of the Mitchell-Lama program earn more than they did when originally receiving their property or rental unit, they will need to pay a surcharge. Lastly, veterans can receive preferential treatment in obtaining property or rental units in this program.
To understand the finances of the purchase of Parkmerced by the City, I direct you to the Resolution to Purchase Parkmerced by the City included in the CSFN newsletter.
Let's hope the City provides true low-cost housing for the citizens of San Francisco. They deserve it.
Glenn Rogers, RLA
Landscape Architect / License 3223r