Conversations with Advocates of Fair Growth
Overview | Conversations with Advocates of Fair Growth | Living on the Fenceline
Ben Golvin
Before becoming a partner in a development firm in San Francisco, Ben Golvin managed the construction of affordable housing for Bridge Housing, a non-profit organization that pioneered the large-scale production of affordable housing. Golvin oversees affordable housing development from soup to nuts, starting with the site acquisition and the procurement of permits all the way through construction. Having worked in both the non-profit and for-profit side of the business, he has wide experience with the process by which affordable housing is made in California, the funding streams that support it, and the regulations that require its construction. When I caught up with Golvin he was managing the construction of a large, Hope VI, affordable housing complex in San Francisco just a few blocks from Fishermen's Warf in North Beach. He subsequently took me on an affordable housing tour of San Francisco and showed me a number of other projects he worked on.
Interview
Steve Lerner (SDL): It looks as if there are a number of new high-rise development projects underway in San Francisco. Is this changing the way real estate development is done in the city?
Ben Golvin (BG): It is only in the last few years that high-rise development has started again in San Francisco. We are talking about Rincon Hill, which is what Jeff Heller [a local architect] is involved with. The city is working to locate places where lots of density can be accommodated along the transit lines and at Rincon Hill you are right by the Transbay Terminal and it is a few blocks from BART and Muni on Market Street It is a place where it is not going to gore anybody's ox to build tall buildings. So get them in there and do several of them and that is great. That is one piece of San Francisco puzzle. But it is not really a NIMBY issue because the city is basically agreed on that. What is going to be interesting [and controversial] is densification along the transit corridors, an issue I expect to work on for the next 20 years. On Geary Street, for example, and other places where you back off a block or two into residential neighborhoods, people will see it as a big deal if high rise or mid-rise buildings of higher density are built there.
SDL: In the Rincon Hill high-rise projects, I hear from Heller that most of the required 20 percent affordable units will be built off site. Is the ability to build affordable units off site unusual?
BG: In suburban areas in master-planned communities we see requirements for 10 to 15 percent affordable housing. Brad Wiblin, my former colleague at Bridge, is doing this in San Diego, working with these master plan developers. Mostly what they are building are single family homes. When I was at Bridge our strategy was to try to get them to carve out a piece of the property in the masterplan for affordable housing. Hopefully, the designated area for the affordable housing was appropriately placed close to the center of the development and near the retail instead of an isolated tract of subdivision housing that becomes a separate apartment community. My view is that with ownership housing there is only so much you can do. You can't leverage much financially. You are loading the cost of making a unit of affordable onto the rest of the market-rate units.
SDL: Why are the big developers of suburban housing including affordable housing?
BG: Because it is California law. My former boss and colleague at Bridge, Don Turner, pushed the rules through HCD, the state's housing agency. It is part of the General Plan legislation of California. In this state every community has to have a General Plan that has a Housing Element. Part of the Housing Element has to show how that community is meeting its Fair Share of all of the housing needs. That is one of the primary tools for affordable housing advocates in this state to go to a community and push for more affordable housing.
San Francisco is way out ahead on this one because of the politics of San Francisco. But in places like Carlsbad, San Diego, or suburban areas like Orange County, localities adopt inclusionary housing requirements. The whole state has this to differing degrees in different places. It is a state law but some cities do not do a very good job of preparing their Housing Elements and make room for affordable housing. If you are a planner, or the head of a planning department in a fairly wealthy place such as San Carla down on the peninsula, you are supposed to make sure there is adequate land zoned for higher density housing so there can be a range of housing types built. To this end you enact an inclusionary housing requirement that requires developers building a 100 unit apartment complex to set aside some of them as affordable housing.
SDL: But there is no unified percentage of these developments that must be set aside for affordable housing set across the state?
BG: No. Each area must just show how they meet their goal. Under redevelopment law a city has to use 20 percent of its tax increment funds on affordable housing. If a city declares an area to be blighted, they form a redevelopment area which allows them to do certain things eminent domain and all that. It gives them a lot more control over the land use and finances. What happens is the tax base on day one, when the land is declared a redevelopment area, is frozen. Then the increment [value] that you create by all the public intervention to help development happen and aggregate property and the infrastructure you put in and all the things you can do as a redevelopment agency creates more of a tax base. The difference between the tax base when you start and what you create is then available to the city to use spend. They can use it on redevelopment, to retire debt, or to retire bonds that it floated to do the infrastructure. This allows a city to spend money upfront and get it paid back over time from the increase in the tax base. State law says that 20 percent of that tax increment has to be used for affordable housing. That was one of those state wide initiatives to try to help affordable housing happen.
The tools are legislative: inclusionary housing requirements and the Housing Element law that says cities have got to try to make room for affordable housing. That is the stick part. Then you have the carrot part. The carrot part is essentially financing. You have this tax increment financing that cities have, you have to spend some on affordable housing, and you have bond issues that get passed. In this state we passed several state wide bond issues for affordable housing and the most recent was $2 billion. So the state has money.
SDL: The $2 billion is for what?
BG: It is for spending on affordable housing. And what do they do with it? A portion of it a portion of it will get used to make second mortgages so that if a house cost $400,000 to build and that is only affordable to someone who makes x percentage of the Area Median Income, then we might have a program that will make a second mortgage of $50,000 so that it takes a $400,000 house and makes it effectively a $350,000 and you leverage people's ability to borrow. Or they might help people with down payments or help people with monthly payments or a mortgage assistance program just to bring the threshold of income down that you need to buy a house. But most of it gets used for rental housing because that is where you get the biggest bang for the buck. And that is where you get to the issue of rental versus ownership. In rental housing, because the ways you leverage public investment, if you bring down the cost of borrowing money you can have a pretty significant effect on rents. If you put rental housing in non-profit ownership and take the profit incentive out of it over time, if you restrict rents over a long period of time, it restricts the value of the property. Then you can get rents to be below market over time and they get more and more below market because generally speaking the rents are only allowed to go up with CPI (Consumer Price Index). Sometimes you get big jumps in the rental market but in general the difference on day one between the market rent and the affordable rent you create in a development is X but over time it gets to be more because the [real estate] market tends to go up. So there is a lot of leverage to be had in building rental housing.
HUD doesn't have much in the way of programs but this project here is a HOPE VI project, in which provides 20 percent of the financing. Then there is the Low Income Tax Credit Program which is the most powerful program tool we have for financing affordable housing. So there are all a variety of financial tools you can use to bring the rents down and keep them down over time.
In ownership housing if you make it affordable you have a built in tension because what you want people to do is get on the equity ladder but you don't want to have them take all the equity you gave them and run away with it. So you get these balancing acts of trying to restrict the upside of how much people can profit. I have been involved in several. In my mind one of the most successful affordable ownership developments in the city is called Park View Commons, which is a project I did back in the late 1980s and early 1990s. It is now 13 years old. I also built ownership affordable housing in Hunter's Point, which is an area that is now almost all subsidized housing. It is a ghettoized place with a lot of subsidized housing and Section 8. It is a troubled place with a lot of people with a lot of social needs. We were asked to build an ownership place out there on a piece of donated city property. It had been Navy housing right next to the Naval Shipyard. It was a real challenge but we made affordable ownership housing. The idea was to offer it first to people who were already involved in that community, who lived there and were involved in churches in that community. It was affordable ownership housing to help stabilize the neighborhood.
SDL: So this was an economically depressed area and by putting in affordable ownership housing it was bringing the area up.
BG: It was creating a more stable base.
SDL: Did there have to be an incentive for people to buy a home in this area?
BG: The price was the incentive. This was 1989 and has unbelievable views of the Bay and we sold two bedroom and three bedroom houses for $94,000 and $104,000. I am sure they are worth some $300,000 today. The restrictions on resale were very light.
SDL: So those people who bought in got to keep a bunch of the equity.
BG: Yes. Parkview Commons is at the other end of the spectrum because it is an incredibly desirable neighborhood across from Golden Gate Park in San Francisco. There the restrictions there are very stiff. People get a certain return on their down payment. As an example, there were people who bought a four bedroom three bath townhouse in 1990 for $99,000, put down maybe 3 percent, and then got assistance with their payments and a 7.5 percent fixed interest rate which was better than market at the time. As a result some people were paying $650 a month. The first mortgage was $95,000; the second that the city was paying was $200,000 and I'm sure it is up higher than that now so there is a strong cap on that. It is all a balance.
SDL: Tell me about this North Beach project you are working on here. It includes 341 units, 20,000 square feet of commercial space and so on. This is quite a desirable area.
BG: This is the cusp of North Beach and Fisherman's Warf, which is nationally known. It is a stunning location and as we go up people have views of the water. Previously it was a complex that contained 229 units of public housing. It was pretty awful. This is one of the few Hope VI projects where we are increasing the number of affordable units. In most Hope VI projects what was happening was that the density was too high. It was the wrong kind of housing architecturallynot defensible. This one was three stories and it was a haven for people who went out and rob the tourists steal purses, carjack, and stuff like that. There was also a thriving community here because like in most public housing 85 to 90 percent of the people were paying their rent and trying to live a decent life. But it doesn't take more than 10 to 15 percent to drive everything down plus there is the generational divide. Many of the parents and grandparents are doing fine but the kids, without supervision, end up with drugs and gang stuff and people get kicked out because their kids screw up.
SDL: Is this project offer a one-for-one replacement of the pre-existing affordable housing?
BG: This is way more than that but in terms of the public housing yes. It had 229 public housing units before. We can do a little chart about what the new 341 units includes. It is 138 public housing units. Public Housing means that the Housing Authority gets a payment from HUD, theoretically exactly in the amount that it costs to operate the project. It is a break even deal. Then there are119 units that are Section 8 and they are project based. The residents pay 30 percent of their income as rent and the federal government makes up the difference between the rent they pay and what is deemed the fair market rent. So someone might end up paying $100 or $150 and the federal government will make up the rest of the rent. And the rent is going to be $2,900 for a three and four bedroom unit. That is what the fair market rate is. And then the rest of the units, 84 units, are tax credit units. The whole project is a tax credit project which means every unit qualifies for low income tax credits.
On the financing side this is a $95 million project. The Hope VI money was $15 million. That is what got it kick started. What it can carry in real debt that gets paid off is $20 million: $10 million is 30 year money and $10 million gets paid from the Section 8 rents over ten years. That is all it can carry in real debt financing. There is $1 million in Federal Home Loan bank, which takes part of their profits and distributes them as a subsidy. Then there is $10 million in city money the city had a bond issue which we all worked hard to pass. And the rest is equity raised from an investor based on their return being only from the tax credits. They don't get any cash flow or money when they leave the partnership in 15 years. They just give us equity and they get their return based only on a tax credit. That is why it is such a powerful program. You don't have to pay the money backyou just have to rent to the right people [low income people]. So more than half the financing comes in the form of equity from an investor. That is like buying a house for $100,000, having a mortgage of $20,000, having someone give you 50,000, and the other $30,000 is someone who says: pay us back someday when you can. That is what it takes to create housing in San Francisco that is affordable to people that are at 30, 40, or 50 percent of Area Median Income.
SDL: Who gets to live here?
BG: First the residents who were displaced who were temporarily moved to other housing. That is the 229 units. And then for the public housing and Section 8 group it will be people coming off the Housing Authority waiting list. And for the tax credit units it will be open for people to apply: first qualified first offered. It probably will be a lottery. There are a whole bunch of fair housing issues.
SDL: In terms of what income groups people come from there are 229 units of people who were already there.
BG: They won't all come back. I think it is more helpful to think about categories of units. In public housing I don't think you can qualify for public housing unless you are less than 60 percent AMI but most of the people in public housing are quite a bit lower than that 30 to 35 percent AMI. And the people in Section 8 are the same. They pay 30 percent of their income for rent. That is really where we get some low income folks. People in the tax credit units are generally people in the 45 to 60 percent AMI. The whole project is qualified for tax credit program so you can't have anybody over 60 percent AMI. What we will have is a range of folks from basically welfare to probably 60 percent of AMI, which, depending on household size is, about $45 to $50,000 in income. So it is definitely mixed-income housing; it is just all mixed in the lower tier. But people will be paying essentially according to their need. Everybody is as stretched as they can be. It is just where they are in the income strata.
SDL: How many people will end up living here?
BG: We have a lot of three and four bedroom units so probably 700 to 800 people. It could be more.
SDL: Will there be social services built into this?
BG: Not as much as there should be. This is a housing program. This is not supported housing. We would like as the owner/ operators/ managers to be able to create a budget for at least a service coordinator or someone to help people get to the services that do exist for them. And there are lots of organizations that do that that are not necessarily part of the housing development. But people have a wide variety of needs. This is not classic supported housing. This is not something for people with AIDS. This is about getting the rents low and creating an architectural design and context that makes for a good living environment. That is a lot of what the Hope VI program is about. It is going from blocks of double loaded corridors buildings to individual front doors, townhouses, clearly delineated open space that is built on a scale that is defensible. It will not have huge spaces but rather smaller ones that people can take some ownership of.
SDL: These are all rental units.
BG: Yes it is rental because it is such a scarce resource to have land in this area.
SDL: Who do you work for now?
BG: I'm in a firm called Equity Community Builders. We are a for profit company that does a combination of development for our own account and fee development and management. This is a fee job. There are three owners who were selected by the public housing authority to be the redevelopers of this site. One of them is Bridge. I worked with Bridge for 12 years. I was the first project manager hired by Bridge in 1983 and worked there for 12 years.
SDL: So you manage projects?
BG: Yes, I manage development projects from the beginning to the end: from conceptualizing projects and working with the neighborhoods, going before planning commissions, to overseeing design and financing and construction. Soup to nuts: beginning to end. That is my highest value added.
[Golvin takes me on an affordable housing tour of San Francisco.]
We are going along the Embarcadero which is the eastern edge of the city. The Bay is on our left, you can see the Bay Bridge up ahead of us as we head south. This neighborhood on our right is Telegraph Hill where Coit Tower is. The base of Telegraph Hill has gotten some quite dense housing built over the last few years. Levi Plaza. As we head south past the base of the bridge we are getting to a neighborhood called South Beach which is a redevelopment area where the city has done a really good job of taking what was a warehouse and industrial area, declaring it a redevelopment area, getting the tax increment from it, making certain kinds of investments, doing a certain amount of planning. It was benefited by the fact that after the 1989 earthquake the Embarcadero freeway that used to be over our heads was damaged so it got taken down. And that completely opened up the waterfront, thank God. It is wonderful. Getting to Chinatown and North Beach by car is a little harder but on balance it has done a great thing for the city. The Ferry Building that was under it is now freed up and it just got renovated. It has a great farmer's market on Saturday. So the Embarcadero freeway coming down and South Beach catching some traction in terms of development in the late 1980 and 1990s made it a great residential neighborhood. There are really nice buildings being built, some high rises being built. I got an opportunity to build on a property that technically is owned by the port but was leased to the redevelopment agency that leased it to Bridge Housing while I was there. It was designated in the redevelopment plan as an affordable housing site. So in terms of fair growth and mixed-income housing that was an effort to make sure that this neighborhood has a mix of incomes.
Another project that we will go by is Delancey Street. It is an organization that takes ex-convicts and gives them a second chance through work and therapy. It is a fantastic place. They built one of the most beautiful buildings that has been built in San Francisco in the past few years. It is right along the Embarcadero also on Port property. It has a restaurant that the residents of Delancey Street run. The folks who live and work at Delancey Street do all kinds of things to keep themselves on the straight and narrow. Delancey Street was technically our partner. They helped us with a number of things. Partly it was about having someone already in the neighborhood be our partner, which is in terms of strategies is important. You want people who are local to be vouching for you and saying that we know these folks and they will be good neighbors. They can tell other neighbors that they will keep an eye on us. So Delancey Street was a partner.
Steamboat Point is a rental. It is 108 apartments. It was financed at a time when the state of California had a program that was called the RHCP the Rental Housing Construction Program. So we got some money from the state and we made sure the project was competitive for that money in the late 1980s. The land came cheap because the redevelopment agency gave us an inexpensive lease that helped keep the cost down and we got low income housing tax credits, so we raised equity. We built 108 apartments a lot of which are two and three bedroom units. The idea was to get family housing built in this neighborhood. The project is now 12 years old and is holding up well. It is all affordable. It had rents that reached own to folks at about 35 percent AMI. We had rents there in the early 1990s that ranged from probably $400 up to $800 to $900 a month. Now, with the increase in the CPI they are probably $400 to $1,100 range.
Next door to it is a condo project that got done a few years ago. This is directly across the street from PacBell Park, the Giants Stadium, which was built a few years ago and was a capper for this neighborhood [in terms of its redevelopment.
Along the Embarcadero and north of the bridge by a few blocks you see the GAP headquarters they built a few years ago. There was an old coffee roasting plant here, the Hills Brothers, that is now Hills Plaza. The whole building was renovated.
In back of this the first redevelopment was done with tax exempt bond financing under which you have to make 20 percent of the units affordable. It is a carrot. You get the lower interest rate on your project in return for doing affordable units. This project here, Portside, is a condo project which was done practically underneath the Bay Bridge and is quite successful. Nearby, this three and four story development is called Bayside Village and was done in the late 1980s early 1990s. It is big and all market rate and is 20 percent affordable but it is essentially a market rate project. It is doing fine and helped move this area towards residential.
The next building to your right is Delancey Street. As you look up this street you will see high rises that are new. That is all ownership so this is high end. On the top are a couple of million dollar units. The next development here is called South Beach Marina. That was an 80/20 bond project 20 percent affordable. You can see it is mostly low-rise but has a mid-rise tower behind it. Across the street is Steamboat Point, the one I built. It is where the Embarcadero starts to turn so it is kind of a bullet-shaped site. This is still owned and managed by Bridge Housing. It has 55 year rent restriction on it.
This development here is called the Towers at Embarcadero Center. It was a site that sat for a long time and had a methadone clinic in it while I was building Steamboat Point. Someone finally built condos that I think have succeeded. They hit the market during the huge dot.com bust so they didn't get all the units sold so they went down in price. If someone were renting this they would be paying $2,500 to $2,800 a month. Next door someone is paying $400 to $900 a month. And it is all a function of planning on the land use side for some affordable housing and then on the development side using the financing options that are available to get the thing built. This has become quite the hot spot: the whole neighborhood has blossomed
South of Market area is where all the lofts got built through the 1990s and there was a lot of controversy about that. There is not much affordable housing down here because it is all ownership and there was no redevelopment agency.
In Haight Ashbury we got an incredible opportunity to develop on a site that was a former high school. It was sold by the school district. It is now the Parkview Commons. We took down the old school buildings and did ownership housing which is what the neighborhood and the city negotiated as a use for this formerly public property. It is all affordable at two levels. There are some units that are low-income and some that are moderate. The low was 80 percent AMI the moderate was 120 percent AMI. That was a program driven by tax exempt mortgage revenue bonds. The financial program here was that we got the site from the city on a ground lease, not your normal real estate structure if you are doing ownership housing. It was difficult to get the FHA to insure these loans but it was a way to get the land inexpensively so the housing could be less expensive. We had these mortgage revenue bonds so we could have the mortgage financing for the buyers. At a time, when rates were considerably higher, people could get a 7.5 percent fixed rate mortgage through the tax exempt bond issue. The city took other funds and set up mortgage assistance for folks who qualify as having a low enough income. They could get help with making their mortgage payments each month and that was a subsidy that burned away over time. The assumption was that you were trying to get people into ownership housing who couldn't otherwise based both on the price of the unit and also the price of the financing. There was a lottery for these units. We had 4,000 people apply for 114 units so there were some lucky folks. There were a group of units available for people at 80 percent and a group at 120 percent AMI. The pricing was different. The $99,000 price was for the low income folks and the others were about $140 to $150,000 for people who were moderate income.
SDL: So this doesn't touch the really low-income people.
BG: Yes, with this financial structure you can't get to folks below maybe 60 percent AMI. It would be convenient to say that the rental gets you up to 60 percent AMI and the ownership goes up from there but in most cases it is hard to get to folks that are below 100 percent AMI in ownership particularly in San Francisco.
SDL: Tell me about the phenomenon that has come to be called "creaming." Do these kinds of projects siphon off some of the folks who currently live in low-income neighborhoods who are doing reasonably well. Do you think there is anything to that? Does this take people who are role models out of poor communities?
BG: The first ownership project I did in San Francisco was called Halloway Terrace. It was an old school site and was in a neighborhood called the Ingleside, a very integrated neighborhood in the southern part of the city. It was the move-up neighborhood from Hunters Point. Hunters Point was by the shipside and people, especially African Americans, got brought from the south to work in the shipyards in San Francisco and Vallejo and Mare Island. So you there were more African Americans in this area than in the rest of the city. There was a thriving community here, that had its problems, during WWII and post WWII and then the people who could afford to the move-up moved to Ingleside. People bought homes in the Ingleside and I ended up working with a non-profit group in that neighborhood to help them develop 42 units of ownership housing on a former school site. It was a fairly well integrated community reflective of that community.
At that point the market was doing what you are talking about. It gave people an opportunity to move into better housing. We give people the opportunity to do the same thing: move to San Francisco and own their own homes and live in a nicer neighborhood. Does that potentially have the effect of taking some community leaders or people who might be community leaders out of Hunters Point and put them in the Height Ashbury instead? I supposed so.
SDL: Given that there are limited resources to do affordable housing there are questions about whether or not money should be put into doing a project in a reasonably affluent part of the city vs. bringing up an economically destitute neighborhood.
BG: That is a totally legitimate public policy debate. North Beach is an interesting example of that because the property is incredibly valuable and there were people who said: "Why don't they sell that [North Beach] property and get money so that they could build far more affordable housing in other parts of the city. My answer is that there are two dynamics here. First there are people who had been living there [in this North Beach property in public housing] for 50 years. It is their community and their neighborhood and we are displacing them temporarily in order to rebuild their homes. What is the justification, aside from pure economics, to say we will rebuild your home but it is going to be in Hunter's Point.
SDL: So the message would be: we will improve your neighborhood but you have to leave.
BG: Exactly. That is purely a policy decision. Look at the choice between building in Irvine, Orange County, where land is more expensive; compared with building it in Aneheim, where you could theoretically get more affordable housing built for the same amount of money. The buildings in both places probably cost the same more or less but the land is more expensive in Irvine and maybe the community would place a lot more demands on the design of the affordable housing and it would end up costing more because you have to make them fancier. State law says every community has to have a Housing Element that shows how it is going to meet its fair share of the full spectrum of housing. Depending on what scale you look at there is a policy set that says we are going to do it across the board.
In San Francisco, a built out city, where are the opportunities to build affordable housing? [There aren't many]. Let me show you one right around the corner here. It is not mine but it is beautiful anyway. This is a site that was a mortuary. Mortuaries in San Francisco are "a dying breed," they are a use that doesn't require the same amount of land that they did before.
SDL: Car lots where automobiles were sold are also disappearing because people now buy cars on-line or at massive lots way out in the suburbs.
BG: Exactly. Things have changed and people get buried in different ways now. But this was a mortuary and there was an opportunity to buy it. The company I used to work for, Bridge Housing, got it. There was a huge neighborhood fight. We are in the Deboise Triangle, just off Market Street, headed towards the Castro. It is right next to the Mint. It is called One Church Street. There was money from the city to help buy the property. Architecturally it fits quite nicely into this neighborhood. This is not the most upscale neighborhood but it is not the most downscale either. We are on the edge of the Western Addition, which is a redevelopment area where a lot of African-American folks were driven out by urban renewal. But here is an affordable housing development that takes up a full city block. At the time there was a NIMBY fight but now that it is built people say it is beautiful and it belongs here. The whole project is affordable and it is a tax credit poroject. It is all rental units. I think there are some units that are particularly affordable because Bridge got Section 8 certificates for people with AIDS. It is right next to the Muni stop and to the Safeway. In terms of Smart Growth it is about as good a residential site that I can imagine in San Francisco. But opportunities like this don't come up often in Pacific Heights or Presidio Terrace where really wealthy people live because the properties are just too damn expensive. So this city is quite an activist city about trying to find affordable housing sites to the very strong network of private developers.
On the stick side the city has been having an active conversation about an inclusionary requirement. It went up from 10 to 12 percent of a total project's units must be affordable and then 17 percent of the units must be affordable I they are to be built off-site. And there are some folks who don't like the of-site option as a policy because it fails to contribute to the construction of mixed-income communities in San Francisco. But it is tempting at times when you can see how much affordable housing can be built if the units are located off site, for example, at the Rincon Hill high-rises where the affordability isn't all that great.
This city is quite good about getting the money out and using it efficiently for affordable housing. We have a good infrastructure for doing it. In general this is not a set of skills that people in the public sector often have. It is the non-profit development community and, to a certain extent, the for-profit developers who focus on affordable housing such as McCormack Barron out of Kansas City. But the non-profit sector, particularly in California, is very robust and there are a lot of people here who are very committed to the production of affordable housing. And this is a way to make a living and do good, socially-useful work.
SDL: You knew Don Turner who got this legislation through at the state level.
BG: Don was a marvelous man. It is part of the General Plan. It happened in the late 1970s. Don was the housing director for the state under Jerry Brown.
SDL: How is that being carried out?
BG: There are not great teeth in the law so that if a community is not very good about bringing its housing element into conformance with law. There is always talk about making the consequences stronger for cities that don't comply by withholding Community Development Block Grant money. But it hasn't happened yet. It is federal money that gets allocated to the localities. There is an active conversation at the legislative level about what to do about this. But you can imagine that it is always politically challenging for the state to be dictating land use policies to a locality. People feel awfully strongly that that, like schools, land use is their issue.
SDL: What happens currently to a wealthy community that decides to not comply with the fair share provision of the law?
BG: That is a good question for someone who knows the law better than I do. In general it is not that strongly enforced. There is a law firm called Goldfarb and Litman over in Oakland and they do a lot of transactional work on affordable housing and they really know state law.
SDL: The laws promoting affordable housing appear more progressive than they are in the rest of the country.
BG: I think you should talk to Brad Wiblin at Bridge Housing in San Diego. We got in a huge fight over an 84 project in Irvine where we got land from the Irvine Foundation to build a 100-percent affordable deal. It was the second generation deal with them. The first generation deal was a mixed-income apartment community where we had gone from 20 percent affordable to 40 percent affordable with Bridge's participation in the project. But the second round we were doing an all-affordable deal and we got in a huge fight with the neighbors about the fact that it was all affordable. The state law made it impossible for the city to turn it down. It is another law which states that the city cannot turn down a development that is in the zoning just because it is affordable. So there are several state laws that are good tools for affordable developers.
SDL: Tell me about the process you went through to get affordable homes built at the Parkview Terraces in an affluent part of San Francisco.
BG: As you can see, the complex runs the better part of this block. Up here there was a two and a half story concrete bunker structure we tore down. This goes all the way through to the next street and I will show it to you from the lower side. It is a big sloping lot on which we built 114 ownership units. It is quite a bit denser than the neighborhood so we definitely pushed the land use approval process. The way it is laid out is these are sets of three story flats and then there is another two stories of flats on the parallel building behind it and the middle of the site is taken up with these four bedroom two bath townhouses. There are 18 of those in the center of the site and on the lower site there is the same building as up here: a three story set of stacked flats.
Above is the UCSF hospital, nationally renowned. And we are right next to the Golden Gate Park and a stadium. There used to be 25 foot walls along here and 80 foot walls along the school so this street was shadowed by the walls and was very dark. We tore the walls down but kept the two gyms. There is a boys' and a girls' gym. There was no money to do anything with them but two organizations have bootstrapped their way into running programs. One of the people who bought one of the homes here, Ndori Huntington, got hooked up with a couple of Russian gymnasts and they started running a program primarily for kids. They call it Acro-Sports and it is ten years old and it is a fantastic organization. The money to stabilize this gym came entirely from this non-profit organization and now they serve 1,000 kids a session. They have a performance program. In the other gym there is a circus arts program. Both of these happened because the gyms got saved. And, in the case of Acro-Sports, the program was started because someone, who would have had to leave the city to be able to buy a home, got to buy a home here instead because of this affordable housing project. So she was able to devote her energies here in an entrepreneurial way and create this wonderful program. I can't think of a better argument for why it is worth the effort to maintain the full-spectrum of folks who want to live in this city and not force them to go buy a house in Antioch which is where they can afford to buy a house under current market conditions. But, as a result of this program, here they are and their kids are going to local schools, they are contributing to the local economy.
This was a Bridge project that was done in partnership with a for-profit developer named Tom Callahan. We had a huge NIMBY fight about this project. There were a few neighbors who were upset about the density we wanted in the project. Unfortunately for us, there was a guy who owned a medical office building up the hill, who had been buying up a bunch of housing between Parnassus and another street and was illegally operating a hotel for people whose kid is in the hospital here and they need a place close by to stay. He was trying to get a hotel approved but he couldn't get a permit. This is a very activist neighborhood in Haight Ashbury so they fought him. They saw it as institutional creep from the hospital. There is a legitimate public policy issue here. This is a great institution that needs to grow but should it grow at the expense of the neighborhood? That is the ongoing battle.
This guy wanted to build a hotel but the city turned him down. Then he watched this development get approved here lickety split -- because it was something the city wanted -- and he was angry. So he funded the neighbors to circulate petitions to put the approval for this project on the ballot as part of a referendum. To get permission to build this project, over a couple of years we fought one referendum that made it to the ballot, one referendum that didn't make it to the ballot, two initiatives that didn't make it to the ballot, and one lawsuit. It took a couple of extra years. My first day at Bridge in 1983 I had a meeting about Poly Technic High School. By the time it had become a development opportunity it was 1985-6. And we finished it in 1990. So we finished it in five years and it should have taken three.
SDL: Was there a lot of opposition other than this one entrepreneur?
BG: There were a few neighbors and the fight was about density. How much was it about affordability? I don't know. Most of the people who bought their homes around here 20 to 30 years ago would probably qualify because 120 percent of the AMI at the time was probably $60,000. But the neighbors wanted fewer units. They were worried about parking and traffic. Who knows what they were really worried about but the density fight is always about impacts of the project on the neighborhood.
SDL: But they were not arguing against affordable housing?
BG: Not ostensibly. Did it play into their attitudes? That is hard to say. Sometimes people are careful about what they say and sometimes they are not.
SDL: It is certainly not the same dynamic one would face trying to get affordable housing into a suburban community where it would be much more a class-based objection.
BG: In San Francisco you are in a political context where it is really not ok to say: "I don't want poor people living near me." I built another project which was built in the air rights above a store. Standard Brands was going to build a store a one story store and there was an opportunity to construct a building that was much taller. They did not want to be in the development business so we got them to donate air rights. We built the housing up above their store. There was a guy across the street who didn't like what we were doing. I took him out to Holloway Terrace project we had built and showed him the development. We were proposing to build rental units for seniors. I spent a half day with him and went around the city and showed him the high quality of the architecture of affordable housing here. I introduced him to some of the people who lived in these complexes.. I took him back to his house and parked and asked him: "What do you think, Jim?" He said: "Those were really nice developments and really nice people but, you know, I still don't want those people living across the street from me." I told him what I thought about that attitude and asked him to get out of my car. At that point it was like: what could I do. I could respectfully disagree with him but at that point we was telling me that what I do is something you don't think should happen in your neighborhood and I think that is incredibly selfish. But we built the project and he painted his house and added onto his house. A lot of it is fear. People are afraid of what will happen.
That approval fight in Irvine was an ugly one. Next door to the site the Irvine Company had built their first small-lot single-family product for entry level buyers who were just getting in by the skin of their teeth and all of a sudden there is this affordable family housing going in next door to them. They flipped out. They felt: "Well, there goes the neighborhood. There goes my property value." And they fought like crazy. It got built and when Brad was working on another project in Irvine the same people [who had previously opposed him] came out and said the project had turned out to be a wonderful neighbor. It is just fear of the unknown.
SDL: Do you know any projects that did bring property values down?
BG: No. There have been studies done. If you build a really crappy development whether you are a for-profit or a non-profit; whether it is affordable housing or market-rate you can screw up property values. In San Francisco it is hard to bring down property values because it is such a constrained market. I'm sure it has happened but by and large the standards to which the affordable housing developers in California are held are higher than the private market. You go before the planning commission for approval for market- rate housing but the number of parties that feel they have a stake in an affordable housing project is a much larger. I am willing to bet that most people feel when they see what we build that it is at least as a high a design standard as anything built now. We are spending a lot of money on it. It is not cheap housing.
SDL: When you introduce affordable housing into the neighborhood, once it is built it has to work not only architecturally but also socially. It can't be allowed to becoming a problem. How do you manage that?
BG: If you went to the property management companies that regularly manage market-rate housing and you looked at the extent to which they are Big Brother and then you went to an affordable development and looked at their rules, which do you think would be more restrictive? The affordable units are n part because in a development like that you have all these people you are answering to. You have public lender, private lenders, private investors the equity investors who, God forbid they would have their name associated with something that became a problem in a community: a place where bad things happened; a place where light bulbs don't get replaced and so someone gets assaulted because it is dark. That just doesn't happen. The standard for design, development, management of affordable housing, at least in the world I work in, especially among the non-profits, is incredibly high. It is mission-driven and people want to provide good housing.
Now, I would say that I know there are places in this state and this country where development gets done on a for-profit basis Bill Witty for one -- that is high quality, well-managed, and works to the same standards as the non-profits. But then there are other folks who develop housing and try to squeeze as much money out of it as they can. Are they trying to get social services in there? Do they have management people who are trying to see that people get their social needs met? Do they maintain to the highest standard? Some of them don't. I think the structural logic holds affordable housing in most ways to a higher standard.
SDL: That suggests that people should no be as worried about an affordable housing project in their neighborhood as many of them are.
BG: That is exactly right. The people who do neighborhood acceptance work around affordable housing and it is mostly the developers who do it -- what really works is to take people around and show completed projects, let them talk to people who live there and who live in the same neighborhood. Cabrini Green [a high-rise, public housing, poverty tower with a lot of crime] is the image at the worst end of the spectrum. As far as I am concerned Steamboat Point, Parkview Commons, and North Beach are the other end of the spectrum and I am very proud of them. They provide fantastic showcases where you can take people and show them: "This is what we do."
Don Turner was damn good at this. He was the president of Bridge, founding president, and president up until the time he was killed in that plane crash with Ron Brown in Bosnia. Don was such a fantastic advocate for affordable housing. The Bay Area is full of people who do a great job of helping people understand what affordable housing is, can be, and should be. There just is nothing like the pudding to show people the proof. So the more good affordable housing we do, the more there are opportunities to show people different kinds of contexts in which affordable housing is a great contributor to a neighborhood.
SDL: How did you end up doing this work.
BG: I went to college at the University of California at Santa Cruz in the early 1970s. It was a very political place and I was an American Studies major. When I got out of school and was looking for a way to make a living and live in Santa Cruz I had an opportunity to work as a carpenter. I worked with a couple of guys and we built houses and one of the guys I worked with was among the people trying to do something about affordable housing in Santa Cruz. We ran rent control campaigns, which was a very controversial issue. Between building stuff during the day and doing community politics around housing issues at night I came to the conclusion that this was going to take up my whole life. I decided that I better find a way to bring these things together. I am very interested in how cities develop. In New York City I walked around with my jaw agape. The interaction of the built environment and historic forces is so interesting. I was drawn to being part of shaping the built environment. I worked first as a carpenter/ builder so I know something about how you build.
I moved up to Seattle and worked for a non-profit there and worked in the International District. We took buildings that were under-utilized like Single Room Occupancy hotels and rehabilitated them. I went to the Planning School at U.C. Berkeley intending to learn to be an affordable housing developer. I was there for a few months when Don Turner and Rick Holliday, the president and voice president of Bridge Housing as of January in 1983, came to both my business school classes, where I was taking real estate classes, and planning school classes, where the work was more about policy and urban history. They said: "Hey, we are starting this organization." And I said: "That is for me." I wanted to be an entrepreneurial non-profit housing developer. So I became the first project manager hired there in 1983 and I got to work there for 12 years. I got to do four or five generations of projects. It was a million dollar education. I couldn't have gotten it anywhere else. I had great freedom in my deals to screw them up every possible way. I did that until1995 when I was recruited to start a program with one of the equity investors Southern California Edison's investment arm. It was time for me to do something different so I did that and lived in southern California for a year.
A couple years before that, at Bridge Housing, I had been doing the southern California work, which Brad Wiblin has carried on, to try to get into these master-planned communities and try to do the deepest affordable housing you can do. I had a chance to work in Carlsbad, which had had only one tiny affordable housing project before. We did this huge project and I got to do another in Irvine with the Irvine Company. I went to Edison Capital and worked there for a year and a half. I came back and started my own company and now I am in a partnership and what we do is urban infill development. My partners have done some residential but more commercial development and they are very involved doing office space for non-profits a cluster of offices in the Presidio called the Thoreau Center for Sustainability.