2015 San Francisco Election Recap: Developers win some battles, lose war

This post first appeared on Medium.

The polls are closed and the results are in. Let’s take a look at how housing-related measures and individual races shook out in San Francisco’s 2015 election.

Headlines this morning would have you believe that real estate developers were big winners yesterday. The smart money knows however, that while they may have won some battles, they lost the war.

Mayor: Ed Lee wins in a landslide

No surprise here, incumbent Mayor Ed Lee ran essentially unopposed and won with 57% of the vote. His next closest competitor was Francisco Herrera at around 15%.

In office since his appointment and subsequent election victory in 2011, Lee is widely seen as a pro-business, pro-development mayor. Despite his background as a tenants’ rights attorney, a handful of tenant-friendly policies have failed to garner broad support in the city under his watch. And those that did have widely been deemed illegal by the courts.

Mayor Lee is pushing developers to add 30,000 new housing units by 2020, which is a fine goal, but even if we hit that building target it will barely sop up demand from new residents, let alone ease the ongoing affordability crisis.

Board of Supervisors, District 3: Aaron Peskin back in power as Supervisor swing vote

While headlines focused on Propositions F (Short-term rentals) and I (moratorium in the Mission), the race that really mattered this year was decided by a handful of well-heeled San Franciscans hailing from in and around North Beach.

The battle pitted incumbent Julie Christensen (appointed earlier this year by Mayor Lee when David Chiu left for a post in Sacramento) against long-term political power broker Aaron Peskin. The real estate community by-in-large backed Christensen while the tenant community and affordable housing activists pushed for Peskin to be back (formally) in power.

Peskin is a highly controversial figure in San Francisco. A former president of the Board of Supervisors, some see him as a savior and champion of keeping the city affordable, while others view him as a self-righteous obstructionist who’s more concerned about preserving his rich friends’ sweeping views than looking out for the common man.

Regardless of your view on Peskin, who took the race by nearly a 10 point margin, he’s now the swing vote on the Board of Supervisors. Real estate developers, already in the cross-hairs, aren’t going to see the political environment improve much under Peskin’s watch.

Proposition A: Affordable Housing Bond sails through

In another widely expected outcome, San Francisco is now approved to issue $310 million in general obligation bonds to build, develop and otherwise support affordable housing. On the surface the measure seems like a no-brainer given the affordability issues facing the city, but the small group of opponents would point out that such programs are rife with graft and waste.

Earlier this year I proposed an alternative to the traditional ways in which such funds are spent … to which my right-leaning friends suggested I had kind of lost my mind.

Proposition D: Mission Rock Development gets green light

The Giants may have failed in their bid to repeat as world champions, but 2015 hasn’t been a total loss for the team. With big plans to transform the 28 acres worth of surface parking lots south of McCovey Cove into a massive mixed use housing development, thanks to last summer’s Proposition B which was snuck through by folks like the aforementioned Peskin, the Giants had to seek voter approval for their Mission Bay development project.

With one notable and powerful opponent, Proposition D won easily as proponents touted the 1,500 new residential units, 33% of which would be affordable, with zero displacement. The Sierra Club wasn’t impressed and fought to block the project.

Traditionally the Sierra Club has favored dense, transit-oriented infill development which it views as the most environmentally-friendly way for cities to grow. But the San Francisco chapter has recently broken rank and opposed such developments. As this year’s election race heated up, a faction within the Sierra Club has been fighting to take back power and return the group to its pro-infill roots.

How this infighting shakes out could materially shape future developments, as the Sierra Club is one of the most influential players in the San Francisco political scene that pits itself against the powerful developer lobby.

Proposition F: Short-term rentals eek out victory

In what became the most controversial measure on the ballot, Prop F, widely known as the “AirBnB law,” was shot down by a narrow margin of 55% opposed to 45% in favor. Much has been written about the relative merits of further restrictions of short-term rentals in San Francisco, two notable piece can be found here: pro and against.

With the election now behind us, new rules governing short-term rentals put into place earlier this year can be given a chance to work. Or not. From what I am hearing, the city’s enforcement agency has been given funding and teeth and are making a concerted effort to crack down on hosts who aren’t complying with the new regulations.

The new laws aren’t perfect and do cause enforcement challenges, but hopefully the rules can be tweaked and improved through the traditional legislative process to provide a better solution than the dramatically flawed Prop F would have.

Given how much emotion the short-term rental debate stirred up however, don’t expect the issue to fade away any time soon.

Proposition I: Moratorium on Mission District development smacked down

I got a lot of questions from friends and family about this one: So wait, we need more housing in San Francisco … how is a building moratorium going to help that? A logical response, and the conclusion that 57% of San Francisco voters arrived at in rejecting the idea of a moratorium to fix our housing crisis. Read that again: 43% of voters got behind the notion that blocking new construction was a good way to make housing more affordable. Only in San Francisco.

Prop I proponents saw it differently, that in order to build an acceptable number of affordable units in the Mission, we needed an 18-month hiatus from new projects to develop better policies and have an informed debate to create new rules. They called it a “pause.”

Ironically, a handful of developers I know quietly supposed the moratorium, but not for the reasons Mission District Supervisor David Campos and his supporters hoped: Less building would have further crimped supply, leading to higher, not lower property values.

One more victory for the laws of supply and demand.

Conclusion: Developers win quantity, lose quality

There weren’t any real shockers in yesterday’s election. Prop F could have gone either way, and AirBnB’s recent marketing gaffes probably made the race closer than it would have been otherwise.

Developers certainly can declare victories with Prop D and I, as well as the widely expected re-election of Mayor Lee.

But with the election of Aaron Peskin to the Board of Supervisors, and with the board current split down the middle on housing issues, Peskin now holds a powerful role as the swing vote. Expect to see development battles become more emotionally charged with projects becoming harder, not easier to get approved.

As for next year’s election, expect more, not fewer housing-related propositions to once again give San Francisco an unnatural amount of power in shaping the city’s skyline.