Classes clash as San Franciscans blame tech for rising rents

SAN FRANCISCO — Housing prices and rents here are on the rise, and they are the source of tension that is boiling over between classes.

The average price of buying a home now tops $1 million, and it costs more than $3,000 a month to rent an apartment, leading to one question dominating the minds of many who call this coveted city home: Who exactly can afford to live here?

The answer is starting to define a growing conflict among the city’s inhabitants that many are blaming on a tech-industry boom that is dramatically shifting the socioeconomic demographics of the city.

For example, the 1,700 freshly minted millionaires from Twitter’s recent IPO presumably can live almost anywhere in the city’s 49 square miles. But there are far fewer options for someone like Marla Knight, a retired community-college teacher, a fourth-generation San Franciscan and — like two-thirds of San Franciscans — a renter.

“I’m not against the tech workers,” said Knight, who raised her two children in a two-bedroom apartment where, under one of the country’s strongest rent-control laws, she pays about $575 a month. “I understand why they want to live here. It’s the speculators driving this.”

Yet Knight is now facing the loss of her home as the tech boom — or, some warn, bubble — rages on and allows San Francisco property owners to cash in by booting their tenants. Last February her landlord announced plans to empty the 14-unit building where she lives and exit the real-estate business. In California, such wholesale emptying of a building is allowed under what is called the Ellis Act, a state law passed in 1985 to allow landlords to retire and cash out their investments. Under the law, displaced tenants must be paid $5,201, with seniors and the disabled receiving an additional $3,473.

Such evictions have skyrocketed this year as rising housing prices, fueled by the tech boom, make it more profitable for owners to sell rather than rent. While the number of all evictions increased about 38 percent from September 2012 to September 2013, those filed under the Ellis Act jumped 145 percent, according to a city report.

Whether those flashing the cash are all tech workers doesn’t matter. There’s a widespread perception that they are, and it is setting off a growing backlash.

Regardless of who is responsible, activists say it is having a terrible impact on the social structure of the city.

“We’re getting an hourglass-shaped income structure here,” said Fred Sherburn-Zimmer, who works with two local tenant-advocacy groups. “There isn’t much middle class left. I think it’s really hit a nerve. Everyday San Franciscans are watching so many people pushed out.”

Last month the Harvey Milk LGBT Democratic Club released a poll that found 64 percent of San Franciscans and 83 percent of renters said they were very concerned about evictions and rising rents.

“Unless you’re making in the upper six figures in a tech job, you’re worried about the stability of your housing,” club president Thomas Temprano said of the survey of 400 voters conducted in November.

Some say the conflict is leading to a crisis of San Francisco’s sense of self.

Though it has been a boom-and-bust city since the Gold Rush of 1849 attracted a global cast of fortune hunters, the city has also been a harbor for artists, poets and blue-collar intellectuals as well as social radicals and political activists of all stripes. They mixed with financiers, business owners and socialites — or at least that was the myth of 19th and 20th century San Francisco.

But now a city known for tolerance is running low on it, with weekly rallies against what many see as a new culture of speculation and greed. Tenants and activists have protested at City Hall and real-estate offices. They have blocked a private bus ferrying tech workers to their jobs at Google’s suburban campus and stenciled protest slogans on the sidewalks of the Mission District, a hub of Latino culture with one of the highest eviction numbers. And they have demonstrated outside the headquarters of Twitter, which moved into a gritty midtown neighborhood and received a payroll tax break when it threatened to decamp to Silicon Valley. For many, the company’s blue bird logo has come to symbolize the changes sweeping the city.

Some official efforts are trying to help. In December, city supervisors passed three measures to protect tenants. One gives priority at publicly funded housing to renters displaced under the Ellis Act, and the others aim to keep rental units on the market by making it harder to merge units into one home and easier to upgrade illegal ones.

“We’ve got to challenge the affordability crisis, and that’s what we’re doing,” said Supervisor David Chiu, who authored the first measure. “San Francisco has always prided itself on addressing the challenges of the day.”

Tech’s defenders, however, say the industry creates far more benefits than problems. There are now more than 1,800 tech-related companies in San Francisco. The industry’s in-town growth has boosted city revenue and cut unemployment. Joblessness nationwide hovers at about 7 percent, but in San Francisco it is close to 5 percent, with as many as five jobs — including retail, tourism, restaurant and office work — created for each new tech job, Chiu said.

But that wealth is not trickling down to people like Knight in the city’s North Beach neighborhood, which has a legacy of Italian immigrants and cafes that catered to Beat poets. Or to Chandra Redack, who can practically see Twitter headquarters from her tiny apartment a few blocks away. A musician and composer who just finished her first CD, she was among dozens of tenants in a six-story, 75-unit building on Market Street who received eviction notices this fall after city inspectors deemed it was not up to code. She and other tenants say it’s more lucrative for the owners to convert the building to office space. With rents under $900, it is one of a dwindling number of work-live spaces for artists.  

“Mayor Ed Lee was saying that artists are the heart of San Francisco and the city wants to support artists here, and they’re pushing me out like I’m nothing,” Redack said. “I have a job here, but can’t afford to live here.”

For many people, it feels like deja vu. The dot-com bubble in the late 1990s also drove up commercial and residential rents. After it went bust in the early 2000s, lines formed in the morning before U-Haul offices opened as the suddenly jobless scrambled to leave town.

Ted Gullicksen, head of the San Francisco Tenants Union, believes the current boom will play out with more negative impact than the first dot-com implosion. The official number of Ellis Act evictions is not as high as in 2000, when there were 384, according to a city report. There were 162 from September 2012 to September 2013. These figures reflect the number of landlords who filed for the evictions, meaning the number of tenants displaced is exponentially higher, depending on how many units each landlord owned. The figures also don’t reflect an untold number of tenants who accepted buyouts and moved out before papers were filed. Gullicksen would like to see tech companies ask employees to pledge not to move into buildings where Ellis Act evictions were served. So far, none have stepped up.

Advocates and city legislators are looking at new measures to slow the evictions, including making it more difficult to buy as tenants in common, more expensive to file under the Ellis Act and asking the state to allow local moratoriums.

Gabriel Metcalf, executive director of the nonprofit San Francisco Planning and Urban Research Association, said the city would have to look at broad-based solutions, such as streamlining approval for building new housing and raising the minimum wage. Lee has talked about bumping it to as much as $15 an hour. With more planning, Metcalf said, the strong economy should benefit the entire region. 

“There are no bad guys here,” he said. “No one set out to destroy the city.”

Meanwhile, Knight and other tenants in her building are poised for a fight.

“We have nowhere to go if this happens,” she said. “I’d like to see Mayor Lee stand up and say something like, ‘This may be a California law, but hell no, we won’t go.’”