The first property for “Foundation Housing” at 19th Avenue and Clement
Everyone’s talking about it – the city’s skyrocketing rents that are forcing workers of all kinds to flee the city in search of more affordable housing.
The situation can be even more dire for workers at nonprofit organizations, whose salaries are typically about 25% less than their counterparts that work the same position in a for-profit organization.
One nonprofit, the Richmond District’s Internet Archive, is trying to address the issue for nonprofit workers with a new model they’re calling “Foundation Housing”.
Internet Archive founder Brewster Kahle recently posted about the project, which is attempting to set up “Permanently Affordable housing for non-profit workers”.
In this model, a new nonprofit, the Kahle/Austin Foundation House, has been set up to purchase apartment buildings. These rental units are then made available to employees of select nonprofits at a “debt free” rate– basically equivalent the condominium fee and taxes. Typically, the debt makes up about 2/3 of the cost of a building and the other costs (tax+maintenance+insurance) makes up about 1/3. Since the employee does not pay the debt part, the monthly fee is now about $850-1000/month rather than $2700-3000 current market rent. This way, the fee to those employees is about 1/3 of the cost of market rent, and we believe more stable than market based rents.
To date, the Internet Archive has purchased one, 11-unit apartment building at 19th Avenue and Clement, just blocks from their headquarters at Clement and Funston. As new apartments become available through attrition (no former tenants are pushed out), the Foundation house has made units available to 2 nonprofits, and there are now 3 employees living there.
“In the Foundation House, the supporters are giving up the ability to flip the building for a profit in return for making a permanent asset for the public good,” Kahle says.
One potential downside to the plan – what happens if you leave your job at the nonprofit? Do you lose your housing as well? Kahle says they haven’t had to address that yet since no one has left their jobs, but they are thinking of how to deal with it in the future.
Kahle is also exploring ways to finance the Foundation Housing project, including creating a credit union, setting up an endowment and a low-interest bond.
“With about 10% of all employees in the US working in the non-profit sector, maybe we could hope for 5% of US housing to become Foundation Housing to provide stable, affordable housing for those dedicating themselves to service,” Kahle says.
A very interesting idea. What do you think? Leave a comment to let us know.
Sarah B.
I love the Internet Archive. In a world of tech-fueled greed, they are a beacon of hope. Bravo…
Fantastic; nice to see that someone has a creative solution to this problem. It’d be nice to eventually see something like that extended to artists, musicians,… (whom some consider as “dedicating themselves to service”). E.g. if one can prove that one’s fundamental occupation is as an artist, musician,… then one would get primary consideration for affordable housing provided they can show need. e.g. trustafarians wouldn’t qualify (I believe Oakland does have a program like that). I know the libertarians are going to complain that this shows favoritism to people how don’t generate market rate incomes and I admit that I’m making the judgement that just having artistic types around (including some who’s aims aren’t solely commercial but can still eek out some kind of rent) provides value to society that isn’t strictly economic. The problem, though, is always who you leave out; e.g. fast food workers deserve housing options as much as anyone but they don’t stand a chance anywhere in SF these days.
that’s nice. 4 years ago I was looking at apartments around the city and the 2 bedroom unit about the day and night drycleaning store was available for $1700 a month. No parking spot. Sounds like an amazing deal nowadays. It’s okay though, I eventually ended up moving to a better unit for slightly more with parking a block away.
More affordable housing is needed in the city. It’s become beyond ridiculous. The entire nation is aware from numerous articles that San Francisco is known for the GG Bridge and high rent (higher than NY City). If I buy a place, it wouldn’t be anywhere near here unfortunately 🙁
While this sounds good wouldn’t it be better to pay fully market-rate salaries? Market-rate salaries would force organizations to locate where they are of value to the community and leave areas where they don’t make economic sense. I’ll be among the first to say that I value the presence of the internet archive in SF but I wonder if this arrangement just provides a tax-free benefit to favored employees.
Maybe the internet archive needs to compete with the likes of Google, Twitter, and Facebook and because they’re too small to do free food spreads and things of that kind they’re going the housing route with sort of a “captive” foundation on the side.
Wouldn’t it benefit more non-profit employees sooner if a “frat-house” type of living arrangement was provided instead? This apartment business model just seems like it will take forever to get the funding and the residential units to make a dent in the problem. Perhaps some communal living arrangements would be more expedient.
@Richmond Resident – I recommend clicking through to the post on the IA site. Kahle does make mention of exploring group living arrangements as well.
Sarah B.
Thank you for writing the article. The linked post has more information about our experiment.
And to #4: we would love to just pay market salaries, but in the Internet sphere these are quite wild, at least now– And they go up and down, as those of us here long enough know. Raising crazy money as a non-profit is not easy and possibly not possible, so we would have to accomplish much less, or might have to leave the city. Also if you have high salaries and your funding goes down as the economy goes down, then you have to lay off people right when the for-profits do as well.
Non-profits, ideally, would expand when the economy went south for businesses, rather than ride their same wave, so we would like a way to stabilize our costs. Foundation housing is one idea on how to do this.
-brewster
What a cool concept, thanks to the IA for taking this on!
And @Richmond Resident… not sure how having only non-profits who can afford to be in our area would be a positive for our community… LLS, Cancer society, etc – help an awful lot of local people & if they were only in low cost areas, I’m not sure how they would help the people in our community.
I applaud the effort. However, it will not make any difference in the overall housing issues in San Francisco. At the end of the day, there is just too much demand and not enough housing here.
Because of this, we are doomed to having a city of the economically well to do. Basically, economic monoculture not economic diversity. The trend is unstoppable.
Why? Two reasons.
First is zoning. Unless we rolled zoning back, before the SCOTUS Village of Euclid, Ohio v. Ambler Realty Co., 272 U.S. (1926) decision, and allowed people to do what they want with their property (and I am not advocating that we do) the supply of housing will never again be built out to meet the demand in a central city like San Francisco.
Second is invested interests. If zoning were to be pulled back such that people could build out their property to meet supply, those people with existing mortgages would fight tooth and nail to stop them. Why? because their building, not their land, would have rental value drop like a brick as the new square footage came online to meet demand. The only thing people could do is to sell their property to build more units on it or their cash flow would dry up. Of course one could rent a 1000 square foot apartment on a working class wage again…but the existing unit owners would be severely hurt. Since they “own” City Hall, they will see to it that any meaningful pull back on zoning will never happen.
So, we have a structural problem that has no solution. Around the edges things like this concept will give a few a lucky people a break, as have the set asides in the past on the newer buildings around town. But in the final analysis, San Francisco is becoming an adult Disneyland for the economically well off and the young professionals who don’t mind living five to a flat.
There is nothing that anyone can do about it.
jd, There is already work quietly being done by the Planning Department and other interests at City Hall to re-zone the entire west half of SF into two separate houses on single lots (from existing RH-1 and RH-2), with money being spent on booklets to be available at the Planning Department on how to do this without being required to send notice to neighbors as is presently required on all large construction jobs.
From an environmental and public safety standpoint, I believe this is foolish because this would significantly increase flooding due to lack of permeable surfaces and increase bad air due to wholesale demolishing of trees and plants. It will also be extraordinarily difficult for first responders to any emergency to access the second home located behind a first home that fills the entire length of the street side of the property and this access will be complicated unless there is significant compensation for granting easement through existing garage and whatever else may exist on ground floor. Lastly, given our water shortage and poorly maintained infrastructure (not to mention negotiations going bad between City Hall and PG&E regarding electric connectivity to SF Government facilities using Hetch Hetchy power), jamming in more people a la Hong Kong will become the norm. I would feel less badly about this if some attention had been made to the large number of vacant storefronts in our district to bring products and services into our neighborhood rather than making some of us have to go downtown. In a few years, the only emergency department west of Van Ness will be Kaiser.
I am aware of that planning effort. It will not do a thing except toss some money into the pockets of existing home owners who want to make some money.
If you go back to the 1920’s and early 1930’s in San Francisco you will see that as the demand for housing ramped up that whole sections of houses were torn down and large apartment building/condominiums were built. Those great Art Deco buildings between Van Ness and Fillmore street being just some of them.
Back to my original post however, the economics (embedded interests) cannot allow the problem to be ‘solved”. If they did they would be placed into a position of having to sell their land or loose their shirt. Since many would not like either choice, they will apply whatever pressure it takes to see that such an opening up of zoning will never happen.
You could double all the west side housing in the next 10 years and there it would not be enough to dampen prices so that a middle class could afford to stay. Now if 1/2 of all that land got an 8-10 story apartment/condo building like those along the Van Ness/Fillmore strip the demand would fall (be satisfied) and the market clearing price would be much lower for each individual unit.
As to the environmental aspects. Having a high density San Francisco uses much less water then the urban sprawl Hetch Hetchy supports in the south bay. The plants, lawns, and trees use more water than the people do. As to run off, simple, replace the curbs with permeable ones with the little holes in them. The sand will do the rest.
In the end we have a structural problem and no amount of tinkering at City Hall will ever address it. It would take a political consensus and a political will that this city will never see again to solve it.
21st Century San Francisco is for the well off to live in and the rest to visit.
You’re mistaken, JD, on where Hetch Hetchy water is sold by SFPUC. Some goes to San Mateo county and none to Santa Clara and Alameda Counties (the South Bay). The single largest customer is Modesto Water District, serving primarily agricultural interests.
My father, grandparents, great-grandparents, aunts, uncles and cousins were around in the 1920s and 1930s where much of the west side of SF had not yet been developed. I have pictures of the mostly unencumbered view from low numbered avenues out to the ocean as well as my grandparents earthquake shack. What is now known as The Sunset was a weekend destination for picnicking and picking wild strawberries. Development happened with WPA and Federal monies.
Interesting that this is happening now. The Presidio housing was, not so long ago, set aside for people who worked for non-profits in the Presidio, and offered below-market rate rents. Now, of course, the Presidio has gone commercial and rents are as high as anywhere else. I wonder whether Internet Archive was a tenant in the Presidio back in those days. Perhaps Brewster got the idea from that precedent. Hats off to you, Brewster. I’m sad to see the soul of the city disappearing as longtime residents are replaced by youngsters who will move on when they want to raise families, or when the tech boom ends. They’ll leave behind blocks of overpriced housing that isn’t fit for families or older people. Where is the plan that will encourage them to stay as their lives play out and their values change? No where.