Saturday, February 17, 2018
55 Savushkina Street, last known home of the Internet Research Agency.CreditJames Hill for The New York Times
From a nondescript office building in St. Petersburg, Russia, an army of well-paid “trolls” has tried to wreak havoc all around the Internet — and in real-life American communities.
By Adrian ChenJune 2, 2015
Читайте эту статью на русском.
Around 8:30 a.m. on Sept. 11 last year, Duval Arthur, director of the Office of Homeland Security and Emergency Preparedness for St. Mary Parish, Louisiana, got a call from a resident who had just received a disturbing text message. “Toxic fume hazard warning in this area until 1:30 PM,” the message read. “Take Shelter. Check Local Media and columbiachemical.com.”
St. Mary Parish is home to many processing plants for chemicals and natural gas, and keeping track of dangerous accidents at those plants is Arthur’s job. But he hadn’t heard of any chemical release that morning. In fact, he hadn’t even heard of Columbia Chemical. St. Mary Parish had a Columbian Chemicals plant, which made carbon black, a petroleum product used in rubber and plastics. But he’d heard nothing from them that morning, either. Soon, two other residents called and reported the same text message. Arthur was worried: Had one of his employees sent out an alert without telling him?
If Arthur had checked Twitter, he might have become much more worried. Hundreds of Twitter accounts were documenting a disaster right down the road. “A powerful explosion heard from miles away happened at a chemical plant in Centerville, Louisiana #ColumbianChemicals,” a man named Jon Merritt tweeted. The #ColumbianChemicals hashtag was full of eyewitness accounts of the horror in Centerville. @AnnRussela shared an image of flames engulfing the plant. @Ksarah12 posted a video of surveillance footage from a local gas station, capturing the flash of the explosion. Others shared a video in which thick black smoke rose in the distance.
Dozens of journalists, media outlets and politicians, from Louisiana to New York City, found their Twitter accounts inundated with messages about the disaster. “Heather, I’m sure that the explosion at the #ColumbianChemicals is really dangerous. Louisiana is really screwed now,” a user named @EricTraPPP tweeted at the New Orleans Times-Picayune reporter Heather Nolan. Another posted a screenshot of CNN’s home page, showing that the story had already made national news. ISIS had claimed credit for the attack, according to one YouTube video; in it, a man showed his TV screen, tuned to an Arabic news channel, on which masked ISIS fighters delivered a speech next to looping footage of an explosion. A woman named Anna McClaren (@zpokodon9) tweeted at Karl Rove: “Karl, Is this really ISIS who is responsible for #ColumbianChemicals? Tell @Obama that we should bomb Iraq!” But anyone who took the trouble to check CNN.com would have found no news of a spectacular Sept. 11 attack by ISIS. It was all fake: the screenshot, the videos, the photographs.
In St. Mary Parish, Duval Arthur quickly made a few calls and found that none of his employees had sent the alert. He called Columbian Chemicals, which reported no problems at the plant. Roughly two hours after the first text message was sent, the company put out a news release, explaining that reports of an explosion were false. When I called Arthur a few months later, he dismissed the incident as a tasteless prank, timed to the anniversary of the attacks of Sept. 11, 2001. “Personally I think it’s just a real sad, sick sense of humor,” he told me. “It was just someone who just liked scaring the daylights out of people.” Authorities, he said, had tried to trace the numbers that the text messages had come from, but with no luck. (The F.B.I. told me the investigation was still open.)
The Columbian Chemicals hoax was not some simple prank by a bored sadist. It was a highly coordinated disinformation campaign, involving dozens of fake accounts that posted hundreds of tweets for hours, targeting a list of figures precisely chosen to generate maximum attention. The perpetrators didn’t just doctor screenshots from CNN; they also created fully functional clones of the websites of Louisiana TV stations and newspapers. The YouTube video of the man watching TV had been tailor-made for the project. A Wikipedia page was even created for the Columbian Chemicals disaster, which cited the fake YouTube video. As the virtual assault unfolded, it was complemented by text messages to actual residents in St. Mary Parish. It must have taken a team of programmers and content producers to pull off.
And the hoax was just one in a wave of similar attacks during the second half of last year. On Dec. 13, two months after a handful of Ebola cases in the United States touched off a minor media panic, many of the same Twitter accounts used to spread the Columbian Chemicals hoax began to post about an outbreak of Ebola in Atlanta. The campaign followed the same pattern of fake news reports and videos, this time under the hashtag #EbolaInAtlanta, which briefly trended in Atlanta. Again, the attention to detail was remarkable, suggesting a tremendous amount of effort. A YouTube video showed a team of hazmat-suited medical workers transporting a victim from the airport. Beyoncé’s recent single “7/11” played in the background, an apparent attempt to establish the video’s contemporaneity. A truck in the parking lot sported the logo of the Hartsfield-Jackson Atlanta International Airport.
On the same day as the Ebola hoax, a totally different group of accounts began spreading a rumor that an unarmed black woman had been shot to death by police. They all used the hashtag #shockingmurderinatlanta. Here again, the hoax seemed designed to piggyback on real public anxiety; that summer and fall were marked by protests over the shooting of Michael Brown in Ferguson, Mo. In this case, a blurry video purports to show the shooting, as an onlooker narrates. Watching it, I thought I recognized the voice — it sounded the same as the man watching TV in the Columbian Chemicals video, the one in which ISIS supposedly claims responsibility. The accent was unmistakable, if unplaceable, and in both videos he was making a very strained attempt to sound American. Somehow the result was vaguely Australian.
Who was behind all of this? When I stumbled on it last fall, I had an idea. I was already investigating a shadowy organization in St. Petersburg, Russia, that spreads false information on the Internet. It has gone by a few names, but I will refer to it by its best known: the Internet Research Agency. The agency had become known for employing hundreds of Russians to post pro-Kremlin propaganda online under fake identities, including on Twitter, in order to create the illusion of a massive army of supporters; it has often been called a “troll farm.” The more I investigated this group, the more links I discovered between it and the hoaxes. In April, I went to St. Petersburg to learn more about the agency and its brand of information warfare, which it has aggressively deployed against political opponents at home, Russia’s perceived enemies abroad and, more recently, me.
Seven months after the Columbian Chemicals hoax, I was in a dim restaurant in St. Petersburg, peering out the window at an office building at 55 Savushkina Street, the last known home of the Internet Research Agency. It sits in St. Petersburg’s northwestern Primorsky District, a quiet neighborhood of ugly Soviet apartment buildings and equally ugly new office complexes. Among the latter is 55 Savushkina; from the front, its perfect gray symmetry, framed by the rectangular pillars that flank its entrance, suggests the grim impenetrability of a medieval fortress. Behind the glass doors, a pair of metal turnstiles stand guard at the top of a short flight of stairs in the lobby. At 9 o’clock on this Friday night in April, except for the stairwell and the lobby, the building was entirely dark.
This puzzled my dining companion, a former agency employee named Ludmila Savchuk. She shook her head as she lifted the heavy floral curtain to take another look. It was a traditional Russian restaurant, with a dining room done up like a parlor from the early 1900s, complete with bentwood chairs and a vintage globe that showed Alaska as part of Russia. Savchuk’s 5-year-old son sat next to her, slurping down a bowl of ukha, a traditional fish soup. For two and a half months, Savchuk told me, she had worked 12-hour shifts in the building, always beginning at 9 a.m. and finishing at 9 p.m., at which point she and her co-workers would eagerly stream out the door at once. “At 9 p.m. sharp, there should be a crowd of people walking outside the building,” she said. “Nine p.m. sharp.” One Russian newspaper put the number of employees at 400, with a budget of at least 20 million rubles (roughly $400,000) a month. During her time in the organization, there were many departments, creating content for every popular social network: LiveJournal, which remains popular in Russia; VKontakte, Russia’s homegrown version of Facebook; Facebook; Twitter; Instagram; and the comment sections of Russian news outlets. One employee estimated the operation filled 40 rooms.
Every day at the Internet Research Agency was essentially the same, Savchuk told me. The first thing employees did upon arriving at their desks was to switch on an Internet proxy service, which hid their I.P. addresses from the places they posted; those digital addresses can sometimes be used to reveal the real identity of the poster. Savchuk would be given a list of the opinions she was responsible for promulgating that day. Workers received a constant stream of “technical tasks” — point-by-point exegeses of the themes they were to address, all pegged to the latest news. Ukraine was always a major topic, because of the civil war there between Russian-backed separatists and the Ukrainian Army; Savchuk and her co-workers would post comments that disparaged the Ukrainian president, Petro Poroshenko, and highlighted Ukrainian Army atrocities. Russian domestic affairs were also a major topic. Last year, after a financial crisis hit Russia and the ruble collapsed, the professional trolls left optimistic posts about the pace of recovery. Savchuk also says that in March, after the opposition leader Boris Nemtsov was murdered, she and her entire team were moved to the department that left comments on the websites of Russian news outlets and ordered to suggest that the opposition itself had set up the murder.
Savchuk told me she shared an office with about a half-dozen teammates. It was smaller than most, because she worked in the elite Special Projects department. While other workers churned out blandly pro-Kremlin comments, her department created appealing online characters who were supposed to stand out from the horde. Savchuk posed as three of these creations, running a blog for each one on LiveJournal. One alter ego was a fortuneteller named Cantadora. The spirit world offered Cantadora insight into relationships, weight loss, feng shui — and, occasionally, geopolitics. Energies she discerned in the universe invariably showed that its arc bent toward Russia. She foretold glory for Vladimir Putin, defeat for Barack Obama and Petro Poroshenko. The point was to weave propaganda seamlessly into what appeared to be the nonpolitical musings of an everyday person.
In fact, she was a troll. The word “troll” was popularized in the early 1990s to denounce the people who derailed conversation on Usenet discussion lists with interminable flame wars, or spammed chat rooms with streams of disgusting photos, choking users with a cloud of filth. As the Internet has grown, the problem posed by trolls has grown more salient even as their tactics have remained remarkably constant. Today an ISIS supporter might adopt a pseudonym to harass a critical journalist on Twitter, or a right-wing agitator in the United States might smear demonstrations against police brutality by posing as a thieving, violent protester. Any major conflict is accompanied by a raging online battle between trolls on both sides.
As Savchuk and other former employees describe it, the Internet Research Agency had industrialized the art of trolling. Management was obsessed with statistics — page views, number of posts, a blog’s place on LiveJournal’s traffic charts — and team leaders compelled hard work through a system of bonuses and fines. “It was a very strong corporate feeling,” Savchuk says. Her schedule gave her two 12-hour days in a row, followed by two days off. Over those two shifts she had to meet a quota of five political posts, 10 nonpolitical posts and 150 to 200 comments on other workers’ posts. The grueling schedule wore her down. She began to feel queasy, she said, posting vitriol about opposition leaders of whom she had no actual opinion, or writing nasty words about Ukrainians when some of her closest acquaintances, including her own ex-husband, were Ukrainian.
Employees were mostly in their 20s but were drawn from a broad cross-section of Russian society. It seemed as if the agency’s task was so large that it would hire almost anyone who responded to the many ads it posted on job boards, no matter how undereducated or politically ignorant they were. Posts teemed with logical and grammatical errors. “They were so stupid,” says Marat Burkhardt, who worked for two months in the department of forums, posting 135 comments a day on little-read message boards about remote Russian towns. “You see these people with a lot of tattoos. They’re so cool, like they’re from New York; very hip clothing, very hip tattoos, like they’re from Williamsburg. But they are stupid.” In office conversation, they used gay slurs to refer to Petro Poroshenko and called Barack Obama a monkey. Management tried to rectify their ignorance with grammar classes. Others had “politology” classes to outline the proper Russian point of view on current events.
Yet the exact point of their work was left unclear to them. The handful of employees I spoke with did not even know the name of the company’s chief executive. They had signed a nondisclosure agreement but no official contract. Salaries were surprisingly high for the work; Savchuk’s was 41,000 rubles a month ($777), or as much as a tenured university professor earns. “I can’t say they clearly explain to you what your purpose there is,” Savchuk says. “But they created such an atmosphere that people would understand they were doing something important and secretive and very highly paid. And that they won’t be able to find a job like this anywhere else.”
Savchuk is 34, but her taste in clothes runs toward the teenage: The night of our dinner she wore a plaid dress and a billowing neon yellow jacket, and her head was swaddled in a fuzzy hood with animal ears. She credits her innocent appearance for allowing her to infiltrate the Internet Research Agency without raising alarms. While employed there, she copied dozens of documents to her personal email account and also plied her co-workers for information. She made a clandestine video of the office. In February, she leaked it all to a reporter for Moi Raion, a local newspaper known for its independent reporting. The documents, together with her story, offered the most detailed look yet into the daily life of a pro-Kremlin troll. Though she quit the agency the day the exposé was published, she was continuing her surveillance from the outside. She brought a camera to our dinner in hopes of documenting the changing of the shifts, which she planned to post to the VKontakte page of Information Peace, the group she founded to fight the agency. Her ultimate goal is to shut it down entirely, believing that its information warfare is contributing to an increasingly dark atmosphere in Russia. “Information peace is the start of real peace,” she says.
But at 10 minutes after 9 p.m., still no crowd had entered or left 55 Savushkina. Finally, around 9:30, a group of five young people approached the building and walked inside. Savchuk perked up, grabbed the camera and began to film the scene. Now more started filtering in, each of them stopping at the guard desk to check in. I counted at least 30 in all. Savchuk told me with pride that she believed the agency had changed its schedule to confound journalists, who began to stake out the place after her exposé.
Savchuk is accustomed to antagonizing powerful people. She has been a longtime environmental activist in the town of Pushkin, the suburb of St. Petersburg where she lives; her main cause before the troll farm was saving forests and parks from being paved over by well-connected developers. Last year she even ran for a seat on her municipal council as an independent, which in Russia requires a level of optimism bordering on delusion. On Election Day, she told me, state employees — health care workers, teachers, law enforcement, etc. — came to the polls wielding lists of candidates they had been “encouraged” to vote for, all of them associated with United Russia, the governing party of Vladimir Putin. (She lost her race.) Savchuk has filed a lawsuit against the Internet Research Agency for violating labor rights laws, citing the lack of official contracts. She has enlisted the help of a well-known human rights lawyer named Ivan Pavlov, who has spent years fighting for transparency laws in Russia; he took on Savchuk’s case in hopes that it would force the agency to answer questions about its business on the record.
Several Russian media outlets have claimed that the agency is funded by Evgeny Prigozhin, an oligarch restaurateur called “the Kremlin’s chef” in the independent press for his lucrative government contracts and his close relationship with Putin. When a reporter from the opposition paper Novaya Gazeta infiltrated the agency posing as a job seeker, she discovered that one of the team leaders was an employee of Prigozhin’s Concord holding company. (The reporter was familiar with her because the woman was famous among journalists for having been deployed by Prigozhin to spy on Novaya Gazeta.) The suspicion around Prigozhin was bolstered when emails leaked by hackers showed an accountant at Concord approving payments to the agency. If the speculation is accurate, it would not be the first time that Prigozhin has used his enormous wealth to fund quixotic schemes against his enemies: According to Novaya Gazeta, a documentary he backed, which later ran on the Kremlin-controlled NTV, claimed that the protesters who participated in the enormous anti-Putin demonstrations of 2011 were paid agents provocateurs, some of them bribed by United States government officials, who fed them cookies. “I think of him as Dr. Evil,” says Andrei Soshnikov, the reporter at Moi Raion to whom Savchuk leaked her documents. (My calls to Concord went unreturned.)
Savchuk’s revelations about the agency have fascinated Russia not because they are shocking but because they confirm what everyone has long suspected: The Russian Internet is awash in trolls. “This troll business becomes more popular year by year,” says Platon Mamatov, who says that he ran his own troll farm in the Ural Mountains from 2008 to 2013. During that time he employed from 20 to 40 people, mostly students and young mothers, to carry out online tasks for Kremlin contacts and local and regional authorities from Putin’s United Russia party. Mamatov says there are scores of operations like his around the country, working for government authorities at every level. Because the industry is secretive, with its funds funneled through a maze of innocuous-sounding contracts and shell businesses, it is difficult to estimate exactly how many people are at work trolling today. But Mamatov claims “there are thousands — I’m not sure about how many, but yes, really, thousands.”
The boom in pro-Kremlin trolling can be traced to the antigovernment protests of 2011, when tens of thousands of people took to the streets after evidence of fraud in the recent Parliamentary election emerged. The protests were organized largely over Facebook and Twitter and spearheaded by leaders, like the anticorruption crusader Alexei Navalny, who used LiveJournal blogs to mobilize support. The following year, when Vyascheslav Volodin, the new deputy head of Putin’s administration and architect of his domestic policy, came into office, one of his main tasks was to rein in the Internet. Volodin, a lawyer who studied engineering in college, approached the problem as if it were a design flaw in a heating system. Forbes Russia reported that Volodin installed in his office a custom-designed computer terminal loaded with a system called Prism, which monitored public sentiment online using 60 million sources. According to the website of its manufacturer, Prism “actively tracks the social media activities that result in increased social tension, disorderly conduct, protest sentiments and extremism.” Or, as Forbes put it, “Prism sees social media as a battlefield.”
The battle was conducted on multiple fronts. Laws were passed requiring bloggers to register with the state. A blacklist allowed the government to censor websites without a court order. Internet platforms like Yandex were subjected to political pressure, while others, like VKontakte, were brought under the control of Kremlin allies. Putin gave ideological cover to the crackdown by calling the entire Internet a “C.I.A. project,” one that Russia needed to be protected from. Restrictions online were paired with a new wave of digital propaganda. The government consulted with the same public relations firms that worked with major corporate brands on social-media strategy. It began paying fashion and fitness bloggers to place pro-Kremlin material among innocuous posts about shoes and diets, according to Yelizaveta Surnacheva, a journalist with the magazine Kommersant Vlast. Surnacheva told me over Skype that the government was even trying to place propaganda with popular gay bloggers — a surprising choice given the notorious new law against “gay propaganda,” which fines anyone who promotes homosexuality to minors.
All of this has contributed to a dawning sense, among the Russian journalists and activists I spoke with, that the Internet is no longer a natural medium for political opposition. “The myth that the Internet is controlled by the opposition is very, very old,” says Leonid Volkov, a liberal politician and campaign manager to Alexei Navalny. “It’s not true since at least three years.” Part of this is simple demographics: The Internet audience has expanded from its early adopters, who were more likely to be well-educated liberal intelligentsia, to the whole of Russia, which overwhelmingly supports Putin. Also, by working every day to spread Kremlin propaganda, the paid trolls have made it impossible for the normal Internet user to separate truth from fiction.
“The point is to spoil it, to create the atmosphere of hate, to make it so stinky that normal people won’t want to touch it,” Volkov said, when we met in the office of Navalny’s Anti-Corruption Foundation. “You have to remember the Internet population of Russia is just over 50 percent. The rest are yet to join, and when they join it’s very important what is their first impression.” The Internet still remains the one medium where the opposition can reliably get its message out. But their message is now surrounded by so much garbage from trolls that readers can become resistant before the message even gets to them. During the protests, a favorite tactic of the opposition was making anti-Putin hashtags trend on Twitter. Today, waves of trolls and bots regularly promote pro-Putin hashtags. What once was an exhilarating act of popular defiance now feels empty. “It kind of discredited the idea of political hashtags,” says Ilya Klishin, the web editor for the independent television station TV Rain who, in 2011, created the Facebook page for the antigovernment protests.
Russia’s information war might be thought of as the biggest trolling operation in history, and its target is nothing less than the utility of the Internet as a democratic space. In the midst of such a war, the Runet (as the Russian Internet is often called) can be an unpleasant place for anyone caught in the crossfire. Soon after I met Leonid Volkov, he wrote a post on his Facebook wall about our interview, saying that he had spoken with someone from The New York Times. A former pro-Kremlin blogger later warned me about this. Kremlin allies, he explained, monitored Volkov’s page, and now they would be on guard. “That was not smart,” he said.
The chain that links the Columbian Chemicals hoax to the Internet Research Agency begins with an act of digital subterfuge perpetrated by its online enemies. Last summer, a group called Anonymous International — believed to be unaffiliated with the well-known hacktivist group Anonymous — published a cache of hundreds of emails said to have been stolen from employees at the agency. It was just one hack in a long series that Anonymous International had carried out against the Kremlin in recent months. The group leaked embarrassing photos of Putin allies and incriminating emails among officials. It claimed to have hacked into Prime Minister Dmitri Medvedev’s phone, and reportedly hacked his Twitter account, tweeting: “I’m resigning. I am ashamed of this government’s actions. Forgive me.”
Friday, February 16, 2018
While Senate Bill 827 is getting all the attention it deserves, sitting in it's shadow is another equally onerous Senate Bill proposed by Scott Wiener and likely authored again his partner in crime Brian Hanlon - See Senate Bill 828 with the innocuous title "Land Use: Housing Element".
SB 828 is about "housing quotas." Housing advocates such as the YIMBYs are hoping that with all attention on 827, Senate Bill 828 will slip under the radar. Like Senate Bill 827, Senate Bill demonstrates all the understanding of a child applying over-simplified logic when it comes to planning:
What are these housing quotas that you speak of?
For decades every city and county in California has been given a housing quota, or "Regional Housing Needs Assessment" allocation (RHNA, often pronounced ree-na) that it must plan for. Cities don't build housing or submit housing proposals (a fatal flaw in Wiener's Senate Bill 828 we'll come back to) but these quotas require that they produce specific numbers of units at different income levels.
These quotas are calculated by a number of regional government bodies such as the Association of Bay Area Governments (ABAG), the Southern California Association of Governments (SCAG), and the Association of Monterey Bay Area Governments (AMBAG).
Alternatively a city can appeal and receive their allocation number directly from the State of California through the Department of Housing and Community Development (HCD).
The quotas are set in 8 year cycles by these organizations. On a 2 year lag after the quota is allocated, cities and counties are obligated to respond with a "Housing Element" - a document that identifies the number of units that could theoretically be built based on current zoning at different income levels.
What happens if cities don't meet their quotas?
If a city or county either doesn't provide a housing element or presents a housing element that does not meet the required quota for certification, then it can be forced to go on a 4 year reporting cycle and exposes itself to liability and can be sued. The cities of Pleasanton and Menlo Park have both been sued for failing to meet their housing quotas by Urban Habitat.
This is not a light slap on the wrist. Not only are the penalties substantial but the city must pay the petitioner's legal costs. This can amount to millions of dollars. Today, cities face challenges balancing the books with onerous payments needed to stave off bankruptcy caused by the unfunded pension benefits crisis. When Vallejo went bankrupt the results were significant:
All city hall employees bar 2 were made redundant;
Fire and Police were severely cut back;
Maintenance of basic city infrastructure was deferred -- traffic lights would break down flashing yellow resulting in major traffic delays
Author Michael Lewis, who wrote The Big Short, predicts in his book Boomerangthat when the next recession hits many California cities are likely to go bankrupt like Vallejo. This author's own city, San Rafael, heads the list of California cities with the largest pension cost revenue ratio of 17.58%. This means 17.58% of all taxes collected go not to supporting city services, but simply to pay of unfunded pension debt. It should be noted that many local tax increases claimed to support enhancing city services (new fire station, emergency radio system, sewer or water pipes) really disguise creeping unfunded pension costs.
So, the impact of not meeting these quotas is very real. It is almost the nuclear option for a city to fail to meet the quota - risking bankruptcy.
Wiener and his advocates like the YIMBY's know this and take full advantage.
What happens when quota's go wrong?
Ten years ago, city of Corte Madera in Marin County, which sits on about 5 square miles of land that is mostly built out except for a few parcels at risk of flooding, was allocated a quota of about 230 units in a prior RHNA cycle; but it only had zoning identified for about 40 units.
To meet the quota the city had to quickly rezone. While several parcels could have been rezoned, a developer working with the city planner convinced the city council that the best option was to rezone the former WinCup polysterene cup factory, which about to be sold. If rezoned the value of the land increased considerably.
Faced with a gun-to-the-head quota, and with the encouragement of its planning staff, the city council caved in and rezoned the WinCup site for 182 units of residential development. The quota was met. The rest is history.
Within 2 weeks of the zoning change, Macfarlane Partners submitted plans to develop the site with housing. Nothing ever happens that fast in planning!
Meanwhile, Corte Madera's mayor went back to the Association of Bay Area Governments and demanded to see the methodology of how such a small city with limited remaining land was given such a large quota. ABAG produced their spreadsheet, but concealed the calculations in the cells. On further protest ABAG, without admitting fault, reduced Corte Madera's quota for that cycle to just 80 units.
But it was too late - the zoning had been changed, and the developer of WinCup had got their foot in the door. The new development was beyond the point that it could be stopped.
Today Tamal Vista (referred to locally in Marin as "WinCup" even though that was really the name of the polystyrene cup factory) is looked upon by both sensible growth and fast advocates as a disaster. The 5 story, gaudy, box like building overlooks 101 and is out of scale with other small city buildings in the county. WinCup has become the poster child for the type of high density, rapid growth advocated by Scott Wiener and the YIMBYs.
Senate Bills 35 and 828 - A deadly cocktail
Now readers understand the background - these housing quotas threaten to bankrupt cities if they are not met - the significance of Senate Bill 828 can be fully realized.
Senate Bill 35 (another Wiener bill) enacted in January adds further penalties. Cities must not only plan to meet their quotas with zoning, they must approve a certain number of units - if not Senate Bill 35 allows developers with qualifying developments (paying union rates) to submit plans that bypass important processes:
No environmental review
No local review
No city council approval required
Only objective, pre-written design requirements can be applied; e.g. planning commissions cannot subjectively require set backs, green space or light wells - items important for livability
The redeeming aspect of Senate Bill 35 are it's two requirements:
Compliant developments must pay "prevailing wage". This means paying union rates that typically are only affordable for large scale development in major cities like San Francisco or Los Angeles. However the author is learning that construction salaries are increasing and closing the gap; so this obstacle many deem to have neutralized Senate Bill 35 may be removed.
Compliant developments must include a specified amount of affordable housing. Typically this is 50% - a number that makes it difficult for market rate developers to make development pencil out. However for cities missing their quotas by a large margin this percentage drops to just 10%. A much more feasible number.
The fundamental mis-step with Senate Bill 35 is that cities do not control how many development proposals are submitted. But SB35 holds them accountable to how many units they approve. Readers should understand this disconnect. Wiener and Hanlon who authored SB35 chose not to. So cities may meet the quotas with zoning, but if they are unlucky they may not receive enough development proposals to meet their SB35 units approved requirements.
To illustrate the significance of SB 35 historically 97.6% of California cities did not meet their full RHNA goals. Only 13 cities (2.4%) met their goals making them exempt from SB 35 streamlining.
SB 828 dramatically increases RHNA quotas
Now the full ramifications of not meeting quotas is clear: all local and environmental review can be bypassed, and market rate development can occur with as little as just 10% affordable units when quotas aren't met.
Wiener's bills make a mockery of the years of community input put into citys general planning process. These plans can cost hundreds of thousands of dollars to generate and capture the communities vision for their city in the future.
The author is a steering committee member for his own city's general plan and is observing the great time and care put into general plans.
Senate Bill 828, if enacted, changes the way quotas are calculated and implemented:
It authorizes the department of Housing & Community Development to challenge and update the methodology for calculating quotas
It rolls over unbuilt quotas to the next cycle, like mobile phone rollover minutes. At present quotas are reset for each 4 year cycle. Now housing quotas can compound, cities can easily get into a quota debt they may never climb out of - and since these depend on developers submitting proposals (they only approve proposals) they can become trapped in a quota deficit they never climb out of. They then lose all control of planning and community input is systematically bypassed.
It requires cities plan for 200% of quotas. This forces cities to upzone and zone more land than they otherwise might to meet the quota. Typically the only areas remaining available are in the least suitable locations - locations at risk of flooding due to sea level rise or in industrial areas or next to freeways and transit corridors where mortality rates for asthma, heart disease are considerably higher and the areas are less safe and noisy.
So while Senate Bill 827 is the poster child - opponents need to step back and understand the full barrage of onerous bills Wiener and Hanlon are presenting - and their combined impact. These bills together accelerate removal of local control and planning. They don't help build affordable units and solve the housing crisis - but they are a gift to market rate developers.
SB828 Bill Text
Leah Green interrupts, insults and makes faces at audience and the audience responds back. Maintenance Shed architect is hired for a site plan in an ILLEGAL location next to Miller Creek. Fire Department kitchen is going forward WITHOUT reopening the bid process. It won't comply with Government contracting law YET somehow they insist on the need to hire contractors with a personal relationship to the Chief/Board for up to $87,000. A legitimate bid was had for $25,000 at the beginning of the process. Thrifty residents pointed out that it could be done for less than $15,000. Leah Green, the daughter of a successful businessman, suggests to move ahead with $87,000 to put the matter to rest. The annual audit shows an improving financial situation (as usual) despite severe financial challenges. Luke Fretwell has been hired as the recreation director at an undisclosed salary and not following standard government procedure. Luke is a fine replacement for our outgoing recreation director, Shane Demarta and SHOULD get the position in our opinion but transparency was violated. Fraud procedures were adapted that denies transparency. If fraud is found, the CSD manager may launch an investigation quietly. If the CSD manager is found to be suspect only the President of the CSD is allowed to investigate. There is no requirement for public reporting or third party investigation. Izabela Perry acknowledges the problem but Jeff Naylor argues to adapt the policy citing that it can "be amended later".
Thursday, February 15, 2018
Posted by: Bob Silvestri - February 15, 2018 - 9:49am
In the early 1970s, my “budding” career designing residential bathroom additions (“Will those be granite or marble countertops?”), took a detour when I spent nine months working as a psychotherapist-in-training at the Primal Institute in Los Angeles. This somewhat inexplicable happenstance was the result of me building bookshelves at the Beverly Hills manse of Arthur Janov: the then rock star, “on the cover-of-the-Rolling Stone” psychologist whose wizardry had recently inspired John Lennon to compose his John Lennon Plastic Ono Band and Imaginealbums.
I had been on my lunch break, sitting by the pool overlooking Benedict Canyon, when Janov himself emerged from the house, beside himself, because he’d been unable to soothe the soul of his lovely but quite enraged girlfriend, and in a fit of exasperation asked me if I would go in and sit with her and try to help out.
More than shocked, but having nothing to lose, I spent the next two hours conducting an ad hoc, private therapy session for someone who was clearly in a great deal of emotional pain (about their relationship, it turns out, which explains why his efforts to “therapize” her were futile).
My technique consisted of muttering whatever laconic comments came to mind: things like, “Wow, that sounds bad,” and “Gee, how did that make you feel?,” which resulted in her emerging from her girl cave euphorically proclaiming that she had never felt better in her life and demanding that Art put me on the staff at the Institute immediately – which is exactly what happened.
The lesson here, of course, is not that I possessed some great skill, but it speaks volumes about the power of allowing someone a safe place to just spill all their tear-drenched truths that they’ve been holding inside for a long time. In any case, in this Forrest-Gumpian reality, then, “I was a therapist.”
In fairness, I had spent some months trying the therapy myself so I knew a bit about it – in those days, if you wanted the cutting edge of self-discovery, it was Primal, EST, Gestalt or jumping into Orgone boxes.
In any case, one of the first things you’re supposed to learn as a therapist is that “everyone’s pain hurts, bad.”
This meant that as a therapist, contrary to the obvious truths before you, whether you’re listening to a suicidal patient who had been physically beaten, mal-nourished and psychologically abused as a child, or a run-of-the-mill, middle class neurotic -- who had never known want and whose parents had paid a fortune for their Ivy League education and summer sabbaticals overseas, but who were nonetheless “depressed” because they were “never really understood” or seen “for who I am!”-- you had to act as if each of their personal definitions of the “pain” that they described as “really bad,” were somehow equally worthy of your time.
This is in no way said to make light of anyone’s pain. There are a million reasons why one person’s annoyance can be another person’s Waterloo. Some of us are far more fragile, while others are almost impenetrable, regardless of the circumstances.
Most practicing therapists are really good at this kind of cognitive dissonance, otherwise they’d probably lose half their patients by perhaps suggesting they stop ruminating about their troubles and take a risk and change their lives, if there so unhappy with it… and by the way, on the way out, get down on their knees and kiss the ground and thank the Universe for their good fortune to be able to pay $400 an hour for the session.
Needless to say, I had trouble with this therapeutic “technique,” and it didn’t take too long before the Institute and I parted ways. To this day, I still have a problem with the “everyone’s pain hurts, bad” concept, particularly when it manifests itself as political correctness.
Surely, there is such a thing as objective degrees of “bad,” right? For example and without condoning either men’s actions, to declare an equivalency between Al Franken’s oafish and sophomoric behavior and the notorious, felony menacing of people like Harvey Weinstein is sort of absurd, isn’t it?
In any event, this all too human tendency to base our beliefs and perceptions on subjective, false equivalencies seems to be somewhat epidemic today. We see this even when it’s obvious that every crisis is not really a “crisis,” but perhaps more just a difficult situation we find ourselves in, which needs to be addressed.
Understanding the difference may be the only way to make sense of what we’re seeing in our body politic, which brings me to Senator Scott Wiener and his YIMBY constituent’s remedy for all the “pain” they see in the world: SB 827.
Things are tough all over
As I’ve noted in past articles, young, educated, urban professionals do face some housing challenges in the Bay Area and in fact, in pretty much every major city in the Western World (London ain’t cheap). At the same time, the cost of living in general, with our seemingly endless layers of fees and taxes and special charges has gotten burdensome for everyone in spite of the fact that inflation is supposed to be tame, at least according to government “statistics.” And, in California, being the highest taxed population in the country (state & local income, sales and real estate taxes and fees), it’s an even bigger problem.
However, none of this justifies the accusatory rhetoric and just plain mean-spirited tenor of the pro SB 827 campaign.
Scott Wiener was recently quoted in Wired Magazine saying,
“It makes me nuts when I see wealthy Nimby homeowners in Marin and elsewhere suddenly becoming defenders of low-income people of color. These are communities that fought tooth and nail to keep low-income people out.”
Race-baiting allegations such as this, constantly repeated by Wiener and his supporters, imply that public opinion against high density development is racially motivated, rather than being based on what the record shows are the real objections: traffic congestion, environmental damage, lack of water supply, impacts on infrastructure and public services, etc.And, if his allegations were true, why are communities of color in major metropolitan centers against SB 827 and other such pro-gentrification legislation?
The biggest irony here, of course, is that SB 827 doesn’t even require that low income housing be built for all those low income people that Wiener claims to care so much about. In fact, his legislation overrides (SB 35) or eliminates (SB 827) local inclusionary zoning laws that do require it. Wiener just likes to use low-income families as a useful talking point.
Following his lead, well-organized supporters of SB 827 have even demanded that the state “outlaw single family zoning” and pass laws that “force seniors to sell their homes (to young urban professionals) and move away.” I wonder where they would have all those “evil” seniors go: to internment camps, perhaps?
The nonsensical nature of these demands notwithstanding, this new American “Red Guard” is encouraged by Senator Wiener (whose quest for political power is fairly naked), and emboldened by copious amounts of funding from tech companies, which are eager to have the state (i.e., taxpayers) pay for the impacts of their voracious, profit making juggernauts.
Elected officials in almost every city and county in the San Francisco Bay Area have written letters to Senator Wiener, stating their objections to SB 827. That’s a good thing. Unfortunately, those letters tend to be filled with fairly insipid comments, the tone of which is more akin to asking permission to be excused from participating, than outright opposition. Even more dangerously, municipalities are attempting to negotiate with the Devil on this and trying to coach their comments in a politically correct way, but in the process are giving away the store and putting themselves and their communities in a lose lose situation.
This is not an “SB 827 needs to be changed” situation. This is a “Hell, no!” situation. There is nothing about this proposed legislation that is worthy of discussion. It is based on ignorance and hatred, and corrosive to communities, disadvantaged populations, the principles of our State Constitution and the sovereignty of local elected government and their General Plans.
It shouldn’t be on the table for discussion in the first place.
Who’d ‘a thunk it
Many people, myself included, have enumerated the fallacies embodied in this developer’s wet dream legislation that Wiener is proposing. But, since being a taxpaying resident who owns a single family home immediately makes one’s comments somehow tainted and dismissible, the current battle of rhetoric quickly devolves into a pointless and tasteless standoff.
In these truly dim times, however, there are voices speaking up that are above reproach.
As a child of the 60s, I never would have imagined that I would be rooting for the FBI to save us from Washington DC politics. More ironically, I never would have imagined myself being grateful to planning staff in San Francisco, for being a voice of reason.
Their recent comments on SB 827 are a case in point. Those comments, submitted to the SF Planning Commission, show what a clueless, planning neophyte Wiener really is, even when it comes to his own city. It helps unveil Wiener’s complete ignorance about what a General Plan is, how and why cities conduct planning and anticipate outcomes, or the variety of planning regulatory challenges and nuances that exist in the most populous state in the Union with the 5th largest economy in the world.
The February 5, 2018 comments by the San Francisco Planning Department are not a public policy response. Clearly, the staff is being respectful of the fact that turning their comments into public policy positions is the purview of the Planning Commission and the Board of Supervisors. So, they tread carefully in their language. However, there is no doubt that they believe SB 827 is divorced from the City’s planning realities and would do far more harm than good.
In their initial summary they note:
The bill would have its greatest impact on the State’s core metropolitan regions with more extensive transit service. In San Francisco, this would be virtually the entire city. In the rest of the Bay Area, large swaths of Oakland, Berkeley, and San Jose would be affected, as would all areas right around Caltrain, BART, and SMART stations, various singular corridors along both sides of the Bay… and areas around ferry terminals.
They go on to point out that the bill would also prohibit the enforcement of
Any design standard that restricts the applicant’s ability to construct the maximum number of units consistent with any applicable building code.
It’s important to consider that cities such as San Francisco are supposed to be Wiener’s base: the places you would think would be most supportive of his vision, because they generally share the overriding goals of providing more housing near public transportation in their General Plan and Housing Element, and because they share his belief that aggressive housing development will bring down housing costs.So, why aren’t they supportive of SB 827?
As they explain
Although the General Plan, as the embodiment of the City’s guiding policy document for the evolution of San Francisco, shares these key objectives with SB 827, the General Plan also explicitly emphasizes the importance of planning for land use change in consultation with communities and in consideration of a variety of relevant factors in the context of each area—urban form, open space, historic preservation, and other factors. [Emphasis added]
And that it’s important to consider
the practicalities of implementing the bill and other key inconsistencies with General Plan policies, particularly the importance of maintaining key urban design standards related to livability, walkability, and context.
It is telling that these observations are essentially identical to the objections voiced by every city council and planning agency in suburban counties, such as Marin.
The SF Planners go on to point out that SB 827 does not address the demolition or removal of existing affordable housing units, potentially opening the door to runaway gentrification, and that the bill would significantly up-zone most of the city (by their calculation 96% of San Francisco would be affected). This would have the impact of over-riding their typical 45 foot height limit and increasing it to 85 feet on almost all major streets in San Francisco.
In addition to that massive up-zoning, they note that development would be covered by the State Density Bonus Law,
Hence what is proposed as 45', 55', and 85' heights could actually be 65', 75'-85', and over 100' respectively.
This again echoes the comments made by suburban cities and counties. The obvious question is how can someone be a State Senator and former San Francisco Supervisor and not be aware of this? Or, is Wiener aware of it, but he just doesn’t care.
But it gets worse. The SF Planning Department continues:
SB 827 appears to eliminate the ability to enforce Planning Code standards or other adopted Design Standards that are the backbone of livability, walkability and urban design quality. The bill’s provision regarding design standards is dramatic. …SB 827 as proposed, completely eliminates all design standards related to building envelope… This would preclude the ability to maintain any standards regarding rear yard, lot coverage, exposure, open space, setbacks, and bulk controls of any kind, to name a few …these planning controls establish basic housing and neighborhood livability standards such as access and connection to daylight, openness in urban density, and natural spaces. [Emphasis added].
As it is in other cities, the SF Planners also point out that the bill would undermine all of their current affordable housing incentive programs and initiatives, which tend to hold density out as a carrot to coerce developers into building affordable units: SB 827 simply gives this bonus density away with no affordability requirement attached.Worse still,
The bill provides potentially huge additional value to property owners throughout the state, without concurrent value capture.
In other words, what does the City get back for this property rights give-away and how do they monetize this so they can provide all the infrastructure and public services these new developers will instantly demand?
How is this in any way equitable to existing residents?
Finally, they point out how completely impractical it is to tie density (a long term planning tool) to the timing or bus routes or the bill’s other definitions of what constitutes a “transit rich” opportunity site, when those transit options are in constant flux.
The minimum standard for a corridor to trigger the major rezoning is a single bus line that runs four times an hour during peak morning and afternoon commute hours (i.e. a couple of hours per day). This bus could run only during these peak hours (such as an express bus) or have much lower headways at other times of day (e.g., 20-30 minutes). It may not run at all on weekends and there may be no other transit that serves other destinations other than that one bus. [Emphasis added]
Additionally, the bill refers to transit “corridors,” but it is true that many bus routes that meet the peak hour service definition are commute express buses that may not stop for miles along their journey, stopping only at the ends. However the proposed this bill would appear to up-zone the entire path taken by such a bus (for example, in San Francisco the areas adjacent to Highway 101 would be up-zoned, because of bus use along the Highway;
[In Marin, this would include the entire length of highway 101, regardless of the actual transportation options available]
However, bus routes are not a fixed form of transportation like trains are: their routes and schedules change, adapting to real time demand. So, how exactly does that work for zoning, which is a permanent planning device?
As the SF Planners point out, under SB 827
The zoning map would be dynamically tied to constantly shifting factors and would require constant monitoring of transit service levels and routes to maintain an updated zoning map. This could mean that zoning could fluctuate somewhat dramatically over time as service levels increase or decrease due to transit budgets, ridership, travel patterns, or agency service strategy. Under the proposed bill, if an operator were to cut service from 15 minutes to 18 minutes, that would trigger a sudden rezoning for 1/4-mile around the bus route; similarly minor increases in transit service could trigger dramatic rezoning.
They go on to ask, what happens when other regional transit agencies, such as Golden Gate Transit, decide to change their schedules or add or eliminate bus routes? SB 827 will put local zoning (and defacto changes to the city’s General Plan) in the hands and at the whim of these outside agencies. How does that work?
To cut to the chase, it doesn’t. SB 827 may be one of the most amateurish attempts at legislation California has ever seen.
Everyone’s pain hurts, bad
Let’s go back to the problem that we should all want to solve: how do we provide housing for those most in need in our communities? That’s the democratic, egalitarian goal we should all be embracing, first and foremost when it comes to housing issues. It’s the basic principle that motivated the federal government to create the FHA in 1934 and addressing it is the path to socially just city planning.
You’ll notice that doesn’t include picking favorites or building housing for those who just want more. That means that if major tech companies create major housing shortages, while they’re piling up there hundreds of billions in profits, it’s not our civic responsibility to make sure their employees have housing. It’s really their problem to solve and if that requires moving their headquarters somewhere else or paying everyone who works for them a lot more money (and that includes third party service providers like cleaners, gardeners and trash haulers), that’s still their problem.
This brings me back to Wiener and his band of snowflakes.
Weiner’s knock on Baby Boomers--all those seniors who should be forced to sell their homes and go “away.” -- is that Boomers had it easy and are selfish.
But, is there any truth to that?
In past articles, I wrote about how much luckier I was than my parents or grandparents, to have been able to grow up in what was then called a middle class family in the 50s: a family of four in a 920 square foot house, owning one family car, having one party-line phone and neighbors who were mostly working class—house painters, electricians, insurance salesmen, etc.—with stay at home moms and if anyone vacationed anywhere further away than Florida, it was a really big deal on the block.
But, the 50s have been over-rated. We spent our youth ducking and covering under our school desks preparing for the atomic bomb everyone seemed pretty sure the Russians were going to drop on our heads any day now, and learning about the “Commie” threat that was somehow everywhere around us.
Later, we went off to college just in time for the reinstatement of the military draft and the Vietnam War. Everyone who lived through that time lost friends and family or saw some of them come home crippled and broken. Many promising careers got cut short.
The 60s are glamorized today, but the abiding tone was non-stop tension. It was a time when you could go to prison for life for possessing a single joint and thrown out of school for having long hair. I’m not complaining, but that’s just how it was. Was it unfair? Yeah, I guess you could say that.
And, if your parents didn’t have the money to pay for college, which many didn't, it forced you to find a way, work nights and weekends, then find a place to live, close to school, which brings us to the issue of housing.
But, housing was much cheaper back then, right? Well, let’s see about that.
It’s true that you could live many places in the country then and spend very little on housing, but that is still somewhat true today. But, that has never been true for anywhere you really wanted to be. And, in the 1960s, New York City was the epicenter of the world, career-wise. It was the place to be, even more than Silicon Valley is today.
In 1969, a small one-bedroom apartment in a crappy old building in a dangerous neighborhood on Manhattan’s Lower East Side (Avenue B or C) cost you about $250 a month, if it wasn’t rent controlled (hard to come by back then because people with rent controlled units never moved – generations of families grew up in the same apartment).
As a graduate architect at that time, I made about $5 per hour doing drafting work. A graduate architect today probably makes about $50 per hour doing CAD. So, based on that, the rent for that apartment should be about $2,500 per month, today, which is pretty much exactly what it is, except that there are no longer any run down neighborhoods on the Lower East Side and the streets are safer than they’ve ever been.
Real estate values have an uncanny way of keeping parity with wages and inflation over the long run, even if there are long periods of transitions where that is not the case, such as now.
Okay, but there’s more to life than just rent, right? What about other lifestyle opportunities? Surely, everything else was still much easier for Boomer college graduates, right?
In the late 1960s and 1970s, when the bulk of Boomers graduated college, the country went through the longest period of stagflation it has ever known. Then the mid-70s “oil shock” turned it into a full-blown recession with cars waiting for gas, in lines around the block. The Post WWII boom came to an abrupt end.
Cities like New York teetered on the verge of bankruptcy and crime skyrocketed. Jobs were scarce, competition was fierce (too many Boomers seeking too few job opportunities) and the jobs you could find certainly didn’t offer climbing walls, sushi bars and fitness centers. And, there was no Internet or cellphones with apps to help you locate a job or an apartment.
So, I’m sorry, but I’m honestly baffled by Wiener’s anti-Boomer generation rhetoric. Heck, if you want to attack the Boomer generation, why not do it for giving up on environmental and social justice causes and trading in Water Buffalo sandals and tie-dyed t-shirts for Gucci’s and Zengna suits and wrecking the world’s financial system?
That notwithstanding, regarding the allegation about being selfish, I’ve yet to see any generation that’s cornered the market on that. But, I keep wondering these days, what is it going to take for people to start to feel grateful and lucky for all we have?
Coming full circle
How about we get back to the point of all this, where the whole discussion of affordable housing started? What about the poor and those who are really in need, who don’t get to go to college, whose children go hungry at night, or who have disabilities, or whom police and federal agencies racially profile, and who work manual jobs and live crammed into crappy old apartments? Those are the people in our communities who really have a housing affordability problem. What about them?
Why aren’t they even a footnote in Wiener’s agenda? If we believe we have any social responsibilities at all, isn’t this one of them?
SB 827 is an awful idea based on fear-mongering and self-serving, small-minded politicians, the greed of major corporations and our unquestioned mantra that privatization and unbridled growth will solve everything: San Francisco’s housing needs, climate change, the national debt, peace on earth, you name it.
Frankly, if we can’t do better than SB 827 to address our housing challenges, we should dissolve the State Legislature and start over.
Just say, "No."
 Wikipedia: A person who has an inflated sense of their own uniqueness, has an unwarranted sense of entitlement, or is easily offended and unable to deal with opposing opinions.
Hated by politicians, speculators and money-launderers, Andy Yan’s data on Vancouver housing has earned him the right to say, ‘I told you so’
February 14, 2018
Andy Yan is a 42-year-old East Vancouverite who came up out of the proud working class ranks of Van Tech high school, toiling on weekends in the kill tank at the old Hallmark Poultry Factory on Clark Drive. He set out on a career in urban regeneration and applied demographics that took him to projects in New Orleans, New York City and San Francisco.
Nowadays he’s the director of the City Program at Simon Fraser University, and while he’s too modest to boast about it, along the way he’s picked up a couple of exceedingly rare civic distinctions.
The first is the enduring enmity of all the politicians, real estate speculators, white-collar currency pirates and money launderers who have turned Vancouver into a global swindler’s paradise for real estate racketeering, a city that is now also one of the world’s most hopelessly pathetic urban landscapes of housing affordability. The second thing Yan has earned is an unfettered and unimpeachable right to say “I told you so.”
Three years ago, Yan was anxious to get a handle on the role foreign capital was playing in Vancouver’s weirdly convulsing real estate market. At the time, Yan’s main gig was his work as an urban planner with Bing Thom Architects, on contract as an urban planner. When Yan published the results of his research in November, 2015, it came as a shock, for two main reasons. It seemed to conclusively prove what everybody knew but nobody was supposed to say out loud. And it broke a taboo that was enforced so absurdly that Vancouver mayor Gregor Robertson resorted to dismissing Yan’s research as racist.
Yan found that buyers with “non-Anglicised Chinese names” had picked up two-thirds of 172 houses sold over a six-month period beginning in September 2014 in Vancouver’s posh west side neighbourhoods. Contrary to public perception, however, the buyers weren’t just showing up with “bags of cash” to make their buys. Some of Canada’s biggest banks were in on it. Roughly 80 per cent of the deals involved a mortgage, and half of the mortgages were held by two banks – CIBC and HSBC.
Canada’s banks have mastered the manipulation of clandestine back channels around China’s currency control regulations—the same routes that well-connected Chinese multi-millionaires have been using to shift up to a trillion dollars’ worth of yuan out of China every year. What wasn’t clear about what was happening on Vancouver’ s west side, however, was who the real buyers were, exactly. The new homeowners’ most commonly stated occupation: housewife or homemaker.
Fast forward three years. The weirdness that Yan documented in Point Grey, Dunbar, Kerrisdale and Shaughnessy has rapidly spread southward and eastward, decoupling the bonds linking incomes with housing values across Burnaby, Richmond, Coquitlam, all the way out to Surrey and White Rock on the Canada-U.S. border. Metro Vancouver’s real estate market is now a dystopian tableau of panic buying, tax fraud, property flipping, overseas pre-construction condominium sales, stone cold speculation and elaborate, multiple-account money transfer rigmaroles that are the conduit of choice for drug cartel tycoons. Not even the heaviest regulatory hands at the controls of the Chinese Communist Party’s surveillance state seem capable of shutting the networks down.
It’s not just about shady Chinese money—not by a long shot. Vancouver’s old establishment property developers and real-estate companies fed the frenzies and made a killing. Along the way, they greased the skids by pouring buckets of money into Gregor Robertson’s now-dying Vision Vancouver civic party and Christy Clark’s Liberal Party. Robertson is now a sad figure, his legacy a shambles, his term up in October, and even his celebrated relationship with his glamorous girlfriend, the Chinese pop star Wanting Qu, fell apart last year. Qu’s mother, a Communist Party official in Harbin, remains on trial on charges of embezzling $70 million in a land swindle. Christy Clark is history, too. Her government was toppled last year by John Horgan’s New Democrats. With at least 60,000 Chinese immigrant investors sloshing their money around Metro Vancouver real estate over the past few years, federal politicians, too—Liberals, mainly—have been more than happy to rake it in at cash-for-access soirees and in generous donations to election campaign war chests.
In these ways, in Vancouver’s political circles, and in polite company, one simply didn’t mention the way the city’s housing market was being restructured to serve as an offshore investment bolthole for billions of dollars’ worth of shadow currency being spirited out of China, Iran, Russia and other such kleptocracies. But back in 2015, when the profoundly caucasian Mayor Robertson attempted to dismiss Yan’s findings—“I’m very concerned with the racist tones that are implied here,” Robertson said—it was a smear too far.
Yan’s great-grandfather was allowed into Canada only after being obliged to pay the infamously racist head tax Ottawa put in effect to keep out working-class Chinese immigrants. Students, merchants and diplomats were exempt. The head tax was in place until 1923. Yan wasn’t going to put up with Robertson’s backchat, and by that time, Vancouver’s ethnic Chinese community leaders had siimilarly lost their patience. White real estate moguls and politicians like Robertson persisted in proclaiming their anti-racist bona fides and purporting to be the champions of Vancouver’s Chinese community by shutting down public debates about the region’s housing catastrophe. Brandon Yan, a civic activist and volunteer on Vancouver’s planning commission, put it best: “Let’s leave it to the rich white dudes to decide what’s racist, right?”
Vancouver’s “condo king” Bob Rennie—a primary financial backer of Robertson’s NDP-tilting Vision Vancouver team and also the chief fundraiser for the NDP’s adversaries in Christy Clark’s Liberals—had cultivated a particularly brazen habit of it. “So you had these whispers about racism being used to shut down a dialogue about affordability and the kind of city we want to build here,” Andy Yan explained. “It’s a kind of moral signalling to camouflage immoral actions. It’s opportunism, and it’s a cover for the tremendous injustices that are emerging in the City of Vancouver and across the region. It’s a weird Vancouver thing. It’s very annoying. It’s kale in the smoothies or something.”
While the politicians and their friends in the property industry were making speeches about diversity and the importance of having sensitive feelings, foreign ownership grew to account for more than $45 billion dollars’ worth of Metro Vancouver residential property. Within Vancouver city limits, 7.6 per cent of all residential properties are now owned directly by individuals “whose principal residence is outside of Canada,” by the definition of the Canada Mortgage and Housing Corporation. Roughly one in ten Vancouver condos are owned by non-residents. And that’s just the owners we know about.
Transparency International reckons that perhaps half of Vancouver’s most expensive properties are owned by shell companies or trusts, with the nominal owners commonly listed as student, housewife, or homemaker. Roughly 99 per cent of the single detached houses within Vancouver’s city limits are now valued in excess of $1 million. More than 20,000 Vancouver homes are vacant, year round. Vancouver’s rental vacancy rate is hovering just below one per cent.
“I’m always careful about using biomedical analogies,” Yan told me the other day, “but what was like a little skin ailment, if you will, over the last 10 or 15 years, has become a full fledged cancer.” Over just the past four years, throughout Metro Vancouver, homes worth $1 million or more have risen from 23 per cent of the housing market in 2014 to 73 per cent of the market now. Yan has been putting together a series of maps that show how the $1 million “red line” has been moving inexorably across the region, deep into the suburbs. “But what those maps don’t do is they don’t factor in transportation costs,” Yan said. “The top two expenditures of any Canadian household is shelter and transportation. God help you if you factor in child care. The whole map might as well be red. A number of factors have all come together to produce this catastrophic situation, but what was a small concentrated pattern in the west side of Vancouver has now metastasized to hit every single part of the region, and it’s similarly metastasized into the rest of the economy.”
As for where things are headed, Horgan’s NDP government has raised expectations, mainly because of Attorney-General David Eby’s avowed determination to chase dirty money out of Vancouver’s housing market and bust up the gangland playground B.C.’s provincially-licenced casinos have become—money laundered through casinos has also been pouring into residential property acquisitions. In Tuesday’s throne speech, delivered by Lt.-Gov. Judith Guichon, Horgan’s government directly addressed tax fraud, tax evasion and money laundering in the real estate market, hinting that a speculation tax is in the works. Next week, the New Democrats release their first full budget. The housing file, however, falls mainly to the more timid Carole James, former NDP leader and now deputy premier and finance minister. Preliminary indications aren’t particularly promising.
With short-term AirBnB rentals swallowing up long-term rental inventory, Yan was less than impressed with James’ solution, announced last week: short-term rental outfits will now pay the eight per cent provincial sales tax, and two or three per cent in municipal taxes. “That’s like taxing cigarettes to pay for lung cancer treatments,” Yan said.
Developing appropriately punitive taxes to discourage property-flipping and offshore pre-construction sales – those are obvious fixes. But knowing how to fix things requires a clear understanding of what’s wrong, Yan says, and closing the “bare trust loophole” that allows property owners to hide their holdings is a must-do. Ontario closed the loophole back in the 1980s. Clark’s Liberals promised to close it, but they never did.
In the meantime, Yan is focusing on converting hidden-away data into publicly comprehensible information. Some key information Yan has drawn from a trove recently released by Statistics Canada’s Canadian Housing Statistics Program, for instance, shows that simply building more condominiums won’t do. A condo building boom in Metro Vancouver has kept the property developers happy, but there’s no evidence that the boost in supply has lessened demand or beaten back prices. Nearly one in five condos built in Vancouver since 2016 were snapped up by non-residents.
To a certain extent, there’s nothing new here,” Yan said, pointing to the Guinness family’s financing of the Lion’s Gate Bridge in the 1920s, and the opening up of the British Properties on Burrard Inlet’s north shore. “But what is new is the hyper-commodification of residential real estate, mixed in with an intensification of global flows of people and capital. It’s just a statement in fact. We’re talking about the globalization of the Chinese economy and its impacts.”
Yan says there may be some solution—a mix of remedies, new laws, purpose-built rental housing, tax adjustments and so on—that does not mean a collapse in Metro Vancouver’s real estate prices. Channelling foreign investment in such a way as to serve the public interest might be possible. “But whether this comes out as a bubble-popping isn’t the point. That’s a secondary concern to the kind of society we want to build. “We need to go back to civic virtues.
“We need to talk about the sacrifices we are willing and we need to make for the greater good of the community. We need to have a discussion about what the public good is, and what we are willing to sacrifice to make it happen.”