Ron Conway freaks out over proposed tax to fund housing

Or: Rich guy freaks out at fellow rich guy over what to do about city's poor

Financial trends and news by Faith Merino
June 10, 2014
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What happens when two rich guys get into a debate over affordable housing in San Francisco? Sparks fly.

To be more specific, Ron Conway lost his shit on Monday at Bloomberg’s Next Big Thing conference when Facebook executive turned investor Chamath Palihapitiya proposed a 1% equity tax on San Francisco startups to fund affordable housing construction. He also criticized San Francisco mayor Ed Lee and suggested he should resign, which is where Conway really went bonkers (Conway personally raised $600,000 in angel funding for Lee’s first mayoral campaign).

While Palihapitiya was speaking, Conway stood up and began shouting and gesticulating wildly.

“I live in the city of San Francisco. You live in the city of Palo Alto,” said Conway. “Ed Lee, who you ridiculed—how dare you, Palo Alto resident!—put out a mandate to build 30,000 new housing units by 2020 in San Francisco, 30% of them dedicated to affordable housing. He is doing something!”

It so happens that 30,000 new housing units will not make much of a dent in the city’s housing crisis. San Francisco’s own Chief Economist Ted Egan has said it would take 100,000 new housing units—equal to all of the housing built in San Francisco since the 1920s—to bring the city back to a point of affordability.

Egan has also proposed down payment assistance for low income residents, subsidized below-market-rate housing, and general market forces to correct the city's super rich imbalance.

But construction on 100,000 new housing units would have the same impact on affordability as giving 56,000 low income households $75,000 for down payment assistance.

Egan stated all of this at a Land Use and Economic Development Committee hearing back in 2012, so it’s not new information. Granted, 30,000 new units is better than nothing, but Mayor Lee knows it’s not going to solve the problem.

And we're all familiar with the tech buses

While Conway raged from the back of the room, Palihapitiya remained calm and responded that people in the city are frustrated, and that follow-through is more important than setting goals.

"There are a lot of people in this city who are really frustrated," Palihapitiya said. "You see it in the riots. Effort is fine, but there are a ton of people who feel like they’re getting pushed out of subsidized housing.”

Indeed, over the weekend, a group of anti-eviction activists protested outside the home of Google product director Tom Fallows after the Google exec evicted 24 units in four buildings under the controversial Ellis Act, which gives landlords the unconditional right to evict tenants in order to "go out of business." 

The problem has been exacerbated by Lee’s visible canoodling with big tech firms that are now enjoying tax breaks and nearly free use of public resources at residents’ expense.

Conway noted that Lee gave a payroll tax deduction to Twitter (previously, the city leveled a payroll tax at any company that operated within city limits, and Twitter threatened to move out if an exception wasn’t made for its employees). That led to a slew of protests outside Twitter’s headquarters, with residents chanting “Twitter, you’re no good. Pay your taxes like you should.”

In an effort to show everyone that the tax breaks aren’t for nothing, Mayor Lee worked with ZenDesk (which also received the same payroll tax break) to create Link-SF, a portal that connects low-income residents with places to find food, shelter, and medical care. Which…I guess is good news for all those people with Internet access but no food…or housing.

Palihapitiya’s original point was that the city should charge companies a 1% equity tax for subsidized housing.

“The city can say ‘this is a subsidized housing tax, and we want a piece of your equity.’ And a company can choose to not be there…Imagine how many more units they could build—300,000, a million. Imagine how much free education they could give—PCs in every school, subsidized ways to learn how to code.”

See the video of Conway's freakout here

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