Landmark Links November 16th – RIP Golden Goose


Must Read: The City of San Francisco is highly reliant upon development fees on new market rate residential developments to fund it’s affordable housing initiatives.  However, it is quickly running out of money for the initiative and finding out the hard way that continuously raising the inclusionary requirements for the percentage of affordable units in a new development makes it unprofitable for developers to build which, in turn shuts off the very revenue that the city is trying to raise.  This ain’t rocket science – unless of course you are a San Francisco voter or in city government:

In 2016, San Francisco voters passed Proposition C, which substantially increased the city’s inclusionary housing requirements — the percentage of affordable housing that every new market-rate development must either include on site or pay to build elsewhere. Developers called the increase onerous, leading to a series of negotiations after the election.

While subsequent legislation modified the on-site requirement, the offsite number was never lowered, meaning that a market-rate developer building a 100-unit housing project must pay the city the cost equivalent of 30 units of affordable housing. The city’s payment schedule lists the offsite costs as ranging from $198,008 per studio unit to $521,431 per four-bedroom unit. Typically, a market-rate developer must pay these fees to the city upon pulling a building permit.

Unfortunately, due to a variety of factors — rising construction costs, high land value, high impact fees including those from Prop. C, and the softening of the rental market — market-rate developers are applying for building permits at a much lower rate than in the past few years. This means the city is not collecting offsite fee payments in sufficient quantities to build new affordable housing that is already going through the planning process. When developers are able to start construction, they are most often opting to build affordable units on site, depriving the city of funds that could be paired with low-income tax credits and other financing sources to develop 100 percent affordable housing projects.

Then again, this is San Francisco that we are talking about, so maybe having nothing actually get built was the intent all along.


Welcome to Purgatory: Rising bond yields give the Fed a green light to continue hiking interest rates, creating a difficult environment for risk assets.

Glut?  Oil prices went from four-year highs to a bear market in just six weeks thanks to concerns about supply outstripping demandBut See: As usual, a fall in oil coincided with a rising dollar, which has hit a 17-month high.


Stop Me If You’ve Heard This Before: Back on September 21st, I wrote a post about how WeWork was pursuing a too-big-to-fail strategy where they were taking up so much space that landlords couldn’t let the co-working giant go under and would be forced to restructure leases once a recession hit.  Well, this week none other than Andrew Ross Sorkin of the NY Time (who wrote a book titled Too Big To Fail) is saying the same thing.  Perhaps someone at the Times is a loyal Links reader?

Gold Mine: The sales per square foot metrics of a MedMen location put the Apple Store (and all other traditional retailers) to shame.

Vertically Integrated: Skyscraper farms are increasingly becoming a scalable thing in Japan.


Music Slowing: Home flips are down 18% YOY nationwide and average days on market for a flip are at their highest level since 2006 as affordability issues and increasing supply take a toll.

Downswing: Waning popularity and unprofitable operations have developers generally staying away from including golf courses in their new communities and trying to re-purpose them in existing ones.


Backlash: Andrew Cuomo and Bill DeBlasio practically begged Jeff Bezos to locate Amazon’s HQ 2 in New York.  Now, fellow Democrats who did not have a seat at the table during the courtship process are pissed and looking for ways to defund $1.5 billion in taxpayer subsidies.

If This Cars a Rockin’… Some researchers think that self-driving cars are going to be largely used for sex and prostitution.

Catching On: Cannabis gets all of the legalization press these days but the Supreme Court’s recent decision allowing all states to offer sports gambling could lead to a bigger sports book boom than most anticipated.

Chart of the Day

It’s remarkable how correlated home prices and the CPI were until the late 1990s.


Source: Advisor Perspectives 


Gotta Hear Both Sides: In a story that shockingly didn’t involve any vegans, a drunk woman was arrested for stealing a lobster out of a tank at a Red Lobster restaurant and running off with it because Florida.

Muchies: A naked man was recorded on surveillance video sneaking into a restaurant when it was closed and seating ramen noodles before leaving because Florida.

The Best Alibi: A man arrested for drunk driving in New Jersey claimed that he did it “because the Jets suck.”  Side note: if this went to trial and the jury consisted of only Knicks, Mets, Giants and Jets fans, he would get acquitted.

Landmark Links – A candid look at the economy, real estate, and other things sometimes related.

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Landmark Links November 16th – RIP Golden Goose

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