People often remark on the superficial similarities between Lisbon and San Francisco: the hills, the iconic bridges, the culture and food, the cosmopolitan sophistication.
I’d been struck on a recent visit to Lisbon by other, less fortunate, similarities: the challenges of dealing with boom times. Both cities are struggling with housing affordability, gentrification, and a feeling that the city is “losing its soul”. So I came back to spend the month of June to see how this city governed by the Socialist Party deals with these issues and to see what the juxtaposition of the cities could teach me about San Francisco. Here in Lisbon I served as a consultant to neighborhood planning association Rés do Chão.sponsored by Venture With Impact.
I learned some surprising things:
- Lisbon’s boom didn’t just happen. Measures were put in place to crawl out of financial crisis.
- Lisbon changed dramatically in an astonishingly short time. Ten – even – five – years ago it was a very different place.
- Lisbon itself has little control over matters that American cities would determine.These are national matters, governed by Portugal and in some cases by Europe.
- “Socialism” doesn’t mean much. San Francisco is far to the left of Lisbon.
- Culture is as important as politics.
- What’s happening here isn’t only gentrification. They call it “touristification” and “financialization”and both the causes and effects are very different.
- Lisbon is inexpensive – unless you’re Portuguese.
- Even the nature of nostalgia, or saudadein Portuguese, is different.
A little background:
Lisbon has seen sweeping changes in just the last century. Although it is one of the oldest cities in Europe, founded by the Phoenicians in 800 BCE, most of the old city was devastated in an earthquake, fire, and tsunami in 1755. Tremendous growth occurred starting in the 1950s, much of it on land formerly occupied by squatters. In 1974, about 30% of the residents lived in these informal communities, many of which were solidly built and benefitted from tapping into public water and electric lines. The population of Lisbon peaked in the 1981 census when the population was about 850,000, a size and density similar to San Francisco today. But by the last census, in 2011, that had dropped to about 500,000. San Francisco never shrank and during about the same time period the population steadily grew from 678,974 to 805,237.
Meanwhile the Lisbon suburbs grew by 1.6 million people, most of them rural people coming to the city for work, tenants moving out of Lisbon, and an estimated 700,000 returning from the colonies (primarily Mozambique, Cape Verde, and Angola, all liberated after the 1974 revolution), some black and some white, sometimes after generations in Africa.
In the last century about 1 million mostly rural Portuguese left, usually for France, often on foot. These are enormous numbers in a country that then had about 8 million people.
Economically, the 20thand 21stCenturies have been tough for Portugal. Little changed in the Portuguese economy during the decades of the Salazar dictatorship, 1926 to 1974. Then, from 1974 to the early 1980s inflation was 20% – annually. And a series of recessions set the country back until the global financial calamity of 2008 knocked the economy down farther.
If you come from San Francisco, whether to visit or to live, Lisbon is a great bargain. Average one bedroom rent is about $1,030 (890 Euros) vs. $3,396 (3,020 Euros) in San Francisco (according to the website Numbeo which tracks costs of living in cities worldwide). And it isa bargain – unless you are Portuguese, where the average monthly net wage is just about $1,000, with over 20% of Portuguese making the minimum wage of about $730 (650 Euros). In San Francisco the average monthly net salary is $6,580. So the average one-bedroom apartment in Lisbon rents for the average Portuguese monthly income.
Today’s Lisbon is booming, with 23 hotels under construction and rehabilitation and building throughout the city. A recent New York Times article put it this way: “Lisbon is thriving, but at what price for people who live there?”
Do sweeping changes like those seen in Lisbon just happen?
He ticked off the measures taken by Portugal to climb out of the devastated economy of 2010 and to satisfy the European Community’s demands for austerity:
- Golden Visas: Invest more than 500,000 euros in property in Portugal and you get a visa, good throughout the EU. Many of these investors then market their “homes” as short-term vacation rentals. And the 500,000 Euro threshold for visas has had a perverse impact on housing prices. A friend of a friend’s apartment was stuck on the market at 350,000 Euros, but it sold in two days at 510,000. It’s a parallel real estate market, really a market for visas with buildings thrown in. According to Bloomberg News, 80% of buyers of property for Golden Visas are Chinese nationals. I passed a real estate storefront with a sign in Chinese. And I’ve started getting an awful lot of emails urging me to “Invest in Portugal”.
- If you’re already an EU citizen, you could benefit from the Portuguese tax code. If you haven’t earned money in Portugal in the previous five years, you can move there and pay no taxes on pensions, dividends, royalties or interest for ten years. That’s no income taxes in Portugal or in your previous home country.
- Tourist attraction efforts are nothing new in Portugal: the tourism board was formed in 1911. Even Fernando Pessoa, the rock star of Portuguese literature, whose name and image are all over Lisbon, wrote a tour guide, “Lisbon: What the Tourist Should See”, in English, in 1925. Their efforts have won many awards: Best Tourist Board, with the Best Website, World’s Leading Destination, etc and according to the World Economic Forum in 2017 Portugal for the first time had more visitors (11,423,000) than residents (10,309,573). The birth of budget airlines helped a lot – A flight to Paris costs 34 Euros, about $40 – and most tourists are Europeans.
It’s not just Lisbon that’s flooded with tourists. In 2018, 1.4 billion people stayed overnight away from home, double the number from 20 years earlier.
Here’s an article I just came across in Paris:
All this tourism creates big problems. There is great pressure on infrastructure like transit, especially Lisbon’s picturesque cable cars and in some neighborhoods even the sidewalks.
Short-term rentals remove potential housing from the stock, though it is worth noting that half of what became Airbnb-type units were vacant before. Tourists can be jerks whether they are in your building or on the street, especially where there is nightlife.
And what had been hardware stores or butchers (both of which abound where I’m staying, in a neighborhood called Penha de Franca, which reminds me some of the Brooklyn of my boyhood), become souvenir shops. “Nobody is against tourism but there must be a balance because Lisbon has Lisbonites and Lisbonites can’t be considered as collateral damage. Tourists won’t want to come to Lisbon if there are no residents”, Vasco Morgado, president of the Santo Antonio neighborhood association told Bloomberg.
Airbnb and similar companies are an issue throughout the world and recently ten European cities asked the EU to treat them as real estate ventures, not just web platforms.
In 2018, Lisbon hosted 12.8 million visitors, 25 tourists for every resident. San Francisco that year had 25.8 million visitors– 30 per resident. But somehow they are better absorbed. In part this is because San Francisco has had time to build enough hotels to accommodate visitors and because as in Lisbon tourists tend to cluster. In Lisbon, the hordes of tourists by and large are found in the historic center, where only 10% of Lisbon voters live. They bear the brunt of tourism, though short-term lodging is also scattered throughout the city.
- In 2016 Lisbon ranked 9th worldwide for international meetings. A good example: the Lisbon Web Summit, which brought 53,056 attendees from 166 countries.This has become an annual event. Now Lisbon is turning a former army base into a technology hub, planned to be the second largest in Europe. Mercedes and Samsung have already signed up.
- Airbnb and other short term rentals didn’t just get out of hand in Lisbon. Both the national government and the municipality encouraged them. The national government preempted local regulation in 2014 and only returned some local control in 2018. The municipality then capped short-term rentals in certain neighborhoods – at 25% of all apartments. According to the Jornal do Negocios 34% of apartments in the central city are short-term rentals. In one neighborhood, Alfama, over half the homes are short-term rentals. Residential landlords are taxed at 28% while short-term rentals only pay a fraction of that. Naturally, this level of transience can dissolve the sense of community, as the neighborhood becomes a hotel.
- Since the beginning of the dictatorship in 1926 until 2012 inflexible rent control allowed virtually no rent increases. For 86 years landlords had no reason to maintain or improve properties. In many cases landlords were paying more in taxes alone than receiving in rent. So they walked away. To meet the demands of the European bailout Portugal did away with anycontrols on rent. Anybody can be evicted once their lease, typically 3-5 years, expires or for owner move-in or significant remodeling.
- By 2015, housing prices in central Lisbon had increased by 23%. In 2018 Portugal led the European Community in housing cost increase with a 10.3% rise. In Marvila, a formerly industrial area, prices increased by80%. And the Jornal de Negocios reported the following year that the number of houses for rent decreased by 75% (in a city that’s about half renters).
- In 2009, according to the Lisbon City Council, 5,000 buildings were “vacant, in poor condition, or crumbling”. You can still see them all over the city, boarded up, graffiti covered shells, often missing even the roof. And a few years later the Portuguese Conference on Construction and Real Estate estimated 26,000 vacant buildings. In 2011, 50,289 of the central city’s 332,865 apartments were vacant. Many of these buildings are owned by the municipality, which took them over when owners walked away.
- In San Francisco I can think of less than have a dozen abandoned buildings, all owned by the City and each handicapped by the need for expensive seismic upgrades and controls on historic buildings.
Not all of these efforts were started by Lisbon or even by Portugal. The “Troika”, composed of the European Community, the International Monetary Fund, and the European Central Bank, in 2011 bailed out Portugal with a $92 billion loan (about 80 billion Euros) – with conditions, including the elimination of rent control.
In Lisbon, when people say “the government” they mean the national government, not City Hall, which is “the municipality”. Most power – from regulating housing subsidies to rent controls to AirBnB is with the national government (which of course is itself in Lisbon). This is very different from the situation in American cities where the municipalities are pretty much left alone, with little interference from the states or national government. Decisions are made locally.
Note that none of these efforts, crafted to help Portugal climb out of the recession, directlyhelp residents of Lisbon – they benefit newcomers, landlords, visitors and investors. The fiscal benefits help Portugal while the social costs are concentrated in Lisbon. And the solutions generally are transnational – aimed at capturing euros and dollars from outside Portugal – to address a financial crisis that itself is primarily an import.
Professor Simone Tulumello pointed out that it’s not only gentrification and not just displacement. It is a myth that Lisbon was “empty”. True, the population plummeted and in the historic center many buildings were abandoned, but many parts of the city remained solid and the metropolitan area population boomed.
They don’t call what’s happening in Lisbon gentrification – rather, touristification. I’d never heard that term but in Lisbon I hear it a lot.
I heard many times that Portuguese excel at complaining, but only to each other and increasingly on social networks, but not so much to anyone who could actually fix anything. This is probably a legacy of the 48 years of dictatorship or of a fatalistic culture. I’ve heard both theories. Italian journalist and Lisbon resident Francesca Berardi told me her theory: Americans petition, vote, speak out and sue because we consider ourselves customers of government with a right to be satisfied. Dr. Roberto Falanga, of the University of Lisbon, says that Southern Europeans think of themselves as beneficiaries, not consumers, of public services.
This is changing. An example, from the Facebook page of Stop 60m Torre, the community group opposing a high rise tower:
“This is an exercise in public scrutiny because as citizens of Lisbon, we have an obligation to be demanding with those who represent us and who manage our resources. We have confidence in our public authorities and believe that together it is possible to build an even better city.” (Translation, automatically, by Facebook)
Look at the case of Torre de Portugalia, a grossly oversized high rise proposed for the site of a former brewery not far from my Lisbon apartment. I met with Miguel Pinto-Correia, a leader of the opposition to the site, for coffee in a park overlooking the city. He and a handful of other volunteer activists have done a heroic job of researching the project and the Municipal Planning Code and rallying support. They built on their experience of successfully opposing the bulldozing of an open space for a parking lot and instead involving the neighborhood into the design of a park.
The project is 16 stories high: 85 market-rate apartments, parking for 413 cars and 99 motorcycles, and some retail or office. The developer has applied for bonuses relating to energy efficient lighting and rainwater capture that would enable a building 60% bigger than would otherwise be allowed. The city planners signed off on these bonuses without any independent calculation of their value, simply relying on the tables provided by the developer.
And it would violate policies, similar to San Francisco’s, aimed at concentrating taller buildings on hilltops and protecting sunlight on sidewalks. Protected views from three public miradoras, or viewing points, would be blocked.
In Lisbon, once application documents are submitted by the developer (in this case a German pension fund), citizens have two weeks to review them – by visiting City Hall and reading them in person. Because of the outcry over this proposal, rallied primarily via Facebook, the municipality extended the deadline and the documents were posted online. In Lisbon, delivery of 150 signatures triggers a public hearing; project opponents gathered 2,800. 300 people attended a presentation by the architects (at which they defended “an elegant shadow”).
I was struck by how little press coverage there has been about Torre de Portugalia. In San Francisco it would be front page news and I realized how fortunate San Francisco is to have such good coverage of planning, urban design, and development issues.
In San Francisco, the process would play out differently and the proposal itself would have to differ. About 20% of the apartments would be subsidized by the developer to increase affordability, the energy and water conservation features would be requirements and there would be no bonuses for them. San Francisco would not allow even one parking space per apartment, in an effort to discourage private cars. The planners are empowered to comment on every aspect of building designs and delay consideration until they are satisfied.
The project would be analyzed in an Environmental Impact Report, which would probably take two years to complete, while really ugly meetings between the sponsor and neighbors were held. The project would be turned down – or, more likely, the application would not have been accepted.
Were the project somehow approved by the Planning Commission, it would be appealed to the Board of Supervisors and then to court, adding additional years to the process. Projects in Lisbon do get appealed to the courts and Miguel told me of four that were eventually turned down.
And in San Francisco the years of delay might be enough to kill the proposal. Construction costs have been rising about 10% per year and there are plenty of approved projects that have been shelved because the numbers no longer work
It’s ironic that the Socialist Lisbon (and Portuguese) government acts capitalist. One local expert summed it up over coffee: they are Socialist – but only on Monday, Wednesday, and Friday.
SF is the opposite, supposedly capitalist but far to the left of Lisbon in policies and regulations. People in Lisbon are really impressed by San Francisco laws.
- Market rate developers are required to create or fund affordable housing;
- The Brown Act and Sunshine Ordinance require public access to meetings and documents. I’m told that such laws are in place in Portugal but routinely ignored.
- Our rent control and eviction protections ensure that tenants can feel secure in their homes, while allowing landlords to raise rents between tenancies.
- San Franciscans saw the impacts of Airbnb and after a series of laws, lawsuits, and even a ballot proposition, regulations have cut listings by 50%, virtually overnight. It is no longer legal to keep an apartment solely for short-term rental use; you’ve got to register and prove that it is your home except for the 75 nights a year you can offer it. Airbnb and the other web-based services provide the listings to City Hall for tracking.
- We attempt to provide subsidized housing. 10% of housing in Lisbon is public housing. In San Francisco just since 1990 28% of all housing built is subsidized, whether built by non-profit developers or within market rate buildings. And San Franciscans have consistently voted to tax themselves for affordable housing. Nonetheless, because of bureaucracy, land and construction costs, super high demand from highly paid newcomers, and poor zoning San Francisco has the highest housing costs in the nation.
- Office developers are required to pay for housing, childcare, transit, and open space. The housing payment alone is $28 per square foot of construction.
- Building codes are enforced aggressively and residential buildings can’t be demolished until a replacement building is approved.
- Citizens’ commissions and public input into city decisions are the norm in San Francisco and our system of appeals and lawsuits serve to really slow down change – for good or bad. If people aren’t satisfied with all that recourse, it is not hard to get a proposal on the ballot.
Public process in San Francisco can seem like a ritual, one that adds years to any change. An example: 186 apartments were recently approved on Divisadero Street after five years of review and, according to the sponsor, 1,000 meetings including weekly “beer with a developer” sessions at the corner bar. All of this astonished the Portuguese. While I think public input is a good thing, five years of it in a city that is starved for housing is too long.
In California, proposals large and small might undergo years of review, hearings, appeals and lawsuits under the California Environmental Quality Act (CEQA). CEQA was adopted in the 1970s to ensure that decision makers act only when the environmental impacts of proposals have been thoroughly studied.
I think CEQA is misused and should be reformed, but in principal study of impacts is a good idea.
Here’s an example: In the older part of Portugal, the buildings that replaced those destroyed in the 1755 earthquake/fire/tsunami have wooden foundations and as long as they are submerged they are preserved. But when building uphill began putting in underground garages the water table fell and these foundations, exposed to the air, began to rot. That would have been good to predict.
Generally, San Francisco takes earthquake retrofit and preparedness much more seriously than Lisbon.
In San Francisco there is a feeling that petty crime and drug addiction are out of control and the streets and public spaces are sometimes unusable. In Lisbon, the Mayor (now the Prime Minister) even moved his office to face a drug users’ plaza just to reclaim it.
Portugal has done a good job of dealing with drug addiction, a terrible problem in San Francisco (According to the San Francisco Chronicle, an estimated. 22,500 intravenous drug injectors outnumber high school students by 8,500).
Portugal famously removed criminal penalties for possession of any drug in amounts sufficient for a few days use and crime and drug abuse plummeted.
In San Francisco where the police are frank about the low priority of street drug arrests, that hasn’t helped. That’s because although there is no criminal penalty for small drug possession, Portuguese users are required to appear before a panel including a doctor and social worker to discuss their drug use and alternatives. Drug treatment, residential or outpatient, is available on the spot. Methadone is widely available from traveling vans or from pharmacies. Portugal is among the safest countries in the world and you can feel the difference.
Saudade is a word that comes up a lot in Portugal. It means a longing, either for a homeland (in Cesarea Evora’s case for Cape Verde https://YouTube/ERYY8GJ-i0I) or for a loved one. It is considered a pleasurable feeling. I saw two cafes named Saudade, a Saudade guest house, and even a banner in a supermarket, “Obrigado, Volte sempre que ja estamos com saudade”: “Thank you, come back soon we already miss you.”
But it could also describe one’s feelings about the city that used to be.
In SF there is real saudade for a better time. Just read the headlines: “How San Francisco Broke America’s Heart”, Washington Post; “ San Francisco is not Dying, San Francisco is not Rotting, But Things Are Bad And They May Not Get Better”, Mission Local; “San Francisco is A Mess and Everyone Knows It”, San Francisco Chronicle.
No city is just as it was decades ago. That’s not cities. But the rate of change in Lisbon far outstrips that of San Francisco and even though some of the effects are similar the causes are entirely different. San Francisco has classic gentrification. In San Francisco housing costs are skyrocketing because people want to live there: not for visas or to Airbnb, for tax relief, or as investments. In San Francisco, change has accelerated; Lisbon turned on a dime. And not because of anything the city did. San Francisco has been an expensive city for at least the 45 years I’ve lived there. In Lisbon this increase is a shock. Short of an earthquake or a hurricane, I hadn’t thought a city could change so dramatically so quickly.
But in Lisbon while there is lamenting about expense and the tourist invasion there doesn’t seem to be nostalgia for before. Parts of the central city were decaying and forbidding. Unemployment was high. The Municipality was overwhelmed. There were big problems then and along with the solutions came new ones.
By many measures, San Francisco and Lisbon are success stories. But I think that the New York Times headline poses the right question: Lisbon is thriving but at what price for people who live there? That’s a good question about San Francisco, too. To me, the measure of success for a city is whether people of all classes can comfortably live there. I’m not sure that any city has successfully addressed this challenge in a boom time.
My exploration of Lisbon would not have been possible without the warm generosity of local experts, who I can’t thank enough. Thank you, from my heart, to Luis Mendes, Roberto Falanga, and Simone Tulumello of the University of Lisbon; Tai Barroso and Ann Davis of Venture With Impact; Luis Matos of Rés do Chão; Francesca Berardi; João Seixas and Jordi Nofre of the New University of Lisbon; and Miguel Pinto-Correia of Stop60M Torre. And thanks to all the waitresses and cab drivers I informally interviewed.