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UncategorizedGet ready for the attack on Prop. M. Because...

Get ready for the attack on Prop. M. Because it’s coming

Is there such a thing as too much office space? well, yes
Is there such a thing as too much office space? well, yes

 

By Tim Redmond

SEPTEMBER 25, 2014 – In San Francisco, important political signals often lurk in the shadows. Powerful interests don’t come out and announce what they’re planning; you have to watch for the flickers of stories, the hidden indications of what the real agendas are.

And we’re starting to see lots of signs that there’s a move afoot to repeal or undermine Proposition M, the most important land-use legislation in modern San Francisco history, the 1986 ballot measure that put a cap on downtown office development and saved us from the boom-and-bust cycle that devastated other cities in the 1990s.

Prop. M was a reaction to decades of overdevelopment: Since the 1970s, a succession of mayors and supervisors had approved more than 30 million square feet of new office space, attracting tens of thousands of new workers and overwhelming the city’s transportation, housing, and budget infrastructure.

The measure put a modest (850,000 square feet a year) cap on new office construction, and put into the city’s planning codes a set of priority policies that promoted the protection of affordable housing and neighborhood character.

Since then, generations of planning commissions have ignored the Prop. M priority policies, but the annual limit is pretty inviolable. And it’s been a great thing for the local economy.

In the real-estate bust of the early 1990s, when an excess of speculative venture capital from recently deregulated savings and loan institutions drove a crazytime office-development boom, Houston almost went under. Other cities that had hitched their future to buildings that would never be occupied faced a financial crisis.

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San Francisco was hit by the recession, too – but not as badly. See, Prop. M had forced reluctant planners and officials to protect a more diversified economy; when finance, insurance and real estate tanked, there was still a light-industrial, nonprofit, health-care and hospitality industry in town.

And after the bust, office development slowed. For several years, there were no new proposals at all. The recent construction boom has been mostly residential; that’s where the international capital sees the greatest return.

And since Prop. M is cumulative, the limit carries over from year to year. No projects this year? You get twice as much next year. There’s been so much carryover that we were never even close to the limit.

Until now.

The limit, of course, is not a bad thing: If you only allow one or two big projects a year, then the developers have to compete for approvals and show the city what they are willing to offer. More affordable housing, better design, contributions to transit – all those things are on the table in what we used to call a “beauty contest.”

But developers hate to compete, because that means offering amenities that eat up a slice of profit. So now that it appears the tech boom (yes, another boom that will eventually go bust) is driving demand for more offices, the (quiet) campaign is on to gut Prop. M.

I’ve been hearing about it for months. All over town, developers and tech promoters are complaining that the law is stifling their growth. Neighborhood and environmental leaders are starting to gear up for what they fear will be a brutal battle.

Now it’s starting to come into the open. The Business Times reported this week that developers are hoping they can get the mayor to open a series of loopholes in the law.

The cap, which was approved as Prop. M by voters in the mid-1980s, is a mounting worry in the real estate community, which is warning that restricting the amount of office space that gets built will drive rents even higher in the future.

But a fix to the Prop. M mess may be in the works. City planners and the city attorney’s office are researching whether they can add to the cap through a reinterpretation of the law — without going back to voters, as a broader change to Prop M would require. One idea is to give credit for office buildings that were eventually converted to housing or hotels. …

Mayor Ed Lee suggested at the San Francisco Business Times breakfast Wednesday that he was working on a plan to tackle Prop. M.

“I know you have Prop. M on your mind,” he said, later adding that “we need to be thoughtful in our approach,” and that might include looking at the conversion issue.

What’s not being said in these discussions is that the city needs more than new tech office space – and that office space competes with, and displaces, the other types of uses that help the city survive economic gyrations.

I remember when everyone insisted that we needed vast new amounts of office space – and then much of it sat empty for years, while small, locally owned, independent businesses were the only ones creating new jobs.

But so many of the people pulling the strings these days weren’t around, or weren’t paying attention, in 1990. They missed that history class. And they are ready to put the city back on track for another world-class bust.

Tim Redmond
Tim Redmond has been a political and investigative reporter in San Francisco for more than 30 years. He spent much of that time as executive editor of the Bay Guardian. He is the founder of 48hills.
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60 COMMENTS

  1. The significance of Prop M isn’t the annual limit it sets on commercial office development. It’s the hard linkages between that development and the city’s ability to build housing and provide transit service adequate to the demands new office space creates. You want to raise the limit? Increase the production of affordable housing and the capacity of Muni.

    And if recent polls are accurate, Prop M enjoys broader support today than when it was on the ballot in 1986.

  2. The Ca. Court of Appeals in regard to the Parkmerced Project has already stated unofficially that because Prop M. didn’t have must or shall in it the voters intended the city to support development in S.F. .

  3. Glenn, Tim was the one who described Prop M in terms of caps so you should take up your different view on that with him, not me.

    Moreover Prop M doesn’t say anything about projects being “worthwhile” at all which is, in any event, a highly subjective notion. It sets a cap which means that projects have to compete with each other. It’s more like a lottery than anything else.

    But am I happy that Prop M is being weakened? Yes. Because I don’t believe today’s voters would approve it now – it’s a dated approach which doesn’t befit a town that has become a global economic powerhouse.

    As for Parkmerced, I’m comfortable with the project. Those 14,000 new residents are coming here regardless and many people like to see the west side of the city taking its share as well. 19th Avenue is a 6-lane highway – it can handle the extra traffic.

    As for the economic mix of people in SF, yes, that is changing. It always has changed and it always will. The fact that many people are become successful and prosperous is a vindication of the policies the city has engaged in to target this kind of success. And most other cities would kill to have this kind of “problem”.

    Most firefighters and police have always lived outside the city, as do many teachers. That would not be considered a problem anywhere that isn’t chopped up into nine counties and dozens of cities the way the Bay Area bizarrely is.

  4. Sam,

    Proposition M was never designed or acted like a cap. You are misleading the public here. It made available by a referendum, the gathering of 15,000 signatures, to place on a ballet for voters to decide, which projects are worth while. That appears to be undone now. Are you happy?

    Also, 19th Avenue or Highway 1, is part of every Californian’s path going north. So your constant refrain of NIMBY (Not in my backyard) is inaccurate also. During construction and by poor design, this highway leading north will be more crowded with the addition of 14,000 residents in Parkmerced, already the densest part of San Francisco. This is a state wide issue and not a neighborhood one.

    Concerning the population make up in San Francisco, this is something we can agree on. The flight of existing residents of San Francisco because of an increase in the cost of rent, housing and services has been called alarming by some and the gentrification of San Francisco by others. Weekly, it is not uncommon for 3 tech firms to become IPO’s and join the stock market, making millionaires of many founding employees. Many of these new millionaires seek housing in San Francisco and so the prices are going up. This too is something you seem unconcerned about but I thought I would bring it to your attention. Teachers, firefighters and police are not part of this new wealthy class. The fact they are leaving San Francisco, in large numbers, should be a concern for all San Franciscans, including you Sam.

  5. Thank you Tim for the Prop. M discussion, and concerns that with all this housing, and office development, essential needs are not being met, from community based planning to transit infrastructure. The Parkmerced case high-lighted the issue of Prop.M and hopefully the ongoing legal discussion there will focus further on the will of the people, vs. the will of profits.

  6. Prop M also created eight priority policies which all projects that go through the planning department must comply with.

  7. I hope this isn’t too troll of a comment but you seem to be in the mood for signals from the shadows….this is about Ron Conway’s business partner at Y Combinator, Alisher Usmanov and I think relevent to the prop M issue, which has Conway’s finger prints all over it?

    ( ” Although Usmanov has no biological children, through his wife Irina Viner, Usmanov has a step-son, who has become a real-estate investor, currently constructing 30 real estate projects.[24]” usmanov wikipage).

    Facebook market cap is 200 billion dollars and Alisher Usmanov, close friend of Putin and early investor in Facebook and Alibaba, and whom the British ambassador to Uzbekistan called a
    “gangster and a racketeer” just took over the Russian facebook called vKontacte, valued now at $1.67 billion, after the founder resigned over privacy issues, the same time facebook began selectively enforcing its own privacy policy against drag queens. (ref. eurovision 2014).

    Perhaps expect an Alibaba style entry into western capital markets at some point for vKontacke, exclusive of any sanctions issue.

    “”Allegedly a gangster and racketeer, he served a six-year jail sentence in the Soviet Union in the 1980s, his eventual pardon coming at the behest of Uzbek mafia chief and heroin overlord Gafur Rakhimov, described as Usmanov’s mentor,”

    http://www.theguardian.com/world/2007/nov/19/football.russia

  8. Hi! Remember, no name-calling.
    Me, I think M should be strengthened, not weakened. I’m not a boomer, and I’m not a NIMBY.
    Thank you.

  9. Arbitrary caps on anything are always a problem. In the case of Prop M they haven’t been such a problem because, as it always does, the city gets all in a lather about development only at the very top of market cycles, and ends up passing new rules that are almost immediately rendered moot.

    The voters who passed M were a very different constituency to those who are here now, and the current more moderate demographic of the city means that many who are here now feel dubiously about something that looks and smells like it was passed by a coterie of NIMBY boomers and social engineers.

    But as you note, there is no need to totally gut M. We need to exclude Presidio development from the quota because that isn’t the city’s land or jurisdiction anyway. Likewise projects that get changed from commercial to housing don’t get subtracted back out of the cap. So right there are two things we can change without tinkering with the language of M. If we go back in time and readjust those numbers, that will allow several more vital projects to proceed.

    Still, the question has to be asked how San Francisco can continue to build on its global pre-eminence in the vital knowledge, social and sharing economies without a more flexible set of planning guidelines. The majority of voters who elected a pro-growth, pro-development, pro-jobs mayor need to be heard over the residual cackling of NIMBY boomers.

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