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News + PoliticsThe Agenda, August 24-31: tax money for a non-union...

The Agenda, August 24-31: tax money for a non-union hotel?

Plus the next wall on the waterfront — and a capitalist-tool takedown of the Academy of Art University

The Hotel Renoir will become a high-end establishment, with public money -- but no guarantee of union recoginition
The Hotel Renoir will become a high-end establishment, with public money — but no guarantee of union recoginition

By Tim Redmond

AUGUST 24, 2015 – The entire Republican Party seems determined to attack immigrants. Donald Trump can’t talk enough about building a fence. Most of them seem willing to change the Constitution if necessary to promote a race-baiting agenda.

Tens of thousands have been deported under the Obama Administration. The Dreamers are having to fight for the right to stay.

And yet: If you have half a million dollars, you can come to this country easily, legally, from anywhere. It’s called the EB-5 program, and it’s been on the books for years. As we reported back when I was at the Bay Guardian:

If you’ve got the cash, the promoters say it’s easy. Invest  [$500,000] with a broker who’s doing some sort of development in a low-income area and you’re guaranteed the right to move to the United States, immediately, with your entire family. You can live anywhere you want (not just in the area where you invested). And you’re on track to become a U.S. citizen.

But the program, known by its federal moniker of EB-5, is riddled with loopholes and lack of oversight. It has a history of creating few or no jobs, and the projects it funds can harm low-income communities. The immigrant investors aren’t safe, either. They put their fate in the hands of brokers and immigration officials, and if everything doesn’t go according to plan (and sometimes they have no control over that plan), they lose their money and face deportation — sometimes years after settling into their new lives.

In truth, the real winners in this program are the private brokers who profit by connecting immigrant investors with projects that desperately need funding.

And one of the winners right now is the Kor Group, a real-estate partnership that is rebuilding the Renoir Hotel at Market and Jones.

The developers have raised $42 million from EB-5 investors, who get credit for putting money into a “low-income” area (Mid-Market/Tenderloin) that is in fact one of the hottest real-estate markets in town right now (thanks in part to the Twitter tax break).

According to the SF Business Times, the Renoir will become an upscale establishment:

The 1926 Renaissance Revival-style hotel, which closed in April 2013, will feature three “chef-driven” restaurants on the ground floor, as well as a 4,500-square-foot restaurant and bar on the rooftop with panoramic views of the San Francisco skyline.

The interiors will be designed by celebrity interior decorator Kelly Wearstler. She is known for her throwback theatrical aesthetic, sometimes described as “Hollywood regency” or “maximalism.” Along with the Viceroy Hotel and resorts in New York, Palm Springs and Los Angeles, Wearstler’s designs include the Avalon and Maison 140 in Beverly Hills and the Tides in Miami.

Perhaps not the sort of investment that Congress may have had in mind for low-income neighborhoods when it approved the program.

Still: The investors, by law, are supposed to create at least 10 jobs. And the developers say the Renoir project will create 800. But only 153 people will actually work at the hotel – and here’s the problem:

The developer has, according to the local hotel workers union, refused to guarantee that those will be union jobs – or even that the union can organize without interference or retaliation.

UNITE HERE Local 2 and immigrant rights groups will rally Tuesday/25 at 10am in front of the hotel to demand that workers in the hotel will have the right to organize – and to point out the flaws in the law.

A large majority of San Francisco hotel workers are immigrants, and are struggling against the worst affordability crisis in our city’s history. Moreover, millions of working people in the US currently have no path to legal status, or are waiting years to be reunited with family members who remain overseas. By contrast, US real estate developers like Kor profit from what amounts to “immigration reform for the 1%”, and investors get special treatment under US immigration law.

The hotel is also getting $13.5 million in “New Market Tax Credits” – a Clinton-era federal program that is sort of the commercial equivalent of the Low Income Housing Tax Credit, meant to spur investment in low-income areas. It’s had success – but has also been subject to abuse, in one case by a luxury hotel.

I wonder if the mayor and other supporters of the Twitter tax break will show up in solidarity with the workers.


Everyone’s on break at this point in the summer – the Board of Supes doesn’t meet, the Planning Commission doesn’t meet, a lot of the folks at City Hall are out of town.

But the fall campaigns are in gear – and so is an effort to challenge a proposed luxury highrise project on the waterfront.

Where have we heard this before?

The voters don’t tend to like big towers – particularly towers for the richest of the rich – and the Planning Commission will return the first week in September to a huge controversy.

The 75 Howard building is currently a parking garage. It’s making money, of course – parking garages are generally quite profitable – but there’s a lot more money to be made in fancy condos, particularly in a site with spectacular waterfront views.

On the other hand, the project will cast shadows on Rincon Park – and will be another tall building in a part of town where people want to stop tall buildings. A letter from Jerome Dobson, of Save Rincon Park, notes:

“Like the 8 Washington high-rise that the San Francisco voters overwhlelmingly rejected, the proposed plans show a 240-foot luxury condo tower … that would create the dominating effect of a wall on the waterfront. If approved, this project would overshadow Rincon Park and diminish the pedestrian experience along the waterfront, just as the old double-decker Embarcadero Freeway did for decades before it was removed.”

Lots of groups oppose the project, including the Sierra Club, San Francisco Tomorrow, the Harvey Milk Club, the Coalition for San Francisco Neighborhoods, the Alliance for a Better District 6, and the Potrero Hill Democratic Club.

Some of them worry about the environmental impacts, but there’s a larger concern here, and it’s getting expressed with the Mission Moratorium. At some point, we have to accept that luxury housing isn’t helping; it’s making things worse.


A lot of progressives in San Francisco have been complaining for years about the behavior of the Academy of Art University, which gobbles up housing and seems to ignore zoning laws with impunity.

So it was refreshing to see a remarkable investigation of the institution not by some left-wing group but by Forbes Magazine. Forbes writer Katia Savchuk put together a devastating two-part series on the AAU, revealing how the school not only offers false hopes to students who pay high tuition (with federally subsidized loans)…

But behind the shiny façade is a less than lustrous business: luring starry-eyed art students into taking on massive amounts of debt based on the “revolutionary principle” (Stephens’ phrase) that anyone can make a career as a professional artist. No observable talent is required to gain admission to AAU. The school will accept anyone who has a high school diploma and is willing to pay the $22,000 annual tuition (excluding room and board), no art portfolio required. It would be easy to accuse AAU of being a diploma mill, except the school doesn’t manufacture many diplomas. Just 32% of full-time students graduate in six years, versus 59% for colleges nationally, and that rate drops to 6% for online-only students and 3% for part-time students.

…. but thumbs its collective nose at local zoning laws with the support of powerful local politicians.

The Stephen family’s connection to City Hall dates back to the 1970s, when Richard Stephens, Elisa’s father and former AAU president, befriended future San Francisco Mayor Willie Brown – then a California assemblyman – at a downtown watering hole. “We used to paint the town,” Brown recalled last May.

Brown, who was mayor from 1996 to 2004, is an annual guest at AAU’s fashion show, and along with his girlfriend Sonya Molodetskaya, takes frequent trips to New York Fashion Week on the Stephens’ corporate jet.

In the 1960s, Forbes used to proudly promote itself as a “capitalist tool.” But the magazine is starting to realize, as more and more people are, that these for-profit universities aren’t just a threat to public education. They’re a scam.

I wonder if the head of the accrediting agency that has been so hard on City College (and so easy on the likes of AAU) is reading Forbes these days.

48 Hills welcomes comments in the form of letters to the editor, which you can submit here. We also invite you to join the conversation on our FacebookTwitter, and Instagram

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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