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News + PoliticsHow the Twitter tax break continues to damage San Francisco ...

How the Twitter tax break continues to damage San Francisco …

... plus big city contracts that never got the proper oversight, smoking weed in public -- and Scott Wiener's plan to further gentrify San Francisco. That's The Agenda for March 11-17


The long-term impact of the Twitter tax break was never going to be the money that came in or was lost by the city because of lower payroll taxes. It was all about inviting a new tech boom in San Francisco – and it’s about to, as the New York Times says, “eat the city alive.”

When the tech companies that moved into mid-Market go public in 2019, we will see, at least in the short term, thousands of new rich people who will want to buy property. That will drive housing prices, already completely crazy, even higher – and lead to even more evictions, displacement, and gentrification.

Protesters note that the Twitter tax break cost the city millions. It also spurred evictions and displacement — and that’s about to get way, way worse.

From the Times:

When Google in Mountain View and Facebook in Menlo Park went public, their workers were spread across the Bay Area, and so the impact on housing was diffuse. Now, many of the biggest start-ups are based in San Francisco, in part thanks to the city’s tax breaks. Brokers say San Francisco is where the workers want to stay.

Perhaps this is one reason why so many landlords are leaving storefronts vacant, why so many housing units are approved but not built. The landlords and the developers are biding their time – because they are convinced that sales and leases are going to soar after the IPOs.

So will Ellis Act evictions, the loss of longtime neighborhood businesses, and all the other impacts of the tech boom that the city never prepared for. In the rush to embrace tech companies, former Mayor Ed Lee and a majority of the supervisors in 2011 sowed the seeds for lasting, irrevocable damage to this city.

What would have happened if Twitter and Zynga had decided to move to the Peninsula and Uber, Lyft, Airbnb, and Pinterest decided to set up shop somewhere else? The local economy would have recovered. Other small businesses and startups would have found a home here. Nonprofits and community spaces might not have been priced out. Economic inequality in San Francisco might not have reached astronomical levels.

In other words, we would have been better off. And it’s only going to get worse.

The Board of Supes is set to finally pass Tuesday/12 legislation better regulating vacant storefronts. But if the landlords think that 10,000 new tech millionaires are going to want fancy restaurants and boutiques that can pay far more than today’s going rate for commercial space, only a very high vacancy tax is going to convince them to sign leases today.

The board will also consider an ordinance that would, for the first time, allow both sales and consumption of cannabis at public events. The law would give the Office of Cannabis the ability to issue temporary waivers of the city’s no-smoking laws. According to a legal analysis prepared for the board,

The ordinance would initially establish a pilot program limiting Cannabis Event Permits to events previously permitted by the City on a regular basis, at which there have been significant unregulated cannabis sales or consumption.

I can think of a few of those.

On Thursday/14, the Government Audit and Oversight Committee will hold a hearing into a practice that has infuriated Sup. Aaron Peskin: City agencies routinely signing contracts without board approval and then asking, later, for retroactive authority.

(That sounds a lot like what the tech industry loves to do – break the law, then ask the city retroactively to change the rules.)

He raised the issue at a meeting a few weeks ago, but not wants a full hearing on

the retroactive nature of the Board of Supervisors’ approval on January 29, 2019, of the Grant Agreement between the City and County of San Francisco and Tenderloin Housing Clinic, and of the First Amendment to that Grant Agreement; a review of any other contracts to which the City and County of San Francisco are a party and which were not proactively made subject to approval by the Board of Supervisors in spite of the explicit contract and lease limitations set forth in Section 9.118 of the Charter of the City and County of San Francisco.

That grant, for providing supportive housing services, totals $117 million. During the Jan. 29 meeting, the Department of Homelessness and Supportive Housing admitted that the original 2014 contract was signed by the Human Services Agency without any board approval.

Peskin called that “deeply disturbing” and said: “I’ve never seen this before. In 20 years in and out of this job, I’ve never seen this before.” He asked the controller how the funds could have been allocated without board approval, which is required for any contract of more than $10 million. Controller Ben Rosenfield said the contract didn’t come through his office, but that clearly someone made a mistake.

“This is the kind of thing,” Peskin said at the meeting, “where if a department head does this, whether it is intentional or unintentional, that person should be relieved or his or her duties.”

Peskin told me that the issue has nothing to do with the Tenderloin Housing Committee specifically – but that “this is the tip of the iceberg. Many departments do not go to the Board of Supervisors for approval of contracts over $10 million, and that’s a violation of the City Charter.”

Peskin also wants to find out who is really giving orders to the city’s lobbyist. San Francisco employs a Sacramento lobbying firm, Shaw, Yoder, Antwih, to represent the city’s interests at the state Legislature. But in the past (particularly on some housing bills) the lobbyist, Paul Yoder, was working to promote a position that the mayor was taking – but the supervisors were not.

“When the Board of Supervisors takes a position on a bill, that is the policy position of the City and County of San Francisco,” Peskin told me. “But even when we pass a resolution, sometimes the mayor will take a different position and the city lobbyist will work for the mayor’s position.”

That hearing, and the hearing on the retroactive contracts, starts at 10am in Room 263, City Hall.

The Planning Commission will hear Thursday/14 a presentation on SB 50, the bill by state Senator Scott Wiener that would mandate more dense, market-rate housing in many San Francisco neighborhoods. The commission doesn’t have to take a position on this – but I suspect some of the members will have concerns.

From the report:

SB 50 is in many respects an update to last year’s SB 827. Both bills are intended to take on the underproduction of housing throughout the state of California by increasing zoned capacity for housing and focusing that capacity near transit service. The Urban Displacement Project released a study in October 2018 estimating the impact SB 827 could have had on the Bay Area. That analysis found SB 827 would have increased the financially feasible development potential in the Bay Area sixfold (from 380,000 to 2.3 million units), while increasing the potential for affordable inclusionary units sevenfold.1 SB 50’s inclusion of ‘jobs rich’ areas would likely increase that estimate of how many new housing units could be produced. The study also found that 60% of the units SB 827 would have unlocked were located in low-income and gentrifying areas. SB 50’s addition of a ‘jobs rich’ geography greatly expands the area where the bill would apply, and should include many high-resourced areas that may not be immediately proximate to transit.

The hearing starts at 1pm in Room 400, City Hall.

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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