BY MEAGAN DAY (jacobinmag.com)
Under Ed Lee, San Francisco was remade into a playground for tech capitalists and real estate developers.
The first thing Ed Lee did when he took office in 2011 was provide a massive tax break to tech companies in exchange for their setting up shop in the city’s downtown area. “I was very wary of the Twitter tax break,” says former city supervisor John Avalos, who lost the mayoral race to Lee in 2011, “because we had the whole experience of the dot-com boom in San Francisco that led to a huge amount of displacement and gentrification.” Eight years later, Avalos is vindicated: the city is seeing eviction and homelessness on a mass scale, and the gap between San Francisco’s rich and poor residents is notoriously wide and growing.
In recent years, Lee made an effort to secure funding programs for the city’s homeless population and set up navigation centers to help people get on their feet. But he remained committed to a capital-friendly policy approach — one that exacerbated the same problems he made an effort to solve. Lee saw his primary task as concentrating large businesses in San Francisco and keeping them there, and he consistently removed obstacles for real estate developers and tech companies to make it happen. “He was a strong adherent of the growth machine model for cities,” says Jennifer Fieber of San Francisco’s Anti-Eviction Mapping Project, “but I never saw him make the link between his trying to attract tech workers and the obvious displacement it would cause.”
In 2015, the board of supervisors unanimously passed a tenant protection law. Fieber points out that while Lee did not veto it, he also refused to sign it. “It’s like, who are you trying to not offend if it’s not the real estate industry?” she asks. Lee similarly refused to sign an ordinance requiring Airbnb hosts to register with the city, though that passed unanimously as well, and he vetoed legislation that would require a sixty-day cap on short-term rentals. Short-term rentals like Airbnb units contribute to soaring rents, which in turn increase evictions and exacerbate the problem of homelessness.
“Toward the end of his tenure he was trying to resolve the homeless situation,” says former city supervisor and state assemblyman Tom Ammiano. “While the gesture was appreciated, there was a lack of connecting the dots. He wanted to be there for the homeless, but when you looked at the housing policies he supported or his approach to Airbnb or what have you, his actions were often in contradiction to the gesture of funding homeless programs more and setting up navigation centers. You often see that in politics, where someone will adopt an issue but they’re not really paying attention to the things that they’re supporting that undermine that issue.”
Avalos echoes the concern about Lee’s attention to cause and effect, saying, “There was a greater emphasis on attracting businesses and wealthier interests to the city rather than dealing with the impact of growing inequality that those interests brought to San Francisco.” Lee tried to facilitate the concentration of corporate wealth within the city’s borders, Avalos says, presumably guided by the belief that the wealth could be harnessed for the greater good. Yet he was unable to harness that wealth effectively through taxes without getting crossways with the corporations he’d empowered, who gained a greater foothold in San Francisco politics with each passing year of Lee’s tenure. “Like the sorcerer’s apprentice,” says Avalos, “he lost control of what he was trying to achieve.”
In his campaign against Lee, Avalos proposed a $500 million housing bond to secure affordable housing, offset rental prices, and keep San Franciscans housed. As mayor, Lee went with a $310 million bond, after Avalos pressured him to raise the amount. Lee also jousted with Avalos over corporate taxes, with Lee opting for the lower tax rate on businesses. “Lo and behold, years later Ed Lee came forward with a sales tax, which was regressive, to pay for the same services that he could have paid for with the business tax,” says Avalos.
Avalos sees both of these policies as a failure to prioritize the needs of low-income residents and a mistaken belief that wealth eventually spreads around, enriching everyone in its vicinity. “Ed Lee’s idea was that if we serve these tech companies and corporations,” he says, “they will bring economic success and vitality to San Francisco, and the rest of the city will be able to benefit through some version of trickle-down economics. Well I don’t think a trickle is significant enough. When it came to actually trying to create revenue streams that could be used for uplifting all of San Francisco, and dealing with the inequality that increased with the tech companies coming in, Ed Lee fell short.”
Lee took a permissive approach to tech corporations and real estate developers alike — and the relationships between the two were laid bare over the course of his time in office. “Real estate developers know that people working for big tech companies make more than the average resident,” explains Erin McElroy, also of the Anti-Eviction Mapping Project, “so they cater to them. We’ve seen them rebrand parts of neighborhoods as places for tech workers to reside and take private buses to and from Silicon Valley. We’ve seen apartment complexes specifically built for tech employees go up right next to their office buildings. Of course those new condo developments raise the price of rent in the surrounding areas. We’ve even found that there are more evictions proximate to tech bus stops.”
Worse yet, many of the condos developed on Ed Lee’s watch remain vacant while people sleep in tents on the city sidewalks. There are more than 30,000 vacant units in the city — most of them luxury condos owned by speculators, second or third homes owned by affluent jet-setters, or short-term rentals in partial use. Meanwhile, it’s estimated that nearly 8,000 people in San Francisco are without homes.
“The perception was that Ron Conway had too much of a say on Ed Lee,” says Ammiano. Conway is an angel investor who has backed Airbnb, Square, Twitter, Zynga, and sixty-five other San Francisco-based tech companies. He was the single largest donor to Ed Lee’s campaigns; news reports called the two a power couple. Lee followed Conway’s lead in encouraging private philanthropy to boost the public sector. “If you’re talking about Salesforce donating seven million dollars to the schools,” Ammiano says, “that’s not the solution. It’s the tax structure that’s the solution.”
Conway encouraged Lee to pursue public-private partnerships in response to the housing crisis — that is, to let real estate developers build their condo complexes and trust that the private sector will provide for the public. “Lee believed that the real estate industry was the champion to fix all of our problems,” says Faiq Raza of the Anti-Eviction Mapping Project, “and that liberalizing the sector, getting rid of various requirements, and streamlining development were the answer.”
“If we don’t have a strong economy in our city, we can’t help anybody,” Lee said last year. This outlook led Lee to put private profits first, and deal with the externalities of corporate wealth concentration down the line.
But “the more you harness the power of wealth to grow the economy,” says Avalos, “the more inequality is created if there aren’t structures to create equity.” When asked what kind of political leadership is required to undo the damage Lee’s policies have done, Avalos replies, “I think we need someone who has an anticapitalist perspective. Our capitalist market is not going to bail us out of growing inequality.”