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Mayor Ed Lee faces fire over who benefits as S.F. booms

San Francisco's boom is Mayor Ed Lee's legacy, his problem and his opportunity

The 656-condo Lumina complex promises a "transcendent living experience," with a club lounge, climbing wall and pet grooming station. The smallest units start at about $1 million. The penthouse is priced at $49 million, a city record.

But on this day, San Francisco Mayor Ed Lee had donned a hard hat and orange vest to tour a development farther away from the bay that satisfies the affordable-housing obligation for Lumina's developer, Tishman Speyer: a complex that will sell 190 condos at below-market prices.

As the elevator doors clanged shut, Carl D. Shannon, Tishman's senior managing director, told him: "Not everyone in City Hall agrees with me, but I think that building housing solves the housing crisis."

Two other housing developments could be seen rising to the east and north. Just to the south, on a stretch of Market Street blighted for half a century, sat the headquarters of Twitter, Uber and Square.

Lee, 62, a former tenants' rights lawyer who spent more than two decades as a city bureaucrat before reluctantly becoming interim mayor four years ago, was ushered into a three-bedroom unit that will be sold for $300,000 — an unheard-of price in a city where the median price for a house or condo last month topped $1.1 million.

He quipped: "What world are we living in?"

"We're in Nebraska!" said Donald S. Falk, executive director of the Tenderloin Neighborhood Development Corp, a partner on the project.

Then Lee got serious. "This really helps with the crisis," he said, offering to hand over the keys to the buyer when one is chosen. Thousands are expected to apply.

In the years since Lee became mayor and cozied up to tech, San Francisco's unemployment rate has been more than cut in half, the skyline has been transformed, city coffers are plump, and philanthropists are stepping up to help fund everything from hospitals to schools.

But anxiety is skyrocketing along with housing costs, as many fear the city they love is vanishing. "Evict Ed Lee" graffiti abounds.

The boom, in short, is his legacy, his problem and his opportunity.

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Lee was applauded by a regional business group here recently for an honor any mayor would envy, particularly one gearing up for reelection: Thanks to the fastest wage growth in the country, San Francisco (together with San Mateo and Redwood City to the south) had topped the Milken Institute's list of "best performing cities, 2014."

"Creative and scientific" positions — largely in the tech sector with a boost from biotech and medical research — accounted for nearly half of the 56,100 jobs created between 2008 and 2013, according to the index compiled by the Santa Monica think tank. Tech salaries averaged $160,000.

Known for his 5-foot-5 stature, folksy jokes and remarkably rectangular mustache, Lee is attempting a delicate balancing act: stoking the city's racing economic engine while pushing to direct new wealth "right back into our neighborhoods" — to low- and middle-income housing, job training, education and transportation.

He must act on his "shared prosperity" agenda as San Francisco's character is altered by tenant displacements and soaring housing costs that close off a city long a haven for vulnerable seekers and misfits to all newcomers but the wealthy.

The city topped a different index last year — for the fastest-growing wealth gap. Sara Shortt, executive director of the Housing Rights Coalition, said that at this late stage, "all the mayor can do is mitigate."

"The freaks and the hippies and the queers and the immigrants that really helped shape San Francisco into an exciting, cool, fun city of substance, all of that's being chipped away at daily," she said.

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Lee and his six siblings grew up in a Seattle public housing complex before his father, a cook, and his mother, a garment worker, built a modest home. As a youth helping with deliveries from the family restaurant, he had listened to hostile customers berate his dad with racial slurs.

"It was an awakening," Lee said."'Why do we as people take this?'"

As a young lawyer, he joined the San Francisco Asian Law Caucus, helping in 1978 to organize a rent strike by residents in Chinatown's decrepit Ping Yuen public housing project after a young woman was raped and killed there.

In 1988, then-Mayor Art Agnos hired Lee to run a whistle-blower program, followed by a stint heading the Human Rights Commission, where he pressed for fair hiring practices for women and minorities. In his next post, as city purchaser, he opened contracting doors to those same groups. Later he became public works director and city administrator.

"Not once" did he consider elected office, he said. But when Mayor Gavin Newsom left his post in January 2011 to become lieutenant governor, Lee agreed to be an interim caretaker, promising not to run that November.

He did run, though, and won in a landslide.

His earliest welcome signal to the tech sector — designed to keep Twitter from leaving town — was a payroll tax break on new hires for companies that moved into underused buildings in the blighted mid-Market and Tenderloin districts. A citywide tax break on stock-option compensation followed. Many point to a recent ordinance to regulate Airbnb — criticized as too soft — as an example of another tech giveaway.

Lee quickly realized that the tech sector could not only play a key role in economic recovery, but "also be a key partner in the mayor's effort to build public and private partnerships," venture capitalist Ron Conway, who founded San Francisco Citizens Initiative for Technology and Innovation, wrote in an email.

Critics see it differently. David Talbot is the founder of Salon.com and author of "Season of the Witch," which tracks the tumult of San Francisco from 1967 to 1982 — and lauds that other Lee, the young tenant defender.

"The tech elite has bought Ed Lee," he said.

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Lee's mantra when he took office was "jobs, jobs, jobs." But by early 2014, as protesters blocked the white buses that ferry tech workers to Google and other companies to the south, he revised it to "housing, housing, housing."

He has unveiled a plan to build or rehabilitate 30,000 housing units by 2020, a third of them affordable to low-income residents and half to middle-income. He is pushing a housing bond for the November ballot and will seek a philanthropic match.

Luxury building helps, he argues, by preventing super-rich newcomers from displacing those in dwindling rent-controlled units.

But some believe the high-end housing must be slowed. "At some point we will run out of land," said Supervisor David Campos, who is calling for a market-rate freeze in the Mission District until affordable housing is expedited.

Over the last year, Lee has beefed up the rent board and bolstered resources for eviction defense. He has pledged to fight in Sacramento to reform the Ellis Act, which allows owners to evict in order to get out of the rental business.

But Shortt calls the efforts "too little, too late" to stem the loss of housing due to tenant buyouts, evictions, demolitions and short-term vacation rentals.

Even some of Lee's allies believe his numbers don't pencil out.

Gordon Chin founded the Chinatown Community Development Center and once fought for tenants at Lee's side.

"It's not enough," Chin said. "Housing cuts to the core of our values as a city. Who lives here now, who lived here before, and who's going to live here tomorrow?"

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If tech is part of the problem, Lee believes it is also part of the solution.

Lee often prods companies to hire locally. And at a diner over French toast and omelets, he pitched Salesforce.com CEO Marc Benioff with a vision to improve San Francisco middle schools.

The billionaire had invested in the schools before, with what he called poor results, so he was reluctant. But Lee swayed him. The city's largest tech employer has since put in $10 million of what he expects will be a $50-million contribution over a decade and urges others in the tech sector to give back.

Benioff, Conway and Facebook's Mark Zuckerberg have collectively poured more than a quarter of a billion dollars into city hospitals. Meanwhile, Google has funded free Wi-Fi for city parks and donated $6.8 million toward free transit for city youth. Now, Lee plans to ask tech leaders for help in funding housing — as well as a program that aims to break the hold of "intergenerational poverty" on as many as 500 families.

But the reliance on private dollars makes many uncomfortable. They would prefer tax dollars and the public vetting that comes with deciding how they are spent.

"While we believe that the philanthropic approach has a role, to truly address this growing inequality you have to do more than simply ask corporations to do the right thing," said Campos, the supervisor. "You actually have to hold them accountable."

Even Benioff, who has deep city roots, said Lee "has to be cautious not to be bullied by these young billionaire CEOs who want their way."

So far, Lee faces no significant opposition in the fall. He hopes to see his vision through, riding the boom to help "those who have suffered most."

"You have to kind of take a look at where the waves are," he said, "and see whether or not you can use them in a way that helps a lot of other people get lifted out."

lee.romney@latimes.com

Twitter: @leeromney

Copyright © 2016, Los Angeles Times

SAN FRANCISCO STATISTICS

 

Unemployment Rate

January 2011: 9.4%

February 2015: 3.8%

Source: California Employment Development Department

Median House and Condo Sales Prices

1st Q 2011: 638,000

4th Q 2014: 1,050,000

February 2015 (record high): $1,115,000

Source: Paragon Real Estate Group

Average Asking Rent

2010: $2,243

2014: $3,275

% change: 46%

Source: RealFacts

Total Eviction Notices

March 2010 to February 2011: 1,370

March 2014 to February 2015: 2,120

% change: 55%

Source: S.F. Rent Board

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