San Francisco Not Just a Pretty Face : ‘Civilized’ City Is Doing Quite Well Economically, Thank You

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<i> Dianne Feinstein is mayor of San Francisco. </i>

There has been a rash of San Francisco bashing in the media lately, and it’s time to set the record straight. For those of us who live in San Francisco--and believe it to be the world’s most civilized city--recent articles in national publications raise our hackles. The message is: What’s happened to San Francisco? It used to be a thriving metropolis. Like reports of Mark Twain’s death, the stories of San Francisco’s economic decline are greatly exaggerated.

Our average unemployment rate for 1986 was 5.4%, the state’s was 6.7% and for the nation it was 7%. More San Franciscans worked throughout 1986 than other residents in California and most other U.S. cities--hardly a symptom of a town on the skids.

Through the second quarter of 1986, San Francisco’s total taxable retail sales increased 4.4% over the same period in 1985. Los Angeles’ growth rate for the same period was 0.5%, according to the State Board of Equalization. San Francisco’s Union Square Macy’s--only one example of our retail industries’ health --reports annual sales of more than $200 million.


The 1986 California Finance Department state population report noted: “San Francisco, with an estimated population of 741,600, continued its phenomenal growth in this decade, after three decades of losses . . .. School enrollment is up, voter registration is up, the number of drivers’ licenses is up--all indicators are up . . ..” Does that sound like a has-been city?

San Francisco is the fourth largest U.S. market. The city’s industries and services generate more than $15 billion a year. Our local economy is remarkably diversified--finance, insurance, real estate, transportation, communications, public utilities, wholesale trade and services. We have the 10th busiest airport in the world; our Bay Area ports handle more than 35% of all California’s Pacific trade and are served by 41 shipping lines. The Port of San Francisco is the state’s only port already equipped with on-dock and direct ship-to-rail container transfer.

San Francisco’s work force--a key indicator notably omitted in the analyses of would-be Chicken Littles--is among the best educated in the United States, second only to Boston in percentage of college graduates. The Bay Area has a huge education and research network of 54 universities, colleges and professional schools, with a dozen in the city.

San Francisco is next to the heart of America’s high-tech industry leader, Silicon Valley, and a world leader in the rapidly developing biotechnology industry. Many major corporations and five of California’s top 10 banks are headquartered here. We also have the Federal Home Loan Bank and the Federal Reserve Bank of San Francisco. Our economy is not only healthy but thriving.

This doesn’t mean we are problem free, however. I am the first to admit that San Francisco cannot simply tout its spectacular scenery and wait for the world to beat a path to our door. Those days are gone. Intrastate and international competition is increasingly tough. We must do everything we can to attract investors who generate jobs and economic stability. That’s why I’ve been visiting Pacific Rim countries learning how this economically exploding region does business and trying to discern those areas where San Francisco can benefit.

As an incentive to blue-collar industry, I have proposed a five-year moratorium on business taxes for new companies coming into the city and for local firms that want to expand. The Mayor’s Office of Housing and Economic Development assists potential investors with everything from locating plant sites to packaging joint ventures.

What about San Francisco’s reportedly high office vacancy rates? We certainly are not alone among major U.S. cities experiencing vacancy problems--and the result has cost us 25,000 jobs in recent years.


But the reasons for the problem vary tremendously, from increased national and international competition to deregulation of key industries to the high number of corporate mergers. Surveys show that the most frequent reason for business relocation was cost of space. But double-digit vacancy rates have triggered a significant drop in rental prices. Figures compiled by the International Office Market Report for 1986 showed an 18% vacancy rate, Los Angeles’ central business district was 19.8%. Now that rents are dropping, San Francisco’s vacancy rate is about 16%.

Cities do not operate in splendid isolation from regional, state and national economic vagaries. Quite the contrary. Cities are bellwethers of the trends that create the national economy. San Francisco, like many cities, is grappling with loss of jobs to the suburbs and we are working successfully to stem the tide. A recent Office of Housing and Economic Development study shows that in the past two years, the city has had a net gain of 5,000 jobs--gains generated mainly in the business services sector.

These jobs appear to be due primarily to a significant increase in small businesses--many of which supply goods and services to larger companies. Small business growth is an important indicator of where opportunity exists--and its rise tells me that our city is regarded as a good investment.

In the final analysis San Francisco has to be cost competitive and concerned about the welfare of local companies. Businesses have to know that they are wanted and their contributions valued. Appreciation often is difficult to detect in rough economic times, but it is an attitude I intend to encourage as sound civic policy. We can begin by ending the bad-mouthing of San Francisco and supporting the city’s efforts to build a stronger local economy.