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The Show Must Go On: Will Mid-Market's Dramatic Development Attract an Audience? 

Wednesday, Oct 9 2013

Page 4 of 5

Yet the agencies also help reduce San Francisco's homeless population: between 2009 and 2011, the number of homeless people on the street and in shelters decreased by more than 500, according to the city's homeless count. Without social services, the open squares by Civic Center and Powell Street might become so overrun that tourists, pedestrians, and theater-goers would never set foot there. Now, with commercial rents rising and luxury condos becoming the new normal, many nonprofits say they are in danger of becoming homeless themselves.

San Francisco has long striven to help its less fortunate, and its municipal policies often reflected that do-gooder ethos. Back in the '60s and '70s, when the closest things to Google were call-in switchboards or Yellow Page phonebooks, San Francisco administrators made a concerted effort to build their nonprofit infrastructure. In large part, they accomplished that by contracting with nonprofits for most social services, says Mark Burns, deputy director of the city's In-Home Supportive Services Consortium.

"If you go back historically," Burns says, "the city took out all the contracts with for-profit companies, and replaced them with nonprofits." He adds that the latest push for commercial development is anathema to San Francisco's former vision of itself. "The new policies coming out of City Hall... are done on the backs of citizens who the city purports to welcome and be inclusive of."

Meaning commercial development has grown so rapacious in San Francisco that some social service agencies can no longer afford to operate here. Some are already migrating to Oakland, according to Burns. Which raises the question of whether the indigent and low-income people who use those organizations — the people with no assets, whatsoever — will get priced out, too. If anything, fewer available services beget more homeless people, says Nancy Nielsen, deputy director of Lutheran Social Services of Northern California. And that could create serious problems for the developers trying to resuscitate Mid-Market.

Such culture clashes are less troubling than the prohibitive rise in commercial rents, or the cost of living there in general. If places like NEMA become the new norm, then the whole funky infrastructure that San Francisco built 40 years ago may be doomed. Now, many nonprofits and arts organizations — including the ones that help bejewel the city's "arts district" image — depend on the generosity of landlords who aren't necessarily looking to become philanthropists.

Veterans of the nonprofit sector see eerie parallels to the dot-com boom of the '90s, when rapid property appreciation drove the first wave of have-nots to Oakland. Not only are landlords eager to fill ground-floor spaces that languished during the recession, they're also able to command much higher prices. And because most direct social services don't have the luxury of moving out of town — "you may as well move out of state," Jeff Bialik, executive director of Catholic Charities, says — they're often stuck sparring with a much more desirable class of tenants.

"We'd been renting a space in SOMA for 8 years, and during that time our landlord found a tech client who offered double what we were paying," Nielsen says, explaining why her group now has its sights on a large, dilapidated eyesore of a building that needs about $400,000 in rehab. "The landlord is willing to keep rent at an affordable rate, and pay up to a quarter of the build-out cost," she adds. "But he isn't going to pay $400,000, and we don't have that money just sitting around."

City administrators and their nonprofit counterparts have floated many proposals to address the problem. One would be for the city to absorb the overhead costs for its social services programs, which would essentially double its burden: After forfeiting payroll tax revenues from the Mid-Market tech companies, it would then tack on the cost of running all the social services that could no longer afford to rent there.

Another option would be to set aside some tax revenues from commercial leases and create a fund to underwrite nonprofits. Perhaps the most logical would be a swap-off: For every hundred thousand feet of commercial space, the city would have to set aside a certain number for social services, priced below market rates.

The only other option would be some kind of scorched-earth policy to drive all of the homeless out of town, creating the kind of high-priced urban district that could shift the whole culture of San Francisco. (Recall this is a city that routinely passes bond measures for supportive housing.) And if real estate prices are endangering social services, they'll soon put shoestring arts organizations at risk, too.

San Francisco isn't a monolith. Even if many of its policies coddle tech companies, there's still a strong progressive bloc on the Board of Supervisors, and an Office of Economic and Workforce Development set up to protect nonprofits and artists. Yet they can't control the vicissitudes of a hot real estate market. Property values might rise so high that even good intentions can't stem the tide.

With so many other neighborhood nonprofits facing the same predicament, Nielsen and others worry that arts organizations won't survive, either; the going commercial rate of $50-$60 a square foot per year would prove challenging for any tenant without a nest egg or a viable revenue stream. Even nonprofits that sell tickets, such as art museums or theaters, often rely on underwriters or private donations to pay at least part of their overhead. Private funding doesn't typically rise with inflation.

About The Author

Rachel Swan

Rachel Swan

Rachel Swan was a staff writer at SF Weekly from 2013 to 2015. In previous lives she was a music editor, IP hack, and tutor of Cal athletes.


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