Make Room for Dot-Coms

Forget about live-work lofts. The newest fight for San Francisco's soul is over multimedia office space.

While leftist, it is a staunchly conservative ethic with roots in the sense of shock some residents felt during the '50s and '60s when they saw their city gradually cease finding sustenance as a postwar shipping and manufacturing center.

Then, San Francisco was a low-rise, blue-collar city with shipping, manufacturing, and distribution industries as its growth engines. Over time, shipping moved across the bay to Oakland. Distribution warehouses and other space-intensive businesses moved toward the greater urban area's periphery as land here became more dear. The city's economy shifted toward service industries -- tourism and financial services such as banks, accounting firms, and consulting firms. Within 20 years, the city work force went from being largely blue collar to more white collar. Once mostly white, San Francisco became a much more ethnically diverse place during the period. By the 1980s, half of the workers commuted from elsewhere. Residents also saw the city's physical appearance change dramatically, as service-oriented economic growth led to a high-rise office construction boom. San Francisco's skyline stretched upward and downtown expanded. More and more frequently, the term "Manhattanization" drifted through San Francisco coffee conversations.

This grumbling eventually became focused enough to channel into anti-growth ballot initiative campaigns. The first, called Proposition T, was largely concerned with protecting the views of selected property owners, and would have limited building height limits to six stories. It was defeated. In 1979 slow-growth forces regrouped and drafted Proposition O. Backers were led by white, middle-class professionals whose arguments echoed those of today's anti-growth activists: Downtown high-rise growth was responsible for rising housing prices and worsening traffic congestion, they said. The measure would have limited the height and bulk of downtown buildings, but not as severely as its predecessor. Proposition O, too, was defeated. But with its 45 percent share of the vote it was a harbinger.

Paul Trapani
Developer Brian Bock inside the former George W. Caswell Coffee & Tea Co., once slated for live-work conversion, which will now become home to Critical Path Inc.
Chris Anderson
Developer Brian Bock inside the former George W. Caswell Coffee & Tea Co., once slated for live-work conversion, which will now become home to Critical Path Inc.

In 1983, a coalition of low-income and minority groups, social activists, and members of what was coming to be called the San Francisco progressive movement drafted the first version of Proposition M. They argued that downtown development was marginalizing minorities and disenfranchising the poor; driving up housing prices; and focusing economic activity in areas that employed only highly educated, well-paid professionals. This measure required downtown developers to contribute fees for transit improvements and job training. While the measure included no specific growth restrictions, its proponents believed the fees would be steep enough to put the brakes on high-rise development.

Startled by the growing sophistication of slow-growth activists, the city's Planning Department drafted a downtown zoning plan that specifically limited the total amount of office space to be built each year. The plan was credited with helping defeat the first version of Proposition M. But it didn't do much to blunt the message of the anti-growth campaign: Economic development was key to the city's problems, not their solution.

During the next three years the slow-growth forces continued to build on the coalition of poor, black, environmentalist, neighborhood activist, and white liberal voters. And in 1986, the second Proposition M put a temporary moratorium on development and subsequently froze the amount of new office space to be built at 950,000 square feet per year. Neighborhood preservation, the preservation of blue-collar jobs, and the mitigation of traffic problems were key factors to be considered in the approval of projects. The measure included bulk limitations, new zoning regulations, and shadow bans. The black-owned San Francisco Sun-Reporter, the Bay View Democratic Club, and a host of black ministers all backed the measure. Meanwhile, members of the San Francisco business community -- some of whom stood to gain handsomely if growth controls succeeded in driving up commercial rents -- contributed modestly to a lighthearted opposition campaign. The measure won -- barely -- by 5,311 votes.

For city politics, the measure's victory went beyond merely limiting construction in the Financial District. The slow-growth coalition formed during these campaigns was credited with aiding in the victory of liberal Mayor Art Agnos.

"The election of Art Agnos was a progressive victory," writes Richard DeLeon in Left Coast City, a 1992 book that describes the Proposition M campaign as the Bunker Hill of S.F. progressivism. This movement's basic tenets, which were subsequently applied to all sorts of political struggles, never veered far from principles described in Proposition M pamphlets: fight Manhattanization, empower communities, guard against predatory investors and their allies.

While Proposition M had tumultuous political effects, it actually had almost no significance limiting downtown development and growth. Not long after the measure passed, the aftershocks of the nationwide savings-and-loan crisis rattled San Francisco. Downtown banks laid off workers. The demand for office space shrank dramatically. By 1990, no fewer than seven already approved office tower projects languished for lack of financing.

The empty lots holding half-abandoned construction projects served more as a monument to market forces than to the progressives' newfound clout.

Just as market forces pre-empted San Francisco progressives' battles past, they are now defining struggles to come: The sudden growth of the Internet economy has injected a new sense of urgency into the ongoing anti-growth struggle.

Multimedia Gulch, the 10-block area of converted warehouses packed with digital technology companies, is bursting. A 1998 report by the San Francisco Redevelopment Agency said the cyberhood clustered around South Park had created about 35,000 jobs and was generating revenue in excess of $2 billion annually. And that was before the boom. Two years later, massive unmet demand for digital media office space has allowed downtown and SOMA landlords to double rents for firms renewing their office leases.

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