Make Room for Dot-Coms

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

"I suggested we move to Colma," quipped one Financial District lawyer whose firm recently received a hefty rent-hike notice.

Now, though current figures aren't available, anecdotes suggest there are more than 1,000 businesses in the SOMA/Multimedia Gulch area, with hundreds more spilling out into Potrero and the Mission.

The crunch can only get worse as Proposition M limits the amount of available office space. Because of an office construction slump during most of the 1990s, the Planning Department has saved up 3.5 million square feet of office-space permits -- which can lay over from year to year under Proposition M. But with 4.5 million feet in proposed development, and millions more sure to come soon, the once-inert Proposition M is morphing into a giant killer.

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.

The real scope of this impending office bottleneck is also disguised by the fact that city zoning officials have, up to now, had a difficult time classifying exactly what it is multimedia companies do.

The city Planning Department so far has dealt with the steady stream of industrial-to-office-loft conversions going on in the South of Market, Potrero, and Mission districts on a case-by-case basis, in many instances classifying these new companies as a form of light industry, or business service, and therefore not falling under the strictures of Proposition M.

"Business service is in a category allowed in industrial districts, and doesn't require the off-street parking retail requires. It also doesn't fall into the category of the city's concerns about office space limits," says Bob Passmore, who last year retired as the city's zoning administrator. "For a period of time, that wasn't a concern," Passmore says, because there weren't enough large office projects proposed to cause Proposition M's growth limits to kick in.

As a guide to whether computer-oriented businesses were classified as office space falling under Proposition M growth limits, or industrial space, which is unfettered under the law, Passmore referred to the industries that computers, software, and networks have replaced. "If multimedia is turning out software, that's manufacturing. If it's editorial, it may be the same as printing. If it's keeping track of insurance accounts, that's office," he says.

But as computers, software, networks, the Internet, and their associated hardware continued to fill in old industrial niches, modern industrial niches, and heretofore unimagined industrial niches, this system became increasingly subjective. As land developers and Internet entrepreneurs saw the Proposition M limits looming, they realized that these types of spurious determinations could mean life or death to start-up business plans -- many of which included a Multimedia Gulch location as crucial to their strategy.

With this in mind, Supervisor Leslie Katz is advocating legislation that would create a special zoning category for multimedia companies.

"The industry's profile doesn't fit into any of the categories that exist today. We find that their particular profile meets the light industrial, some meets office use. By trying to carve out a new definition that will more precisely cover that industry, as opposed to now, as each developer comes before the Planning Commission, it slows down the process and creates backlog for Planning Commission," says Julian Low, an aide to Katz.

To San Francisco progressives it's not that simple. If the 1970s and '80s anti-growth movement was the progressive movement's Six Day War, Proposition M is its Golan Heights.

Already, a front-page piece in this month's New Mission News decries a planned office project at 20th and Bryant streets. "We are rapidly loosing [sic] the battle to maintain our affordable rental housing stock for the people who cannot compete with the cash-ready DOT.COMies," the article says.

And the progressive movement's new leader, failed mayoral candidate and Board of Supervisors President Tom Ammiano, isn't convinced his troops will yield Proposition M without a struggle.

"I think Prop. M was very hard won and still has a resonance," Ammiano says during an interview.

The first shots of this new battle rang out last week, before anybody expected.

Katz had been planning to introduce a separate piece of legislation later this month creating a new "multimedia loft" category, complete with specific fees developers would pay into Proposition M transit and housing funds. Because the new category would be described as quasi-industrial, any development slated for computer-related businesses could, theoretically, quietly slip outside the 1980s growth limits.

But a seemingly unrelated hearing at the Board of Supervisors last week forced Katz and her allies to fire the first shot in the growth wars to come.

Last week, legislation appeared before the Board of Supervisors Finance and Labor Committee that would add hotel and retail developments to those subject to the $7.05 per square foot Proposition M fee office buildings must pay into a city affordable housing fund. Under the proposed law, hotels would pay $4.25, retail $5.29.

While on its face irrelevant to the fate of digital media in San Francisco, business lobbying groups like San Francisco Tomorrow feared that by setting in stone a new schedule of Proposition M commercial space categories -- while not specifically including a new category for digital media -- the hotel and retail bill could have the corollary effect of condemning dot-com developers to working under the feared "office" zoning category. During coming years, proposed buildings wearing this scarlet "O" would have to compete with millions of square feet of planned development wishing to squeeze into the Prop. M limits.

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