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Stimulating Debate 

S.F.'s employment rate is relatively good, but city leaders can still create more jobs. Here's how.

Wednesday, Feb 17 2010

Last month, Mayor Gavin Newsom, still fresh off his abandoned governor campaign, held a press conference at the upscale hot-dog restaurant Show Dogs, packed it with press and midlevel bureaucrats, showed up late, and then led an endless platitude-fest about his plans to promote jobs in San Francisco. This bit of baroque puffery seemed pathetic, even for a man known as Mayor Photo-Op.

Newsom seemed out of touch: San Francisco voters are notoriously deaf to talk of promoting jobs. Hip leftist members of the Board of Supervisors were at that time pushing for a ballot measure that would have killed jobs-generating downtown high-rise projects in the name of preventing buildings from casting shadows over recreational space.

Meanwhile, the mayor has been beat up by left-wing supervisors over a proposal to waive the city payroll tax for all new private-sector hires for two years. A Controller's report suggested this was an inefficient way to generate jobs; supervisors allied with unions representing city workers said cutting tax revenues would mean sacrificing public-sector jobs.

Besides, the city has been doing relatively well with regard to jobs. December figures released in late January showed San Francisco's unemployment rate at 9.4 percent, compared to 12.1 percent statewide. And the counties of Marin, San Francisco, and San Mateo had actually added 5,700 jobs from the previous year.

But Newsom's current thrust of emphasizing jobs growth seems savvy when you take into account that the San Francisco unemployment picture is roughly the same as the rest of the country's 9.7 percent.

This dismal situation is more serious than local politicians, save the mayor, have acknowledged.

In San Francisco, privately financed construction has all but frozen over during the past year. "The carpenters are telling me they are forced to live in their cars," said Michael Theriault, secretary treasurer of the San Francisco Building and Construction Trades Council. "And now their cars are being towed. I've had individuals come in my office and say, 'I'm out on the street, and I don't know how I'm making my next meal.' It's hard to genuinely starve in a city with soup kitchens. But the situation is not far short of that."

By making jobs creation the theme of his mayoral twilight, Newsom may have put himself on the correct, pro-jobs side of several impending political debates that pit those who would increase the number of jobs available in this city against obstructionists. Maybe last month's weenie roast wasn't as foolish as it seemed.

Whereas America has to incur historically unprecedented debt to produce jobs, San Francisco is blessed with latent stimulus projects that largely won't involve public debt to initiate. These are stalled development plans that could be jump-started by merely generating sufficient political will. Here's a list of some of the low-hanging fruit.

Let the music play at the Nob Hill Masonic Center.
Residents of the upscale Nob Hill neighborhood are fighting a plan to revamp the old Masonic Hall so that it can accommodate more types of concerts. According to backers Live Nation and the California Freemasons, the $6 million construction project would employ 30 workers for four months. Once the revamped facility is up and running, the hall would employ between 50 and 70 people during events.

During the past week, however, residents have been distributing flyers titled "Protect Nob Hill" and warning of a future when "3,500 intoxicated fans spill into the neighborhood after events," and then possibly continue drinking "on the steps of Grace Cathedral? In front of your home?"

According to project spokeswoman Evette Davis, a mayoral staffer was dispatched last week to meet with neighbors in hopes of ameliorating their (ridiculous-seeming) concerns. If Newsom succeeds, that's more points earned for our now job-focused mayor.

Facilitate construction financing.
All over town, real estate parcels that were once supposed to be bustling with cranes and hard hats are now still, thanks to a credit crisis that has made banks loath to issue construction loans.

In response, the mayor's office of economic development has been working on legislation to make it easier for some construction projects to obtain financing. The proposed measure would allow developers to postpone paying so-called impact fees aimed at subsidizing civic amenities such as park benches, sidewalks, public transit, and subsidized housing. Development impact fees typically now run $80,000 per apartment, according to the Housing Action Coalition, a construction advocacy group. On a typical project, such as a 308-unit apartment building proposed at 333 Harrison Street, affordable housing impact fees can add up to more than $11 million, with other levies adding on more than $5 million, putting fees at around 18 percent of total construction costs.

"Now, anyone who wants to get in permitting has a big price of entry," said Newsom staffer Michael Yarne, who is developing the legislation. "Before there's a single shovel in the ground, you have to pay all of our impact fees, with the exception of a few, and then find either equity money or borrow it commercially." For some projects, the fees are enough to drive a project over the edge — or postpone the day when a builder might eventually get financing. Newsom's legislation would allow developers to delay payment of one-third of the affordable housing fee until a building is actually occupied by residents, who would then pay the remainder in the form of a transfer tax.

Left-minded activists have already begun denouncing the proposal as a raid on housing subsidies — seemingly oblivious to the fact that the subsidies are generated only if private, fee-paying projects are given a chance to obtain financing.

Yarne and Theriault say the mayor's pay-later plan solves this chicken-and-egg question, and could reignite stalled housing projects such as a planned 725-unit building at 201 Folsom Street and a 292-unit tower at One Rincon Hill.

"There's a lot of excitement over it," Yarne said. "It would have a tremendously stimulative effect."

Let CPMC build a new medical center.
On Van Ness Avenue on the site of the old Cathedral Hill Hotel, a union-management dispute holds up a $1.5 billion hospital construction plan.

In order to comply with state law requiring seismic upgrades, the four-hospital California Pacific Medical Center chain plans to build a regional medical center to house services now provided at hospitals in the Mission, Richmond, Pacific Heights, and Castro neighborhoods. But by moving services to a new nonunion medical center, CPMC would squeeze nurses at the Richmond and Mission hospitals out of the union. The union has fought back by blocking permits for the new medical center, saying CPMC should build a larger hospital at the unionized St. Luke's Hospital in the Mission and shrink its Van Ness proposal.

According to CPMC spokesman Kevin McCormack, last month the union requested that the company remain neutral when the California Nurses Association attempted a union drive at the new Van Ness hospital.

Under neutrality, "they can present any case they want, and we have to stay out of the whole thing," he said.

The CNA's Shum Preston said the neutrality request didn't include an offer to back off its campaign to stall construction of the new medical center. "We cannot support any development at Cathedral Hill that involved cutting St. Luke's below a size that makes the hospital viable in the long term," he said.

One way of reading this is that the union may not be ready to show its cards. The idea of trading union organizing neutrality in exchange for the CNA calling off its antihospital campaign is a reasonable one.

Union leaders in many industries complain that employers resort to spying, threats, intimidation, harassment, illegal firings of union supporters, and other methods to oppose union drives. And the healthcare industry has been the site of some of labor's most bitter battles during the past decade.

CPMC would seem to be taking a hardline, antiworker position at risk of undermining the hospital plans. The CNA, meanwhile has generated a flood of preprinted antihospital postcards filled out by union supporters, urging supervisors to oppose the medical center as proposed.

"We recognize there are real complex issues tied up with that one," Theriault says. "And, realistically, a number of them have to be worked through before it goes forward." But, once started, "the Cathedral Hill project will be hugely important for us."

This would seem like an ideal situation for a pro-jobs, white-knight mayor to ride in and obtain a compromise.

These are just a few of a city-full of projects stalled by interest groups, despite the fact that they would generate needed jobs.

Last week, reports that the mayor's plan to cut payroll taxes would create 4,300 jobs at a cost of $72 million evoked renewed complaints from leftist supervisors. During the next two months, the redevelopment agency and the developer will seek environmental review and design approvals for Lennar's project in Hunters Point that would include 9,000 housing units, and a community benefits agreement that guarantees job training, subsidized housing, and open space. Expect a continuing fight, with the mayor's office on the side of generating jobs.

And there is the 2005 plan, since blocked by antidevelopment activists, to create a North Beach–like neighborhood in the seven-block area near Market and Sixth streets, using public redevelopment funds to provide subsidized low-income housing, among other amenities. The mayor vowed to revive it last month.

If he wins any of these battles, Newsom will have proven he's no weenie after all.

About The Author

Matt Smith


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