The San Francisco Small Business Commission voted unanimously last night to support legislation that provides a payroll tax exemption for net new hires in Mid-Market and the Uptown Tenderloin. Spurred by Twitter’s interest in moving to 9th and Market, the legislation also creates necessary incentives for an Uptown Tenderloin supermarket. Longtime critics of Supervisor Jane Kim oppose the proposal, including Chris Daly, whose bar has been described as the “headquarters” for the anti-exemption campaign. Joining Daly is SEIU 1021 representative Gabriel Haaland, who losing D6 candidate Debra Walker described as her political “mentor” and who led the San Francisco Democratic Party to deny Kim its endorsement. Daly and Haaland claim that the job creation measure will spawn gentrification, an ironic position given that Daly backed – and SEIU did not oppose – a luxury tourist hotel at 5th and Howard Streets, only a block from low-income 6th Street. And if SEIU thinks Mid-Market is so great the way it is, than why did it relocate its offices from 9th and Market to gentrified lower Potrero Hill?

Jane Kim testified at the Small Business Commission last night, winning strong support for her measure to spur jobs in the long distressed Mid-Market and Uptown Tenderloin neighborhoods. The Commission’s action sets the stage for tomorrow’s Budget & Finance Committee hearing, where former Supervisor Chris Daly is reportedly mobilizing opposition.

The Anti-Kim Political Agenda

Since announcing her candidacy for District 6 Supervisor, Jane Kim has been attacked by self-declared progressive power brokers who vowed to defeat a candidate they could not control. After one of the city’s most progressive district overwhelmingly elected Kim, these detractors continued their attacks – desperate to undermine Kim’s credibility as a progressive.

To this end, Daly, Haaland and others who failed to defeat Kim last November are now charging Kim with promoting “gentrification” by backing a payroll tax exemption to encourage businesses like Twitter to move to Mid-Market.

It’s a curious charge. None of Kim’s critics opposed Daly, when in 2003 he backed the construction of the luxury InterContinental Hotel at 5th and Howard Streets. Unlike Twitter’s move to an historic office building at 9th and Market, this hotel was new construction that expanded the tourist district one block west.

And unlike anything planned for Mid-Market, constructing the hotel required Daly to support a zoning change that raised the height limit on the site from 160 feet to 39 stories.

Think of the massive profits this brought for a single corporate landowner.

I strongly encourage reading the May 2003 Bay Guardian’s account of Daly’s support for the Intercontinental Hotel, so that it can be contrasted with his current attacks on Kim and the payroll tax measure. According to the Guardian: “There would be displacement in the neighborhood, Daly said, and he had already raised concerns to the company about increasing land costs and traffic congestion that may result. But Daly, an affordable-housing organizer, said the neighborhood was not prepared to achieve anything more from community mitigation.”

The InterContinental’s construction paved the way for another tourist hotel recently approved for the 900 block of Mission Street, further gentrifying the area. And Daly backed the project despite recognizing its broader gentrification effects.

Neither Haaland nor SEIU 1021 (nor its predecessor, Local 790) opposed either of these projects, both of which will have a dramatically greater gentrification impact than Twitter’s relocation to an already existing office building. And instead of securing the affordable housing contribution or community benefits associated with such new developments, Daly simply directed the hotel to give money to some of his political allies (the Tenderloin Housing Clinic, which I head, turned down $100,000 and opposed the project to the end for reasons I set forth in the Guardian article above).

To make the contrast between Daly’s support for the InterContinental and his opposition to a jobs creating payroll exemption even starker, unlike Mid-Market today, 5th and Howard was hardly a distressed area. There was no need to either create economic incentives to attract businesses to the area or to dramatically up-zone the hotel site, as SOMA was booming.

No wonder many believe that if Twitter had wanted a payroll tax exemption while Daly was Supervisor, he would have made a deal in a heartbeat. What Daly, Haaland and others really resent is that it is Jane Kim who made this happen, and that her very success so early in her tenure is helping her expand a progressive political base that they do not control.

Spreading Lies About Gentrification

When have we heard of a business moving into a long vacant office building being defined as “gentrification?” I cannot recall a single prior case. But that’s the least of the many lies being spread about the legislation’s potential impact.

Another is that the payroll tax measure will cause tenant displacement. This apparently will occur by virtue of Twitter employees occupying units in nearby areas, and driving up rents through increasing market demand.

But given the salaries of Twitter employees, I strongly doubt they will be moving to vacant studio apartments on Eddy Street. Or even on Larkin and Hyde.

Many who predict the imminent gentrification of the Uptown Tenderloin (prophecies that began in the late 1970’s) fail to understand the significance of two of its unique features.

First, it has the largest concentration of nonprofit ownership of any neighborhood in any major U.S. city. This means much of the community is permanently off the speculative market.

Second, and less recognized, is its unique housing stock, which is dominated by SRO’s and small two to three room apartments that do not attract the urban gentry. Some believe the Uptown Tenderloin was the nation’s first real apartment district, as you did not find such a concentration of efficiency apartments and small studios in other cites by 1930 when the neighborhood was built.

In addition to its small units, the Uptown Tenderloin has virtually no flats or two bedroom apartments. That’s what urban gentrifiers seek. Nor does it have many balconies or decks, or units with a Bay view. And unlike the Mission, Lower Haight, Haight Ashbury, Noe Valley, the Castro and other neighborhoods that attract the gentry, the Uptown Tenderloin has no residential permit parking on its streets.

Combine all of these factors with the neighborhood’s strict residential zoning controls and height limits, citywide rent, eviction, and anti-demolition controls (the latter for SRO’s), and we have a greater level of protection against gentrification greater than in any other central city area in the United States. The idea that increasing employment in Mid-Market will gentrify the Uptown Tenderloin is simply nonsense.

Is Job Creation and Economic Development Bad?

I find it odd that SEIU 1021, whose members depend on city revenue to pay their salaries and benefits, thinks it is in their interest to prevent job creation and economic development in Mid-Market. Sadly, the union has never offered any economic strategies for reviving the area, even though they were located at Fox Plaza before fleeing to more hospitable surroundings (and there were many available Mid-Market office buildings available at affordable rents at the time).

SEIU Local 87, which represents janitors and whose offices are based in the Uptown Tenderloin, strongly supports the legislation.

I also find it odd that Supervisor John Avalos is part of the anti-tax exemption brigade. Avalos often talks about the need to revitalize Ocean Avenue and other commercial streets in his district, but wouldn’t that also trigger gentrification? And if these businesses succeed, won’t their employees occupy housing in nearby areas that would otherwise be available to lower income tenants/homeowners?

At last night’s Small Business Commission, Commissioner Michael O’Connor spoke in favor of the Mid-Market tax proposal. “It’s not displacing anybody,” he noted. “It’s not overly changing the neighborhood. To have that many jobs right there who will go to restaurants is just what Market Street needs. The small guys on Market Street need help. [Jane Kim’s] predecessor did a lot of good work to help the disenfranchised, but there wasn’t enough done on Market Street.”

A progressive movement that supports increased money for public services cannot oppose job creation and economic development on the grounds that this automatically promotes displacement and gentrification. District 6 voters understood this when they elected Jane Kim, and are applauding her willingness to take political hits from frustrated political operatives in order to revive two long distressed communities.

The legislation will be heard at the Board of Supervisors Finance Committee on March 16, which begins at 10am.

Randy Shaw is Editor of Beyond Chron. Paul Hogarth contributed to this report.