Innovation

In San Francisco, A Plan To Get Twitter and Uber To Pay For What They Did To Its Housing Market

by Carter Maness

July 11, 2016

Rents in “cramped and costly” San Francisco continue to be the highest in the nation. There simply isn’t much housing left, so any that’s available is expensive, and it tends to go to the select few who are able to afford it. Lately, that’s been elite workers in the tech industry, which has been booming in the city since at least 2012. That’s when companies like Uber and Twitter were lured into the city’s rundown Mid-Market neighborhood by an exemption on payroll taxes, legislated by the local government and approved by voters.

Whoops, I guess. That incentive saved these corporations a combined $34 million last year—pocket change when you’re worth $62.5 billion, though for locals struggling to pay skyrocketing rents, it’s a tad insulting. (For a little context, a one-bedroom apartment was $1,700 in 2009; now it’s $3,500.) Many natives blame the city’s influx of tech employees, who work for companies like Apple and Google which are not based in San Francisco and therefore immune to the proposal, for driving housing prices to unsustainable levels.

Neither the tech companies nor the city administration made any preparation for the number of workers that were coming in.

Kathy Lipscomb, a 23-year resident of the city’s Noe Valley neighborhood and associate of the Alliance of Californians for Community Empowerment (ACCE), hopes a new payroll tax would nudge tech companies into meeting their full responsibilities to the community. “Tech has been generous with education,” she told me. “They’ve given a lot of money to healthcare, to hospitals, but in housing, where they have a very negative impact in terms of affordability, it seems to me it’s time to pony up. Neither the tech companies nor the city administration made any preparation for the number of workers that were coming in.”

Deirdre Hussey, director of communications for San Francisco mayor Ed Lee, pointed out that lots of jobs at the newer technology companies actually go to locals. “This is a job-killing measure that [will] take jobs away from everyday San Franciscans,” she told me. “Taxing jobs, instead of revenue, will drive unemployment.” She added that it’s particularly bad for “people such as administrative assistants, office managers, security guards, laborers, and any entry-level positions” who might lose their employment.

Tech companies have been predictably unified in their silent response. What corporation in their right mind would want to be labelled either anti- or pro-homeless? But they also have strong reason to believe the proposal won’t even make it to ballots this November. It would need six of 11 Board of Supervisors members to vote in its favor—a political longshot—to even reach a public vote, where the proposal would then need to be approved by two-thirds of the same population that granted these tech companies a tax break in the first place. The San Francisco Chronicle’s editorial board called the proposal “reckless and self-defeating,” claiming it was a “knee-jerk response to serious problems” in a recent missive. So why speak on it?

“Rather than scapegoat a sector of our economy, we should be working together to find solutions to housing and homelessness, such as the proposed sales tax on the November ballot,” said Hussey. The Mayor’s 0.75 percent sales tax increase would bring in an estimated $150 million per year—$50 million of which would be earmarked for homelessness.  

This is a job-killing measure that [will] take jobs away from everyday San Franciscans.

Nickolas Pagoulatos, a legislative aide for Eric Mar, District 1 Supervisor and one of the bill’s authors, clarified that the “tech tax” is in fact all about fairness. “We do not want to penalize employees,” he told me. “[We want to] make sure that large, profitable companies are made to pay their fair share for the impact that their workforce is having on San Francisco’s housing market and community safety net.”

Pagoulatos cited the city’s Small Sites Acquisition Program—an underfunded yet successful initiative which purchases buildings where low and moderate-income tenants are being threatened with eviction—as one in need of a cash infusion, especially with the city staring down a projected $250 million deficit over the next two years. The “tech tax,” which the City Comptroller estimates would bring in as much as $140 million in revenue per year, would also go toward getting homeless residents into permanent, assistive housing with complementary human services like mental health evaluations and drug rehabilitation.

For Kung Feng, lead organizer of Jobs With Justice San Francisco, the tax could lead to more projects like the Vera Haile Senior Housing complex, which opened last year and, in under two weeks, received 5,000 applications for its 90 open units. “Revenue could go to a full range of responses, from tenant counseling, homeowner assistance, homeless services, new construction of affordable housing to preserving existing affordable housing through acquisition and rehab,” he told me. “We need a multi-faceted approach and we need to hold tech corporations accountable for their housing impact.”

[We want to] make sure that large, profitable companies are made to pay their fair share.

No one disagrees about the idea of a multi-faceted approach to homeless and housing issues—it’s merely the methods to get those ideas funded: a sales tax on everyone versus a payroll tax on tech.

Ultimately, the “tech tax” will likely fail because of lacking political support, but its proposal is still symptomatic of the tensions that occur when a city doesn’t have enough housing, when nearly 7,000 people live in its streets and shelters, and when those doing a little better are a mere rent increase away from ruin. Yet in a grand act of civic irony, it might be the tech workers themselves who ultimately regulate the housing market. Rents have become so high, even they’re getting wandering eyes—looking to Oakland, to Berkeley, really, to any place where the cost of living is just a little more affordable.

Image via Flickr user David Yu (cc)

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In San Francisco, A Plan To Get Twitter and Uber To Pay For What They Did To Its Housing Market