Tensions Build In San Francisco Amid Tech Boom

Apr 16, 2014
Originally published on April 16, 2014 12:30 pm

As San Francisco experiences a historic economic boom, partly fueled by an influx of tech workers and companies, some activists say that not all city residents are reaping the benefits.

Google bus protests are becoming an increasingly regular occurrence in San Francisco, with activists targeting the bus that takes Google workers from San Francisco to Silicon Valley.

There was another protest on Friday, where protesters held signs with the name of a Google executive who is also a landlord. Activists say he’s unfairly evicting tenants.

It’s an example of the tensions over an influx of tech workers and companies and a rise in city rents.

Erin McElroy of the group Eviction Free San Francisco and Greg Gretsch, managing director at the tech venture capital firm Sigma West, join Here & Now’s Jeremy Hobson to discuss what’s happening.

Interview Highlights

Erin McElroy on what’s going on in San Francisco

“I have a problem with the eviction epidemic that is ongoing in San Francisco currently, and across the Bay Area for that matter. What we’re seeing is a lot of longtime residents being displaced and a political economy into which a lot of people are moving here to work in the tech industry, driving up rents and leading to a situation in which speculators and Realtors can evict tenants, flip buildings and create housing that people who are more upwardly mobile can afford to live in.”

Greg Gretsch on how he sees the issue

“The economy in San Francisco right now is benefiting absolutely from a tremendous economic boom. Just looking at 2013, there were almost 27,000 new jobs created in San Francisco, and only 8,000 of those were tech jobs. San Francisco doesn’t have a tech problem; San Francisco has a housing problem. And San Francisco has long had a housing problem. It’s a desirable place to live. But San Francisco is geographically limited. We have water on three sides, so San Francisco can’t build out. But San Francisco should build up. For generations, San Francisco has fought building up. And our issue now is just a lack of housing stock, and that can only be fixed over the long term by adding more housing stock.”

McElroy on how the prosperity isn’t ‘trickling down’

“You know, I would be pro the economy growing, and I am of course pro the economy growing if, in fact, trickle-down economics worked, and we had evidence of it working. I can tell you that on the ground, nobody is seeing it actually manifest in any sort of working nature. Basically, people who have longtime businesses are being kicked out of their homes, are unable to continue working in their businesses. People are also not having their businesses frequented by people who are moving into the city now to work in tech. There are less laundromats in the Mission, for instance, than ever before. People who owned laundromats for a very long time are losing their jobs because folks in tech are able to have their laundry washed by the companies that they work for.”

Gretsch on how the prosperity is boosting the whole city

“You can’t help feeling empathy for the people who are feeling this dislocation. But when you look at the aggregate statistics for San Francisco and the economy in San Francisco, it has been a rising tide that has lifted pretty much all boats. Inflation in the city between 2010 and 2012 was 2.6 percent, while wages increased by 4.5 percent. Through the rest of the country you talk about wage increases not keeping up with the rate of inflation, and here in San Francisco we’re seeing the exact opposite: where wages are increasing greater than the rate of inflation. … One of the nice things about the economic boom is that it fills the city coffers. For a lot of the people that are dislocated through this, their only source of help is going to be through government programs in the city. In 2008, the city was suffering with a $500 million budget deficit. This year, the budget grew 10 percent from last year and there’s no budget deficit at all. The city is booming on many levels, and the extra resources that the city has as a result of this economic boom are being used to try and help solve some of the issues that are caused by it.

Guests

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Transcript

JEREMY HOBSON, HOST:

Well, here in this country the Commerce Department said today that groundbreaking on new homes rose less than expected last month, perhaps another sign that the housing market is starting to slow down thanks to higher mortgage rates and higher home prices.

But in some parts of the country, a slowdown in housing prices may be welcomed, places like San Francisco, where rents are among the highest in the country. There has been a record number of evictions in the last year. Some landlords have been using a California law known as the Ellis Act, which allows them to say they're going out of business in order to sell or convert what are sometimes rent-controlled buildings.

But is this just one of the ugly side effects of an improving economy? Joining us now from KQED in San Francisco are Erin McElroy of the group Eviction Free San Francisco and also Greg Gretsch, managing director at the tech venture capital firm Sigma West. Welcome to both of you.

GREG GRETSCH: Thank you.

ERIN MCELROY: Yeah, thank you.

HOBSON: Well, Erin, let's just talk about what you see as the problem first. You have helped to organize some of these Google bus protests, and you've started this mapping project. Tell us what exactly is going on in San Francisco that you've got a problem with.

MCELROY: Sure, so ultimately I have a problem with the eviction epidemic that is ongoing in San Francisco currently and across the Bay Area, for that matter. What we're seeing is a lot of longtime residents be displaced and a political economy ensue in which a lot of people are moving here to work in the tech industry, driving up rents and leading to a situation in which speculators and realtors can evict tenants, flip buildings, and create housing that people are more upwardly mobile can afford to live in.

HOBSON: Well, and give us the numbers that you're looking at, because I know you've got data on this.

MCELROY: For sure. So there are three kinds of no-fault evictions that we're specifically worried about: Ellis Act evictions, owner move-in evictions, and demolitions. And all of those evictions happen when tenants, for no fault of their own, are evicted. Ellis Act evictions are up 175 percent over the last 12 months alone, and Ellis Act evictions are what we consider the most insidious type of eviction.

It's the type of eviction being most abused by speculators and investors.

HOBSON: And the Ellis Act, we've got more information on that at our website, hereandnow.org. That's a California law. Erin, what do you see as the reason for all this, though, behind all of these evictions? Because hearing it from the outside, it sounds like exactly the same story that we're seeing in Washington, D.C. and New York and Boston and other cities, which is economy booming, people want to make more money on their units, and so they're kicking people out that aren't paying the highest possible rent.

MCELROY: Yeah, I mean that's it in a nutshell, and that is what we have a problem with. We see it being both resultant of the real estate industry and what we are calling a sort of trifecta, if you will, between the tech industry, the real estate industry and city and state government, in which tech is being privileged, and longtime residents not in tech are being economically abandoned, if you will.

HOBSON: Let me bring in Greg Gretsch. Can you respond to that and what we've heard there? What do you think about that, when you hear that argument about what's happening to people in San Francisco and these evictions but also the reason behind it being this tech industry that's booming, essentially?

GRETSCH: Well, I think first take a step back and talk about the economy in San Francisco. The economy in San Francisco right now is benefitting absolutely from a tremendous economic boom. Just looking at 2013, there were almost 27,000 new jobs created in San Francisco. And only 8,000 of those jobs were tech jobs.

San Francisco doesn't have a tech problem; San Francisco has a housing problem. And San Francisco has long had a housing problem. It's a desirable place to live, but San Francisco is geographically limited. We have water on three sides, and so San Francisco can't build out, but San Francisco should build up.

And for generations, San Francisco has fought building up, and our issue now is just a lack of housing stock. And that can only be fixed over the long term by adding more housing stock.

HOBSON: But it's not going to build up right away. You're not going to have 40 and 50-storey buildings show up within the amount of time that some people are hoping, which is, you know, I'm getting evicted next week, I need a place to stay. So what's the solution right now?

GRETSCH: No, and you're absolutely right, and the mayor has put forth a plan to put 30,000 new housing units into the city by 2020, and the mayor and the tech community in the form of SF City has gotten behind Senator Leno's SB1439, which would be Ellis Act reform, to close some of the loopholes and protect long-term tenants in the Ellis Act.

So, you know, the economic boom does create some issues, and, you know, I think part of being in tech, you realize that in any tech company you make advances, and those advances cause challenges. Do you stop the advances because of the challenges? No, you go back and try to fix the challenges.

HOBSON: Erin McElroy, do you think that affordable housing and more affordable housing is going to solve this problem? Because it's of course not just people who are being evicted. There are also people who just don't want to live in an apartment where the rent keeps going up and end up moving out on their own volition.

MCELROY: Well, certainly I hope that when and if housing is built that it be built affordably. Unfortunately right now affordable housing is housing built for people who are making under $150,000 a year. The average median income per capita in San Francisco is $46,000. So if you're poor, working class or even middle class, most likely you can't compete for even affordable housing at this point.

But first and foremost, we want to see the affordable housing that exists, namely in the form of rent control, be preserved. Every time an Ellis Act eviction is enacted, and then the unit eventually condo-izes, we lose rent control, and rent control is a non-renewable resource, if you will, in San Francisco. It only applies to non-single-family homes built prior to 1979.

So you know, for instance a friend of mine who is 98, her year came up and she is now being forced out of her home. She will eventually probably be dragged out by the sheriffs. She has partial Alzheimer's and does not even fully recognize that she is being evicted because it's so unfathomable to her.

Another friend of mine, Benito Santiago(ph), is, you know, currently being evicted. He's also a senior, disabled man, Filipino, born and raised in San Francisco and teaches in the Unified School District, which means that a lot of people are of course leaving the city altogether or are living out of cars and, you know, on their friends' couches or are being made homeless.

HOBSON: So some very difficult situations there, although some people may hear this and think, well, when the economy grows, housing prices are going to go up. Not everyone will necessarily be able to afford to continue to live in the same place that they did before.

We're speaking with Erin McElroy of Eviction Free San Francisco and Greg Gretsch of the venture capital firm Sigma West. We welcome your comments about this at hereandnow.org. Stay with us, more to come, HERE AND NOW.

(SOUNDBITE OF MUSIC)

HOBSON: This is HERE AND NOW, and we're looking today at how the tech boom in San Francisco is affecting the city and some of its longtime residents. Rents there are very high, and evictions have risen by 115 percent over the last year, according to the Anti-Eviction Mapping Project. And it's created a lot of tension.

There have been protests in front of those private Google buses that take Google employees from San Francisco down to Silicon Valley. We're talking with Greg Gretsch, managing director at the tech venture capital firm Sigma West; and Erin McElroy of the group Eviction Free San Francisco. And Erin, it's hard not to feel sympathy for those who are evicted, but are you against the economic growth? Because how do you get around the fact that when the economy grows, housing is going to become more expensive, and certain people are going to lose out in that equation?

MCELROY: You know, I would be pro the economy growing, and I am of course pro the economy growing if, in fact, trickle-down economics worked and if we had evidence of it working. I can tell you that on the ground, nobody is seeing it actually manifest in any sort of working nature.

Basically, people who have longtime businesses are being kicked out of their homes, are unable to continue working in their businesses. People are also not having their businesses frequented by people who are moving into the city now to work in tech. There are less laundromats in the Mission, for instance, than ever before. People who owned laundromats for a very long time are losing their jobs because folks in tech are, you know, able to have their laundry washed by the companies that they work for.

My friend Mia Gonzales(ph) had a shop on Valencia Street that went out of business recently. She can't find another way to support herself in the city and is being forced to leave. And, you know, San Francisco historically has had no problem with newcomers, it's actually been very hospitable towards newcomers, whether you're moving here to escape political oppression in the global South, whether you are moving here because you are looking for a trans health clinic, maybe you're moving here because San Francisco has some of the best AIDS doctors in the country.

But it's long been a place that people have moved to who are marginal, who are in some way societally or socially oppressed. It hasn't been historically a place to move to to make money. Obviously that happened during the dot-com boom, and then that petered out, and now we're seeing it happen now, exponentially at a sort of hyper rate.

HOBSON: But couldn't you just move to one of the less expensive suburbs, for example?

MCELROY: Yeah, you know, if you're 98, and if you have an entire social support system that you've developed for, you know, 98 years, if you're reliant on your neighbor to help you out, if you know the person who works at the local corner store who can get you what you need if, for instance, maybe you can't communicate that day, you can't just pack up your bags and, you know, move to West Oakland and enact a whole new cycle of gentrification there.

It's a lot easier for somebody probably my age to do that than it is for the people that are disproportionately being evicted right now.

HOBSON: Greg Gretsch, you come from a very different perspective on this. Tell us what you think of what you've just hear there.

GRETSCH: Well, you know, first off, you know, I wouldn't say I come from a different perspective. I think the dislocation it's caused, you can't but help but feel empathy for the people who are feeling this dislocation. But when you look at the aggregate statistics for San Francisco and the economy in San Francisco, it has been a, you know, rising tide has lifted pretty much all boats.

Inflation in the city between 2010 and 2012 was 2.6 percent, while wages increased by 4.5 percent. You know, through the rest of the country you talk about wage increases not keeping up with the rate of inflation, and here in San Francisco we're seeing the exact opposite, where wages are increasing greater than the rate of inflation.

The city budget also, you know, one of the nice things about the economic boom is that it fills the city coffers. And for a lot of the people that are dislocated through this, their only source of help is going to be through government programs in the city. And you know, in 2008 the city was suffering with a $500 million budget deficit. And this year the budget grew 10 percent from last year, and there is no budget deficit at all.

So the city is booming on many levels, and the extra resources that the city has as a result of this economic boom are being used to try and help solve some of the issues that are caused by it.

HOBSON: Well, one of the big flash points here has been, as we mentioned earlier, the Google bus and transit. And I want to ask you both about that. If you can't build adequate affordable housing quickly enough, at least you can provide people a quick way to get into their jobs in the city at a reasonable price on public transit. But San Francisco and other cities around the country that are dealing with this kind of very quick gentrification, it's not as if they have dramatically increased their public transit systems. Greg?

GRETSCH: San Francisco is making - a part of this nice budgetary increase in the city is they can make some of the investments in public transportation, and those investments are happening. But you can't make an investment today that'll have an impact tomorrow. These investments take a long time.

HOBSON: Is your company doing anything specifically to help with this problem?

GRETSCH: With the dislocation caused by, you know, some of the economic boom?

HOBSON: Yeah.

GRETSCH: You know, as individuals my partners and I all live in the city, and we contribute significantly to causes in the city. Our biggest philanthropic causes are causes in the city, whether it's the hospitals or the schools. And I think that's true across the tech community. We've seen donations, giving, philanthropic giving increase to the San Francisco public schools, to arts organizations in the city, et cetera.

So the community, the tech community is a big and vital part of the city. We live here too, and we want to make San Francisco a better place for everybody, and so we're all working together to try to contribute, whether that's through our time and our volunteerism or through, you know, our donations when and where we can do that.

HOBSON: Erin McElroy, finally back to you. What would you like to see happen this year that would really make a difference to help people who have lived in San Francisco or other cities like that for a long time and are now being priced out?

MCELROY: Yeah, well, first of all, while obviously San Francisco is becoming more affluent, it is important to note that the divide between the rich and the poor is growing faster than in any other city in the country currently. So we want to see that remedied. This is, in a lot of ways, an effective class war. We are seeing people who are poor and working class be squeezed out, while we are seeing people who are upwardly mobile bringing in a lot of money but not actually distribute it.

We would like to see wealth more evenly distributed, and we aren't seeing a lot of these tech companies actually ask people in the community who are longtime residents what they actually want to see. We're actually seeing a lot of those decisions being made by higher-ups.

Every Tuesday the mayor meets with somebody in tech. We always say why Tech Tuesdays and not Tenants Tuesdays. We're very accessible. You know, none of us are hiding, are unavailable to talk to people who are actually interested in collaborating, but people aren't actually reaching out to us, and we ask them to.

HOBSON: Erin, when you see the news that some tech company in the Bay Area has just raised $10 million, does that make you happy, or does that make you upset or nervous for the future or what?

MCELROY: I mean, I think it depends what that company is and what they're planning on doing with that and how they actually interact with the community itself. I definitely don't see tech as a homogenous entity. I think obviously a lot of small startups are quite different than these large corporate behemoths.

I have a lot more issue with Google and Apple and Facebook than I do a lot of the smaller tech startups.

GRETSCH: Erin McElroy of the group Eviction Free San Francisco, and we've also been talking with Greg Gretsch, managing director at the tech venture capital firm Sigma West. And we welcome your thoughts at hereandnow.org. Erin and Greg, thanks to both of you for speaking with us.

Thank you.

MCELROY: Thank you so much.

HOBSON: And Robin, it's a topic that we're all impacted by if we live in cities especially, but we all know someone who's paying an arm and a leg for an apartment.

ROBIN YOUNG, HOST:

I know a couple who's renting one bedroom, a shared bath, one bedroom in a house in Berkeley for $1,300 a month, one bedroom.

HOBSON: Wow. Well, let us know how you're being impacted by gentrification and what you think of it at hereandnow.org. This is HERE AND NOW. Transcript provided by NPR, Copyright NPR.