By Alejandro Lazo | Photography by David Butow
SAN FRANCISCO -- Lucho Cabrera, a 53-year-old formerly homeless
man, turned to an unlikely place during his recent hunt for
affordable housing: a $3 million community center built by Twitter
Inc. across from the social media giant's sleek art deco
headquarters.
The NeighborNest center exists because the city five years ago
struck deals with tech companies to move to the gritty Tenderloin
area in exchange for tax breaks particularly attractive to
start-ups. Twitter, Zendesk, Spotify and others snapped up new
headquarters buildings, turning a dilapidated commercial strip
known as Mid-Market into a new tech hub replete with hip espresso
cafes and artisanal lunch joints.
For low-income residents such as Mr. Cabrera, who now get free
technology training and child care at the community center, the
corporate neighbors are welcome. "You hear stuff on Twitter taking
over, " Mr. Cabrera said. "Hey, these people are helping us."
Across the U.S., tensions over gentrification have given rise to
community benefits agreements, which seek concessions from
developers in exchange for community support for their projects.
Activists hail such agreements when they benefit those likely to be
displaced by neighborhood change.
But critics of the San Francisco tax breaks say they have cost
the city revenue without bringing enough concrete benefits to the
community. Advocates for the poor also say the Tenderloin's
redevelopment threatens to strip away one of the last redoubts for
low-income residents in an ever-wealthier city.
After Twitter considered leaving San Francisco in 2011, Mayor Ed
Lee created a temporary tax break for companies that moved to the
Mid-Market and Tenderloin areas. These payroll tax breaks were
attractive for start-ups paying workers with stock options. For the
mayor, the deals offered an opportunity to retain a burgeoning,
homegrown technology industry while revitalizing one of the city's
poorest zones.
Companies with more than $1 million in payroll signed community
benefits agreements in exchange for the tax breaks. In 2014 and
2015 alone, those agreements yielded 17,000 volunteer hours, $1.7
million in cash grants and $2.5 million in donations, according to
a city tally. The tax breaks have spurred job growth and revenue
from sales and property taxes, the city said. But the tax breaks
have so far cost the city nearly $40 million.
Critics of Mr. Lee's agreements say they should have included
stronger local hiring commitments and more money for affordable
housing. They also argue the language of the deals is ambiguous to
the point of being unenforceable.
Julian Gross, an attorney who has negotiated several community
benefits agreements, said those struck by the city are "closer to a
handshake deal."
Donald Falk, chief executive of the Tenderloin Neighborhood
Development Corp., which builds affordable housing, said the "jury
is out" on whether the tech boom has helped low-income people
prosper.
"I am just not seeing that good employment opportunities are
materializing for Tenderloin residents," he said. "I am not seeing
a lot of good housing opportunities for low-income residents."
Matt Dorsey, a spokesman for the city attorney, says the
agreements are strong because the city can always withhold its tax
breaks. Todd Rufo, director of the city's office of economic and
workforce development, says the tax breaks were "bringing
long-desired improvements to the Tenderloin."
Tom Tarantino, Twitter's public policy manager, said its deal
with the city has led to meaningful community investments. "We take
our responsibilities as a native member of this community
seriously," he said.
Few are in disagreement that the deal has led to big changes in
the neighborhood. Just three blocks from the community center,
Xi'an Chandra Redack, a musician who works at an organic grocery
collective, says the owner of her 84-unit building is trying to
oust tenants from rent-controlled apartments to make way for more
lucrative commercial tenants.
The owners of her building have filed suit against the city,
saying they are in a bind: having been told by the city that the
space is zoned commercial but unable to evict any tenants to be in
compliance with that zoning.
The Tenderloin has long been a holdout to the city's
gentrification despite its prime location abutting wealthy Nob
Hill, the touristy Union Square area and sitting just a few transit
stops away from the city's financial district. The reason is due in
part to its unique housing stock -- with many rent-controlled and
below-market-rate apartments, as well as single-residency occupancy
hotels -- and because politically powerful advocates for the poor
have fought to preserve the area as one for low-income
families.
These days upscale residential developments are rising alongside
nonprofit agencies, soup kitchens and religious rescue missions.
Investors are buying apartment buildings and developers are
planning new ones.
Annual household income in the neighborhood was roughly
one-third of the city-wide average in 2015 at $37,390, according to
a Census data analysis by Esri, a software-mapping company. An
analysis of rents by the start-up Zumper shows a one-bedroom
apartment in the Tenderloin cost an average $2,295 in February, up
from $1,895 in July 2014.
Nathan Hubbard, the head of commerce for Twitter, recently noted
the disparities in the area, posting a photograph on his Twitter
account showing hypodermic needles along a strip of Market Street's
green bike lane.
"The dichotomy and stratification of SF: in the foreground,
discarded needles," he tweeted. "In the background, Uber and
Twitter."
Joseph Nagle, 29, the director of marketing for an
electric-vehicle charging station company, EverCharge, recently
moved into a newly built loft studio in the Tenderloin with his
girlfriend. He considers the rent, of $2,300 a month,to be a
bargain.
"For that kind of money, I can't imagine where else I would live
in the city," he said. "The Tenderloin was really the only
choice."
Write to Alejandro Lazo at alejandro.lazo@wsj.com
(END) Dow Jones Newswires
April 29, 2016 12:48 ET (16:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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