| SAN FRANCISCO
SAN FRANCISCO Nov 7 Twitter Inc's
initial public offering marks something of a coming out party
for San Francisco as a technology capital, giving the city a
home-grown success story to rival those of Silicon Valley to the
But there is little celebration among community activists
and a growing cadre of middle class residents who resent what
they view as a tech-driven, big-money takeover of the city.
Earlier this week, San Francisco voters overwhelmingly
rejected a ballot measure that would have cleared the way for
luxury condos by the waterfront. The measure, championed by one
the tech industry's biggest supporters, Mayor Ed Lee, epitomized
what many see as the city's skewed priorities.
"He's made it his priority to give tax breaks to Twitter, to
encourage growth at all costs, to encourage developers to build
luxury condos," said Julien Ball, a community organizer who is
part of the Alliance of Californians for Community Empowerment.
Benefits flow to just a small group of the population, he said.
Protesting outside Twitter headquarters on Thursday morning,
as Twitter shares soared in their market debut,
social worker James Chionsini bemoaned what he called the
"bland, sterile, teflon-ification" of the city.
Twitter did not respond to requests for comment. A spokesman
for Mayor Lee said he was not immediately available for comment.
Grumbling about gentrification are nothing new in San
Francisco, a city of 826,000 known for its picturesque Victorian
houses, steep hills and long tradition of counter-culture
creativity. The dot-com boom in the late 1990s also caused
And many cities would love to have San Francisco's problems.
It has never been more prosperous: streets are lively with
bustling shops and restaurants, and per capita income has soared
to $74,349, according to the Milken Institute, far above the
state average of $43,647.
Many residents routinely forgo crowding onto buses in favor
of summoning rides in town cars using the Uber transportation
service. Cranes are building a dozen new office and residential
skyscrapers, according to Colin Yasukochi, director of research
and analysis for commercial real estate firm CBRE.
But public advocates say those markers of prosperity hide
the struggles of those who have been left behind by the
technology boom. While earnings for professional and technical
services - which includes most technology jobs - grew 17 percent
last year, according to the Bay Area Council, they grew just 1
percent in areas such as retail, stayed flat in health and
education, and shrank 9 percent for nonprofits.
Meanwhile, the median rent on a two-bedroom apartment rose
10 percent over the last year to $3,250, more than any other
city in the country, according to online real-estate company
Trulia. Rents in greater New York rose just 2.8 percent.
The total number of evictions jumped 25 percent to 1,716 in
the twelve months ending in February 2013, according to a report
by San Francisco's budget and legislative analyst, despite
strong tenant-protection laws.
Frustrations over the perceived link between the rising cost
of housing and the booming technology sector may have played
into the rejection of the luxury waterfront condos, said Corey
Cook, an associate professor of public affairs at the University
of San Francisco.
"The presumption, it's tech executives who were going to buy
them," he said.
TAX BREAK DEBATE
A sore point for some is a tax break granted to Twitter
before it moved into its current headquarters in a then-derelict
area of Market Street, not far from City Hall.
Twitter won the exemption on the city's 1.5 percent payroll
tax, a benefit that also extended to other companies in the
neighborhood, after it threatened to leave San Francisco. The
city would lose an estimated $22 million, a report for the Board
of Supervisors estimated at the time, based purely on salaries.
The figures did not take into account stock-based
compensation, which could add tens of millions of dollars to the
cost of the tax break, depending on the price of the shares when
employees sell them, said San Francisco accountant Jim McHale.
Last year, voters decided to phase out the payroll tax,
which many economists believe creates incentives to relocate for
companies, particularly those in industries including technology
where the emphasis is on labor rather than capital investments
such as factories.
Enrico Moretti, a labor economist at the University of
California, Berkeley, believes Twitter might have hired fewer
employees in San Francisco without the tax break.
"My best estimate is that the overall effect of the tax
break to Twitter on city revenue has been positive, not
negative," Moretti said. For every job at a San Francisco
technology company like Twitter, he said, five more are created,
including three nonprofessional jobs such as dog waker or
security agent and two professional jobs such as teacher.
Given Twitter's current employee base in San Francisco of
about 2,000 employees, that makes 10,000 additional jobs,
But the job-creation argument rings false to those who are
having trouble scraping by, even with paychecks.
Chionsini, the social worker, said his and his wife's
combined income of just under $70,000 just does not cut it in
San Francisco. "Anywhere else, we'd be living well," he said
about his family of four. Here, he qualifies for affordable
ECHOES OF 1999
The current situation evokes the late 1990s, when a slew of
small Web start-ups popped up throughout the city, causing
tensions over rising rents and traffic. At that time, though,
big technology companies, as well as the venture capitalists and
other professionals who support them, were mostly based in
suburban Silicon Valley.
That center of gravity has now shifted, with Twitter giving
San Francisco a hometown technology juggernaut. The social
network, with 230 million users, raised $1.8 billion in its IPO,
making it one of the largest Internet IPOs on record. Other
marquee start-ups, including Uber, Airbnb and Square, are also
based in San Francisco.
Even executives of companies based outside of the city are
planting stakes in town. Yahoo Chief Executive Marissa
Mayer lives in a penthouse in San Francisco's Four Seasons, a
residence and hotel. Last year, Facebook CEO Mark
Zuckerberg bought a $10 million home in San Francisco's Mission
Big technology companies such as Google, Facebook,
Apple and LinkedIn operate their own buses
which cross-cross the city, making stops to pick up packs of
their employees and ferry them down the freeway to offices in
Silicon Valley. Many young tech workers prefer to live in the
But signs of tension are starting to appear. Graffiti on the
glass paneling of one public bus stop shelter exhorts the
technocrati to "stay in Mountain View," the Silicon Valley town
39 miles to the south that is home to Web search giant Google.
"There's a feeling of us and them," said Matt Gonzalez, a
former San Francisco mayoral candidate who is currently chief
attorney for the San Francisco Public Defender's office. "They
don't necessarily engage in some of the civic activity. They're
not tuned into some of the neighborhood groups."
When many residents see the technology boom, said USF's
Cook, they ask themselves, "When is this going to result in
improvement in the schools? Why isn't there more investment in
The same week as Twitter's IPO, the San Francisco Chronicle
detailed how elevators at some of the city's public housing
regularly broke down for days at a time, leaving elderly and
disabled residents stranded in the high-rise buildings. There
are no plans to replace all the aging elevators, as the city's
housing authority lacks the money, according to the report.
Technology companies could do much to improve their image,
Cook said, by supporting more affordable housing, renter
protections, and making donations to civic institutions, as
Salesforce Chief Executive Mark Benioff did with his $100
million gift three years ago for a children's hospital.