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Condo vote stirs passions over San Francisco's haves and have-nots

By Gerry Shih

SAN FRANCISCO (Reuters) - The proponents of the 8 Washington condominium project envisioned 134 luxury units rising from San Francisco's waterfront — a gleaming symbol of a local economy in roaring good health.

But not everyone in the booming tech hub has been so upbeat.

San Francisco voters on Tuesday struck down 8 Washington, settling a bitter, two-year political tussle that has been framed, accurately or not, as a proxy fight between the growing camps of the haves versus the have-nots.

Although several city agencies and elected officials blessed the project, a coalition of neighborhood residents, low-income tenant activists and rival developers rallied voters to defeat a pair of ballot initiatives that would have granted a critical waiver on height limits for waterfront development.

More than 60 percent of voters opposed the two measures, effectively killing 8 Washington and sending a chill over the city's red-hot pace of development.

"This project is for the super wealthy, for when Twitter goes public and we have an instant number of millionaires who have cash to go drop on a $5 million place," said Art Agnos, the former mayor, in an interview before the poll results.

"There's a middle class housing crisis and we're building luxury high-rises," Agnos said. "The message to teachers, the musicians, the carpenters, the shoemakers, the people who provide the backbone of this city is: 'This place is not for you.'"

Both sides have linked the vote's outcome to other projects proposed for the waterfront, notably an arena for the National Basketball Association's Golden State Warriors team that Mayor Ed Lee has vowed to make the centerpiece of his legacy.

While development battles have long been a civic bloodsport in San Francisco, a compact city with a preservationist current, the fight over 8 Washington has touched a nerve in the midst of a tech industry boom that has been blamed for ushering well-paid newcomers and the highest housing prices in the United States.

PROTESTS PLANNED AT TWITTER

Protesters at an anti-gentrification rally this year in the Mission district, home to the city's oldest building, took baseball bats to piñatas shaped like Google Inc's private buses.

Several labor and neighborhood groups planned rallies outside the headquarters of Twitter Inc on Thursday, when the micro-messaging social media company is expected to raise $2 billion in an initial public offering.

Ted Gullickson, the director of the San Francisco Tenants Union, which opposed 8 Washington, said eviction rates have more than doubled in the past 12 months and are on track to surpass the record rate set during the tech bubble of 1999-2000. He has called for a moratorium on all market-rate development.

While 8 Washington was undoubtedly marketed to the rich — the most desirable units, with views of the Bay, were slated for $10 million — its supporters said there were flaws in the argument that a new project could make San Francisco pricier.

"Growth causes development; development doesn't cause growth," said Jim Chappell, the former longtime director of SPUR, a nonprofit organization promoting urban development.

"The reason housing is so expensive is precisely that we have an imbalance of supply and demand. It's terribly unfortunate that people who should know better are really capitalizing on class warfare."

Aside from the living units, the developers proposed building a small public park on a 3.2-acre stretch now occupied by a parking lot and private athletic club. The developers also hoped to add retail space to enliven what has been a relatively dormant area compared to the nearby Ferry Building and Fisherman's Wharf.

Many 8 Washington backers argued that the project's most strident opponents included homeowners in North Beach and Telegraph Hill - two upper-class neighborhoods - who feared their views would be blocked.

AFFORDABLE HOUSING FUND

As part of a deal with the city, the developer Simon Snellgrove had promised to put $11 million into an affordable housing fund, while the city controller estimated a $350 million tax windfall if the project was completed.

In mid-2012, Snellgrove won the San Francisco Board of Supervisors' final approval for the project, but its opponents immediately moved to nix it by a direct popular vote.

Jon Golinger, leader of the "No Wall on the Waterfront" campaign, rallied to obtain 30,000 signatures opposing the project within 30 days to put a referendum on the ballot.

Since then, the dueling sides spent nearly $3 million to flood the city with TV ads and direct mail pieces. Most of the money against 8 Washington has come from Boston Properties, owner of several commercial towers whose views would be blocked, and a couple who live in the neighborhood.

But Golinger said he received over a thousand donations from small contributors and reveled in his victory Tuesday night.

"The message is loud and clear and unmistakable," he said. "People are unhappy with this administration's rubber stamp approach to development and the changing face of San Francisco that is making it something else."

But even those who oppose the idea of the condo project say even the prospect of a popular campaign derailing a development approved by layers of elected officials makes them uneasy.

"What makes this one unusual is the idea of planning by ballot box," said Jason McDaniel, a professor of politics at San Francisco State University. "It scares me that we would set a precedent that you can gin up people's emotions to stop projects and override the representative process."

Voter turnout was low on Tuesday, at 22 percent, a scenario that favored the city's politically restive left wing that opposed 8 Washington.

The defeat of 8 Washington deals a blow to Ed Lee, the popular mayor of San Francisco who has appeared in ads supporting the project and has touted the city's breakneck development as a sign of economic vigor.

The California State Teachers' Retirement System pension fund, which made a hefty return five years ago in partnership with Snellgrove to transform several piers into a popular retail and office destination, is also facing an unexpected loss after sinking more than $40 million into 8 Washington.

Scott Wiener, a city supervisor who backed 8 Washington, said there has been a "housing affordability crisis" in San Francisco, but the underlying debate over how to solve it has been obfuscated by overblown disputes over specific buildings.

"For decades we've entertained this notion that everybody can live in a single family home or a big spacious flat and we can keep doing things the way we always have," Wiener said. "But that's not true. There are long-term, deep problems with how we approach housing and it's not because of one small project."

(Editing by Jonathan Weber, Grant McCool and Elizabeth Piper)

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