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San Francisco Faces 'Doom Loop' from Office Workers Staying Home, Gutting Tax Base (sfchronicle.com) 218

Today a warning was published from the editorial board of the San Francisco Chronicle. "Experts say post-pandemic woes stemming from office workers staying home instead of commuting into the city could send San Francisco into a 'doom loop' that would gut its tax base, decimate fare-reliant regional transit systems like BART and trap it in an economic death spiral...." Despite our housing crisis, it was years into the COVID pandemic before our leaders meaningfully questioned the logic of reserving some of the most prized real estate on Earth for fickle suburbanites and their cars. Downtown, after all, was San Francisco's golden goose. Companies in downtown offices accounted for 70% of San Francisco's pre-pandemic jobs and generated nearly 80% of its economic output, according to city economist Ted Egan. And so we wasted generous federal COVID emergency funds trying to bludgeon, cajole and pray for office workers to return downtown instead of planning for change. We're now staring down the consequences for that lack of vision.

The San Francisco metropolitan area's economic recovery from the pandemic ranked 24th out of the 25 largest regions in the U.S., besting only Baltimore, according to a report from the Bay Area Council Economic Institute. In the first quarter of 2023, San Francisco's office vacancy rate shot up to a record-high 29.4% — the biggest three-year increase of any U.S. city. The trend isn't likely to end anytime soon: In January, nearly 30% of San Francisco job openings were for hybrid or fully remote work, the highest share of the nation's 50 largest cities. Amid lower property, business and real estate transfer taxes, the city is projecting a $728 million deficit over the next two fiscal years. Transit ridership remains far below pre-pandemic levels. In January, downtown San Francisco BART stations had just 30% of the rider exits they did in 2019, according to a report from Egan's office. Many Bay Area transit agencies, including Muni, are rapidly approaching a fiscal cliff.

San Francisco isn't dead; as of March, it was home to an estimated 173 of the country's 655 companies valued at more than $1 billion. Tourism is beginning to rebound. And new census data shows that San Francisco's population loss is slowing, a sign its pandemic exodus may be coming to an end. But the city can't afford to wait idly for things to reach equilibrium again. It needs to evolve — quickly. Especially downtown. That means rebuilding the neighborhood's fabric, which won't be cheap or easy. Office-to-housing conversions are notoriously tricky and expensive. Demolishing non-historic commercial buildings that no longer serve a purpose in the post-pandemic world is all but banned. And, unlike New York after 9/11, San Francisco is a city that can't seem to stop getting in its own way.

So what's the solution? The CEO of the Bay Area Council suggests public-private partnerships that "could help shift downtown San Francisco's focus from tech — with employees now accustomed to working from home — to research and development, biotech, medical research and manufacturing, which all require in-person workers."

And last week San Francisco's mayor proposed more than 100 changes to streamline the permitting process for small businesses, and on Monday helped introduce legislation making it easier to convert office buildings to housing, expand pop-up business opportunities, and fill some empty storefronts. This follows a February executive order to speed housing construction. The editorial points out that "About 40% of office buildings in downtown San Francisco evaluated in a study would be good candidates for housing due to their physical characteristics and location and could be converted into approximately 11,200 units, according to research from SPUR and the Urban Land Institute San Francisco."

But without some action, the editorial's headline argues that "Downtown San Francisco is at risk of collapsing — and taking much of the Bay Area with it."
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San Francisco Faces 'Doom Loop' from Office Workers Staying Home, Gutting Tax Base

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  • by ShanghaiBill ( 739463 ) on Saturday April 01, 2023 @10:39PM (#63418036)

    The solution is to build housing in SF so workers don't need to "commute into the city." They can live in the city and pay taxes in the city whether they work from home or not.

    Chance of this solution being implemented: 0%.

    SF's revenue problem is caused by SF's mismanagement. They intentionally destroyed their own tax base.

    • by Baron_Yam ( 643147 ) on Saturday April 01, 2023 @10:52PM (#63418046)

      After seeing telecommuting pushed for so long as a solution to all sorts of modern life's issues, it is interesting to watch the rejection of it when we got a couple of years to try it out and decided we like it.

      All sorts of entrenched interests with money want us to keep getting in cars and driving from suburbs to city cores every day, even though it's worse for humans who lose hours of their lives, harder on infrastructure, and burns more hydrocarbons.

      We could be working on decentralizing - slowly disassembling our big cities and building more small cities / large towns. Big downtown business districts are about as necessary today as the old stock exchange trading floors.

      • by Anonymous Coward

        ...about workers being bussed in? Well guess what motherfuckers, you got what you wanted. Enjoy your dilapidated downtowns.

      • I think one major issue is just how sudden this change was. Everyone thought this would happen eventually, but over many years if not decades.Then slowly the rate of office construction would slow as demand cools, some would be converted into housing, etc.

        Instead it was basically overnight everyone who could, stayed home, and never came back. The forced "return to office" measures are stupid, but also, pretty understandable. You don't want cities to run out of money and then end up bulldozing everything dow

        • by monkeyxpress ( 4016725 ) on Sunday April 02, 2023 @05:28AM (#63418526)

          You don't want cities to run out of money and then end up bulldozing everything downtown

          Places like SF are so far away from that ever being a thing it's not worth worrying about. The issue isn't that people don't want to live in SF, it's that people don't want to live there at current prices.

          There is a rather simple solution to that problem - drop the price. It's funny how that is apparently never an option when it comes to real estate.

          If my skills become outdated, then I have to reprice myself at the new market rate. Nobody is going to care that I can't get the income I once could. The problem with real estate is that it is is part of a massive leveraged financial ponzi scheme. If the institutions that own these properties have to reprice them downwards, it is likely many of them will become insolvent, and we would have another GFC situation. You can already see this starting to happen with the SVB failure.

          The irony of our neo-liberal financial system is that it has loaded everything up with so much multi-generational debt that our economy can't easily adapt to changes anymore. I mean, the whole creative-destruction thing is really the big benefit of capitalism. But instead we've created a finkncialised model that is always threatening to collapse anytime something changes.

          Just look at how AI is terrifying everyone, when we should be celebrating entering an era where we are likely to see a huge increase in productivity - i.e. more stuff for less working hours.

          • Places like SF are so far away from that ever being a thing it's not worth worrying about. The issue isn't that people don't want to live in SF, it's that people don't want to live there at current prices.

            The large property owners don't want to lower prices because they can claim the high valuation on their assets to get more financing . Your average homeowners will fight tooth and nail to avoid their McMansion depreciating.

            So this will keep going until everything collapses and turned into parking lots or gets bailed out.

            But yeah overall agreed completely.

          • by S_Stout ( 2725099 ) on Sunday April 02, 2023 @08:31AM (#63418778)
            California bubble is too big for that. If you pop it some people will lose everything. Not even hyperbole, people are all in and then some on their property.
      • That's kid of exactly what the OP wasn't talking about.

        He was talking about mixed use city centres where people live and work nearby, not live miles out and then all commute in by car. That's not a terrible idea. Many people don't want to live in the arse end of nowhere, and never interact with anyone physically day to day.

        You could never tempt me to the American 'burbs with or without a commute.

        • I said this for 25 years and then crime and politics sent me packing.

          10 years in the burbs, I would never ever move back into a big city.

          And it has nothing to do with me being old. Even young adults out here are cooler and more refined and less chaotic.

          You can keep your urban planned ghettos.

          • by serviscope_minor ( 664417 ) on Sunday April 02, 2023 @10:02AM (#63418952) Journal

            There is politics in the burbs, you just don't see it. Financially they are unsustainable in their own and the city you so despise is actually subsidising your lifestyle. Either way, you are now fully dependent on a car to do anything. You can keep that personal hell.

            • by Baron_Yam ( 643147 ) on Sunday April 02, 2023 @10:30AM (#63419058)

              It's true that big city has been supporting the burbs... because the city is where the jobs have been and the burbs are where those people have gone to sleep at night.

              We don't need that to remain true any longer. There's still a need for hubs, but not at the current scale. Plenty of jobs can be done remotely now, and refusing to do so just to prop up the old paradigm is myopic in the extreme.

              Your home can also have your office cubicle in it, and you'll probably have a nicer cubicle than you would 'downtown'. You'll certainly have a nicer commute. I work in tech support and have multiple clients whose main office is now a PO box, with hundred of employees all working remotely.

        • Many people don't want to live in the arse end of nowhere

          It's not the arse end of nowhere. It's a community of like-minded people. Where the political autocrats have not yet been able to get their nose under our tent and start telling us how to live our lives.

          • Many people don't want to live in the arse end of nowhere

            It's not the arse end of nowhere. It's a community of like-minded people. Where the political autocrats have not yet been able to get their nose under our tent and start telling us how to live our lives.

            Well, no autocrats unless one moves into a HOA. Then the HOA can tell one what one can and cannot do with one's own property. ;) Not in CA myself, but we moved out to "the sticks" and have a local store about 5.5 miles away, also in "the sticks", that is basically built around the old community General Store idea. We can get groceries, prescriptions filled, and "dry goods" there. What they don't have we can order online and have shipped. I WFH for my tech job, and have to show up for in-person meetings abo

      • by haruchai ( 17472 )

        "After seeing telecommuting pushed for so long as a solution to all sorts of modern life's issues, it is interesting to watch the rejection of it when we got a couple of years to try it out and decided we like it"
        There's also the issue of the failures of global supply chains which were long touted as everything for everyone anytime, anywhere on demand and one pandemic & one sideways tanker showed just how fragile & inefficient the global village can be

      • by bn-7bc ( 909819 )
        "Working from home in the suburbs", ow would that effect the tax base, people still live and pay taxes in sf, unless said suburbs has grown so much they actually overspill SFs city limits.
    • by kenh ( 9056 )

      The solution is to build housing in SF so workers don't need to "commute into the city."

      That sounds like a neat idea, but, if we consider tax receipts are the goal, that the wrong direction.

      Let's say a worker in the city occupies "X" amount of space, a residential unit for the same worker would *easily* be 10x larger.

      By working in the city at a desk/office, the city collects a certain amount of wage taxes, call it "W", and you can fit a number of workers defined as Available Space divided by X, giving you the number of workers the city can accommodate.

      If the worker lives in the city, they now

      • Not only that, but the revenue generated by someone living in an area is not the same as from someone working in an area. When I live there, my chance of going out to eat is far lower than when I work there, simply because at home, I have the facilities to cook my meals, something few people have at work, so their only option is actually go to out to lunch somewhere.

        • I've a friend who has been instructed by his local council employer to go into work 2 days a week to support the local economy round the office. He brings in sandwiches. Apart from car polluting the air his presence makes no difference to the town.

          OK - that's obviously an extreme case. There are shops that are dependent on rich commuters spending money because their office is there. The pandemic has turbo charged the move to working from home that was already happening a little. Trying to protect the econom

      • First of all I don't think the goal is just tax receipts, but also supporting an actual local economy. Even if you do cram 10 cubicles in the space of one apartment, do they really contribute more tax and economic activities than a family living there? An office worker, from what I've seen, will just drive to the office, sit there for 8 hours, maybe spend $15 on lunch and drive home. The other 16 hours everything is empty. Which isn't how a resident spend their time in the city.

        The whole thing also apparent

    • Re: (Score:2, Interesting)

      by roman_mir ( 125474 )

      How about asking a more fundamental question, why are there taxes there in the first place, can a city exist, function completely without government that is funded by taxes? It can, though it is still too early for this to happen there because there is a government that will fight tooth and nail against the reality setting in. A city based on complete private ownership and operation would be making only market driven (profit driven) decisions, that would be rational and would solve the question of what is

    • This, but: convert empty office space into affordable housing.

      • This, but: convert empty office space into affordable housing.

        Nice idea, but the renovation and permitting costs are generally as much as building a new building on the same site.

        And with SanFran politics being what they are...dream on.

        And with California politics being what they are...good luck finding a developer that wants to make that effort.

        And with employment rates being as tight as they are for the skilled trades required in the construction industry...they might stick to "slap 'em up" wood-frame and "stand 'em up" pre-form construction stuff.

        FYI - There are no

    • by jonwil ( 467024 )

      No way the powerful lobby representing the greedy bay-area landlords is going to allow more housing to be built in the area (which would put downward pressure on rents and prices and loose them money)

    • by Bert64 ( 520050 )

      Exactly this... Just because someone's job prevents them working remotely, doesn't mean they're going to want to waste a huge proportion of their lives commuting. If they can live and work within a short distance that's better for everyone.

    • I am pretty sure they already have a solution under consideration.

      They want to pay black people $5 million each.

      https://www.nbcnews.com/news/n... [nbcnews.com]

      If nobody leaves. This will cost $600,000 per person.

      That should solve the housing problem

    • by lordlod ( 458156 )

      The council area is too small, it prevents diversity and significantly hampers the potential solution to problems.

      The entire greater bay area should be one very significant council. That would lead to holistic solutions around where people live, work and play. You could get coherent planning decisions for things like housing encompassing the whole area, SF, Daly City and all.

  • Comment removed (Score:5, Insightful)

    by account_deleted ( 4530225 ) on Saturday April 01, 2023 @10:59PM (#63418060)
    Comment removed based on user account deletion
    • Comment removed based on user account deletion
  • by Sarusa ( 104047 ) on Saturday April 01, 2023 @11:07PM (#63418070)

    Seems like the obvious course here is to just turn the entire downtown into a giant open prison where the lawless create order with their own hands (and knives and guns). Mad Max: Embarcadero.

    Beats Facebook/Meta at least.

  • by Eunomion ( 8640039 ) on Saturday April 01, 2023 @11:20PM (#63418078)
    The first one, in the '60s-'90s on the East Coast, found some solutions that could probably apply: Basically just stop treating your city like a bunch of numbers on a property value assessment (or in the case of SF, some hipster jackass's art museum) and treat it as a home for human beings.
  • In most cases, trying to do just about anything in San Francisco is very expensive and inconvenient. Tiny narrow streets with almost no parking. What little parking there is usually involves very tricky and frustrating parallel parking (with cars crammed as close together as possible) or parking in very expensive parking garages. Everything is crammed so close together, including on steep hillsides, being in the city is absolutely claustrophobic. Everything is far too expensive. This includes food, public transit, entertainment, etc. Leaving SF and going back into the suburbs is always like a huge breathe of fresh air. There is simply no reason to do anything in SF or go there at all unless you absolutely have to. SF isn't even the largest city in the "San Francisco Bay Area" (San Jose is). SF is not part of Silicon Valley. Why would anyone want to pay more to rent a tiny one-bedroom apartment in SF than it costs to pay the mortgage on a large house in the suburbs? The only people still there (who actually have a choice) are people who have gone all-in on the hipster culture. It's beyond time for SF to have a "reset" / reality check. Meanwhile, the people in the rest of the Bay Area (North Bay, East Bay, South Bay) will be just fine. Keep in mind, the greater population of the Bay Area is larger than the population of the entire state of Arizona. It's evolved far beyond, and no longer reliant on San Francisco, to survive and thrive.
    • SF is highly walkable. When things are closer together, you don't *need* a car. Muni, BART, CalTrain, Uber, and Lyft all provide excellent alternatives to driving within the city. In most of the Bay Area, it is much harder to get around if you do not have a car.

      As for why people would want to live there, there's lots of entertainment and social events. There are many, outstanding restaurants. There's some of the nicest beaches, parks, and views in the entire country, with many more a short distance awa

      • In San Francisco, taking Uber to Lunch, paying for Lunch, and taking Uber back home, means you probably just spent $100-150. Maybe that appeals to some people, but I'd rather just hop in my car get affordable food, and drive home. Even with expensive gas prices I still pay less for gas each 1-2 weeks than a single Uber ride often costs. And "highly walkable"? That's not exactly how I'd describe all of those steep hills. Public Transit costs are not exactly cheap anymore either. And social equality? Oh
    • In most cases, trying to do just about anything in San Francisco is very expensive and inconvenient. Tiny narrow streets with almost no parking. What little parking there is usually involves very tricky and frustrating parallel parking (with cars crammed as close together as possible) or parking in very expensive parking garages.

      Are you America by any chance? You know the solution to better cities is not necessarily "more cars". In fact that's basically never the solution.

      Why would anyone want to pay more t

      • "More cars"? It's nice to have *one* car, and actually have a cheap and easy place to actually park it. I think that's perfectly reasonable. "The America vision of the 'burbs is where the soul goes to die." Your engrish aside, I don't think your one-bedroom apartment in the city is doing your "soul" any favors.
        • How about no cars? People survive just fine in cities without a car.

        • You're clearly a little hard of thinking so it's not especially surprising that you find the grammar of the king's English somewhat confusing. In can try to use small words if you prefer, so you have an easier time.

          Like I said, more cars is not the solution to living in cities. That's why American cities are so bad for traffic and living because everything worthwhile has been eviscerated to make more room for cars. This isn't hyperbole, it's well documented, and the planning laws strictly enforce it.

          I live

  • Begging (Score:5, Insightful)

    by DaFallus ( 805248 ) on Saturday April 01, 2023 @11:58PM (#63418128)
    All people in San Francisco seem to do is bitch and moan about people with high paying tech jobs - they blame them for the price of housing, gentrification, traffic, whine about and attack the shuttle buses companies like Google and Apple use for their employees, etc. Now they're begging for them to come back into the city because they need their money? Why would anyone want to spend money to support people who actively hate you? The city should probably come up with a better way to fund their idiotic reparations scheme.
  • Adapt or perish. Either is fine by me.

  • The SF Bay Area has been gaining jobs, not losing them. https://www.siliconvalley.com/2023/03/14/bay-area-job-gain-tech-covid-layoff-google-facebook-january-economy/ Tech workers have a greater than typical ability to work remotely because of the nature of their work, and they make up a very significant percentage of the Bay Area's employment - much more so than most metropolitan areas. The tech industry is currently in a downturn, primarily caused by a sudden drop in advertising expenditures. DC is als

  • Yeah, sure, biotech requires you to do stuff with chemicals, bacteria etc. which you don't want to bring home, but nowadays you design the genome on a computer. The process is actually really much like programming, except to "compile" you send order to printing company that makes you the genome, which you then insert to your target cells and then do some experiments, fail and go back to computer trying to figure out why your gene did not activate and how you can fix it or debug it using light emitting genes

  • by oldgraybeard ( 2939809 ) on Sunday April 02, 2023 @01:40AM (#63418248)
    As long as public servants in urban areas ignore public safety and public schools. Urban areas have no future.
  • You can only get away with being the most overpriced, overcrowded, pain in the ass metropolis for only so long before people just aren't willing to do it anymore. Its too much money, too much hassle and to much time to commute between good jobs and good housing in the state of California. Everyone is better off if they just refuse to squander time and resources spending as much time in a car as they do in their bedroom in order to succeed. What a waste of life, of time and energy and effort wasted on bad
  • by oldgraybeard ( 2939809 ) on Sunday April 02, 2023 @02:09AM (#63418262)
    Keep in mind what California public-private partnerships are. The public provides the money that is diverted to the private partners. Little of value is ever produced.
  • by Ambassador Kosh ( 18352 ) on Sunday April 02, 2023 @04:27AM (#63418420)

    I moved to Germany for my PhD and I have noticed that the cities here seem to be doing much better with this. People want to live in the cities because they can walk to restaurants, shops, etc. Most places have a shop on the first floor and apartments above it. Work from home had almost no impact on that. Work from home is also less of an issue because many people can walk to work so the commute is not an issue.

    I think that in the USA we have built areas that are pretty hostile towards people and designed to favor cars. As a result things like work from home have been far more damaging.

  • It used to be a nice city. Things went sharply wrong.

  • Perpetual growth ruins cities and it not desirable for anyone not a developer. Fuck them.

    To commute it so pollute and waste time. It's stupid. Work is painful enough already.

    You can't make cities more desirable to live in than suburbs which is why people have been paying to choose their neighbors for centuries. The Frisco people miss was BEFORE high tech devoured it.

    The only people who want other people in their office are social defectives. Everyone here has worked for at least one who lives for work to e

  • That's nice. (Score:2, Interesting)

    It's nice to see a coastal intellectual city go through the same crap they put the Rust Belt through 40 years ago. I remember when the greedy assholes said "Manufacturing is so yesterday, computers are the future!" So everyone and his dog got into the computer scene... then they started shipping *those* jobs to India, etc.... meanwhile everyone still needs the basics (and luxuries) of life, which were created by... manufacturing.

  • Fallacy (Score:5, Insightful)

    by groobly ( 6155920 ) on Sunday April 02, 2023 @12:53PM (#63419594)

    So, let's see, people are leaving SF because the housing is too expensive.

    This reminds me of a Yogi Berra-ism: "That restaurant? Oh, no one goes there any more because it's too crowded."

    At some point it will reach equilibrium.

  • by laughingskeptic ( 1004414 ) on Sunday April 02, 2023 @02:06PM (#63419848)
    In the late 90's I was part of a small but vocal group that fought against blanket "Central Business District (CBD)" zoning in downtown Austin and for Mixed Use. We were at city hall every week pushing for changes to various proposed projects. Kirk Watson was a friend but not part of the group. However when he ran for mayor in 1997 he ran on making Austin a "24 hour city" a concept that smartly expressed economically what we had been fighting for. He went on to be the most popularly re-elected mayor in the history of the city. It was Mayor Kirk Watson, Councilman Chris Riley and a small band that set the stage for what downtown Austin looks like today and which caused it to come out of the pandemic in such good shape. If you live in San Francisco and have a vision of what it should be, then you have to put in the time to fight for your vision. We got lucky, 2 years into our fight we got a receptive mayor and one of our own on the city council, but we didn't let the pressure up for a couple more years.

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