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A vote of disdain for Mayor Ed Lee: How the accidental mayor turned San Francisco into a playground for tax-skirting techies

Former mayor Willie Brown looks on as Ed Lee is sworn in as interim mayor of San Francisco in 2011. (Photo by Luke Thomas, FogCityJournal.com)

“The horns quieted. Lee stood meekly behind [Willie]Brown. He tugged at his baggy business suit, clasped and unclasped his hands. The most colorful thing about him is his moustache, which is brown. ‘Ed, if you want to sit down, it’s all right…’ Brown said, gesturing back toward a chair. Lee sat.”
— “The Power Broker” by Elizabeth Lesly Stevens,
Washington Monthly, July/August 2012

When an article called “The Power Broker” ran in the July/August 2012 issue of Washington Monthly, it was no surprise that the title referred to former San Francisco mayor Willie Brown. An in-depth look at the inauguration of Ed Lee after he was elected to his first full mayoral term, author Elizabeth Lesly Stevens pulled no punches in pointing out Lee’s carefully crafted ascent over a two-year period. The groundwork laid by Brown, with help from longtime political pal and Chinatown rabble-rouser Rose Pak, paid off, leading to Lee’s appointment as interim mayor in 2011 when Gavin Newsom left office early to become lieutenant governor, and, subsequently, to an elected four-year term.

“If Lee wins a second term, he will be in place until 2020, giving Brown a hold on San Francisco’s government that will span a quarter century,” Stevens wrote in 2012. As Brown took center stage at the inauguration, he spent an hour cracking jokes and explaining how Mayor Lee would do his job. He then told Lee that he needed to “recognize state and national political figures in the audience” who could be pressured to support high-speed rail, one of Brown’s pet projects, and, ostensibly, his clients. Stevens observed that Lee “sat dutifully in his chair, gray and mute.”

The article also foreshadowed the enormous role that billionaire tech investor Ron Conway would play in Brown’s scheme to push Lee to power — an alliance that would forever change the face of San Francisco. “I should identify some of your real friends,” Brown said. “People like Ron Conway, who is here. Where are you, Ron Conway?” Stevens noted that Conway, who had not been politically active before joining forces with Brown and becoming Lee’s largest donor, “stood and beamed.”

Four years later, Brown grabbed that quarter century brass ring when Lee won a second mayoral term. Why a formidable opponent didn’t run against him is a mystery to most. I imagine Brown calling would-be candidates to an undisclosed SoMa tech office at midnight and, over a friendly game of Foosball, strongly suggesting they not run, with silver-haired henchman Conway standing behind him flashing wads of cash. One well-known politico who perhaps could have beaten Lee told me off the record, “No one can compete with Conway’s money, and he would have thrown it at Lee’s campaign if a strong contender entered the race.”

It’s a fact that big money influences people’s decision making — just look at Proposition F, the so-called Airbnb measure that would have strengthened regulations on short-term rentals. Supporters managed to garner an impressive 45 percent of the vote with little cash or publicity while Airbnb ran deceptive television ads ad nauseam (“You won’t be able to rent your in-law unit to your grandma”) at a cost of more than $8 million. Had Airbnb not spent that obscene amount to shove their misleading messages down voters’ throats, I believe the measure would have passed.

As for Lee, he garnered just over 56 percent of the vote despite influential friends, buckets of money, and a field of unqualified challengers. According to the San Francisco Chronicle, 8,000 voters left the mayor category entirely blank on their ballots, and more people voted for challenger Vicki Hennessy for sheriff than voted for Lee for mayor. Several Marina Times readers reached out to say they either left the mayor box blank or wrote themselves in as a protest.

One woman said she “wrote Aaron Peskin in for all three choices.” District 3 voters put the progressive Peskin, a power broker in his own right, back in the Board of Supervisors seat he held from 2000 to 2009 and served as president from 2005 until he was term-limited out of office. Lee fought hard against Peskin’s return, warning attendees at a gathering of prominent business, tech and labor leaders that “he was watching” (in other words, if you support Peskin, don’t expect any favors from the mayor). Lee’s allies poured hundreds of thousands of dollars into the campaign of incumbent Julie Christensen, Lee’s handpicked appointee, some of it going toward last-minute personal attack ads against Peskin that came across as snarky and desperate. Peskin ran a clean, low-key campaign and ousted Christensen, ending Lee’s control of the board (and four years of sleepwalking through City Hall).

It started with a Twitter

San Francisco’s contempt for Lee’s leadership began in his first term with the infamous “Twitter tax break,” an exemption from the city’s 1.5 percent payroll tax initiated by Lee in 2012 to attract technology start-ups to the crime- and drug-infested mid-Market area with the promise they would help clean it up. Four years later, those start-ups have morphed into gargantuan public companies through IPOs that made it rain stock options. According to the San Francisco treasurer’s office, in 2014 the city lost out on $34 million in taxes from those companies, $30 million more than in 2013. Meanwhile Mid Market is worse than ever, with filthy, urine-scented sidewalks and rampant drugs, crime, poverty, and homelessness.

Lee may be the technology pied piper, but he was unprepared for how those newly minted millionaires would drive up the cost of housing and, consequently, drive out longtime residents. To be fair, San Francisco has a history of being adverse to expansion, and that suppressed supply has led to surging demand. Lee’s answer was to promote unregulated development of every vacant lot in the city, allowing speculators of multibillion-dollar condo complexes to ignore height limits and include the bare minimum requirement of below market-rate housing.

You can’t walk down the street without hearing conversations blaming Lee for rising rents, increased evictions, the techie takeover, and the “hoteling” of buildings for short-term rentals. Not surprisingly, Lee opposed Prop. F and has remained conspicuously silent on the number of landlords kicking tenants out to list their apartments on the more lucrative Airbnb. A May 2015 report by San Francisco’s independent Budget and Legislative Analyst Office estimated that between 5,249 and 6,113 Airbnb listings exist in San Francisco, taking between 925 and 1,960 long-term rental units off the market. That amounts to nearly 25 percent of available units citywide (in popular neighborhoods like the Mission, Airbnb listings consist of nearly 30 percent of the rental market). Ellis Act evictions, where landlords can evict tenants if they take the building off the rental market, are up sharply under Lee as well. Data from the San Francisco Rent Board shows 2,120 notices of evictions were filed during the year ending Feb. 28, 2015 — a 54.7 percent increase from five years ago.

In a karmic twist, the monster Lee unleashed is now affecting the tech companies themselves. Last September, billionaire venture capitalist Chamath Palihapitiya told Business Insider that if a start-up spends more than 15 percent of its funding on rent “a huge red flag goes up.” According to Palihapitiya, every dollar that someone raises in Redwood City or Mountain View has to be multiplied by two for it to go as far in San Francisco. Once those firms go public, they are beholden to shareholders who want to see profits. Twitter recently laid off more than 300 employees, squashed expansion plans, and in mid-November its struggling stock sunk below the 2013 IPO price for the first time. Privately held unprofitable start-ups are also having trouble living up to lofty valuations. Square (run by Jack Dorsey, who also runs Twitter) went public last month with a valuation a third less than the $6 billion that private investors valued it at just one year ago. Could ludicrous valuations, tumbling stock prices, and exorbitant burn rates cause Lee’s San Francisco Silicon Valley vision to go up in flames? Perhaps Palihapitiya hinted at the answer when he noted that every tech company worth $100 billion or more started no farther north than Palo Alto.

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