Would SoMa boom leave some behind?
Officials project benefits for all; critics say the gap will widen
The plan to rezone San Francisco’s Central SoMa neighborhood to spur job growth around the route of the $1.6 billion Central Subway would transform an already rapidly changing city corridor.
But the long-term economic impacts of the plan — which officials say will create space for as many as 35,000 new jobs and more than 8,000 housing units — could be equally dramatic for the whole city.
A recent report from the City Controller’s Office of Economic Analysis projects that over the next 25 years, the sweeping commercial effects of the Central SoMa plan could raise the average earnings of all San Franciscans by around $2,300 per year by 2043.
While much of the new office space is expected to be occupied by the growing technology industry, San Francisco Chief Economist Ted Egan, who prepared the report, said tech jobs are not expected to grow disproportionately
because of the plan.
Smaller, local businesses outside the epicenter of the Central SoMa plan — a zone belted roughly by Folsom Street south to Townsend Street and Second Street west to Sixth Street — will benefit, Egan said, as an influx of workers in new high-rises spends money around their neighborhoods and the rest of the city.
“Since these local businesses get virtually all of their sales from within San Francisco, their revenues generally only grow when the exporting side of the local economy also grows, and that’s what the new office development in Central SoMa will allow,” Egan said.
On a percentage basis, Egan said, retail, administrative service and construction jobs are expected to add the most jobs citywide because of the plan and the economic activity generated by it.
Egan estimates that citywide, office and retail industries could add 15,000 jobs by 2043. Retail jobs alone could grow by as much as 5.6 percent above what would be created if the plan weren’t adopted. In percentage terms, Egan said, the “biggest gainers are lower- and middleincome industries.” Egan estimates the tech sector will add about 8,100 jobs by the time the plan is fully built out, a 3.8 percent increase.
But the city’s auspicious economic projections have done little to sway critics of the Central SoMa plan, who see the prospect of more office high-rises as a recipe for accelerating gentrification and displacement of the neighborhood’s low- and middleincome residents.
Details of the plan are still being worked out, but the Board of Supervisors could vote on it by early October. By raising the height limits within the plan’s perimeter — by up to 400 feet in some places — officials are expecting 20 million square feet of development. Those new buildings will be served by the Central Subway, which will include stops at Fourth and Folsom streets and Fourth and Brannan streets. It is expected to open late next year.
The anticipated surge of commercial development — and the attendant rise in job growth — has given rise to fierce criticism charging that the plan will exacerbate San Francisco’s twin problems of soaring housing costs and scarce supply. Tens of thousands of jobs will be created, critics say, but with little regard for where so many new workers will live.
“With the influx of highpaid tech workers that come with those office jobs, we get the all-too-familiar result of increased displacement and gentrification, especially of the city’s most vulnerable populations,” said David Woo, the community development coordinator for the South of Market Community Action Network, or SOMCAN, which staunchly opposes the Central SoMa plan.
“The city couldn’t even predict the jump in housing prices over the last several years,” Woo said. “How can you expect any one person to predict housing prices 25 years out?”
According to the city’s analysis, the job growth fostered by the Central SoMa plan will cause San Francisco housing prices to rise 2 percent over 25 years. But according to Egan, the boost to incomes will more than offset the hikes in housing prices. Wages rise in job markets where demand for new employment outpaces the number of available workers, Egan said.
Policies that raise income generally, Egan said, “make housing more affordable, as incomes grow faster than housing prices.” On top of that, the plan mandates that a third of the 8,000 new units be designated affordable housing.
But Woo and other critics remain skeptical that Central SoMa’s economic benefits will reach low- and middle-income workers, as evidenced by the city’s current housing crisis and its yawning income gap.
“I don’t foresee how wages for minimum-wage workers could rise to the point where people could live affordably simply by bringing in office towers and high-paid workers. The profit is created at the top, and it’s staying at the top,” Woo said.
Whether Central SoMa’s economic stimulus will meaningfully lift up the city’s lowand middle-income workers remains a vexing question for Supervisor Jane Kim, who represents the neighborhood. Kim has been working to amend the plan to exact greater concessions from developers and to include more housing.
“That’s the million-dollar question. One group will say, ‘Build, build build; that helps everyone the most.’ And others say, ‘That has never helped us; it’s only brought higher-income wealthier folks in; it’s pushed us out,’ ” Kim said.
“I believe in growth and development. I think it’s healthy for cities. But what I try to do is support the growth ... but make sure that, as I’m conferring value to private developers and landowners, that I’m capturing as much of that additional value back to support our existing low-income to middle-income communities.”
Dominic Fracassa is a San Francisco Chronicle staff writer. Email: dfracassa@sfchronicle.com Twitter: @dominicfracassa