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Kissing up to the community
Once hailed as San Francisco saviors, dot-coms now have to make nice with peeved neighbors.

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By Damien Cave

Aug. 29, 2000 | Along with spending $1 million to renovate and remove asbestos from its nine-story office building in San Francisco's Mission District, Bigstep.com will soon offer internships to the area's low-income students, rent out at least two floors to nonprofits at below-market rates and recently reward another group with about $1 million in company stock.

CEO Andrew Beebe says the Web development company also is forming a foundation to funnel money from new-economy entrepreneurs to Bay Area charities. "Communities need a lot of support in times of growth," he says. "You have to focus on the community or else you won't be accepted."




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Welcome to the new economy, San Francisco-style. Only a few years ago, when the city languished in a recession and unemployment hovered around 13 percent, San Franciscans begged companies to bring jobs. Come they did -- in droves -- to join in the high-tech frenzy. Now, office vacancy rates sit at around 3 percent.

But today, locals apparently regret the warp-speed growth and are staging anti-development marches to protest companies that have displaced the city's artists and nonprofits, while Web sites tell tales of landlord woe. As a result, companies are being forced not just to pay average rents of $65 per square foot, the highest in the nation, but they're bending over backwards to be good neighbors, altering building designs, adding extra parking and giving time, space and money.

Nevertheless, even these maneuvers may not be enough. Two propositions on San Francisco's November ballot seek to make it even harder for technology companies to open offices here.

Both grow out of a desire to amend Proposition M, the nation's first development cap, which San Francisco voters approved in 1986. Until recently, the proposition mattered little because annual office growth never reached the limit of 950,000 square feet and the extra space was "banked," or added to the following year's limit. But when e-commerce started to boom in the mid-1990s, even that wasn't enough.

Since 1995, when Netscape's IPO ignited the demand for dot-com office space throughout the Bay Area, the city has seen over 6 million square feet of new office space fill up quickly, according to San Francisco Partnership, a nonprofit economic development organization. "Yet companies are still fighting for space," says Marie Jones, the group's director of economic development.

City Hall, businesses and anti-growth activists like Sue Hestor, who helped draft Proposition M, agreed it needed fixing, since dot-coms had made a habit out of sidestepping the rules by declaring that their facilities were for non-office uses, Hestor says. Thus, companies such as Bigstep.com managed to move into residential areas like the Mission, where office growth is prohibited under Proposition M.

To put an end to this, Mayor Willie Brown put on the ballot Proposition K, which redefines the uses of an office to include e-commerce, Web design, research and development of computer technology, information technology and other computer-based technology. (Somehow, movie production and life sciences uses were exempted.)

Meanwhile, Proposition L, sponsored by the Campaign to Save San Francisco, a volunteer organization set up to lobby for the proposal, uses a similar definition for the same purpose -- to rein in the technology sector. (The primary difference is that it doesn't mention life sciences developments.)

Surely, these attacks must confuse the generation of executives who came of age in the mid-1990s -- those who have long believed that the technology sector saves everything it touches. But these proposals, here in Year 9 of the nation's economic boom, reveal that the cheerleading mood has expired. They point to a future both here and in the rest of the country where companies must care not just for investors, but for their neighbors.

To force this end, Propositions K and L both require companies to contribute money for transit, childcare and charities. They place a moratorium on office growth in certain neighborhoods such as the Mission and parts of nearby Potrero Hill, another hot spot for dot-coms. And whereas Proposition M awarded the right to build or renovate space on a first-come, first-serve basis, both K and L allow the city's planning office to decide which developments are best for the city.

Yet, K and L differ greatly in terms of how much growth each actually allows, and thus how hard companies end up working to gain admission. Proposition L, for example, would cut off millions of square feet in development that K would permit. Proposition L also places a moratorium on growth not just in the crowded residential areas like the Mission, but also in industrial areas like Mission Bay.

"This is an extremely critical difference," says Ron Kaufman, a San Francisco developer. "Mission Bay is the old Southern Pacific rail property down by PacBell Park and there's already over 5 million square feet of space that's been approved. So if L passes, there won't be any development outside of Mission Bay for five years. It completely cuts off growth."

Although Jones believes L goes too far, she denies it would cut off all growth. Still, her group opposes the measure out of the belief that it would be detrimental to San Francisco's economy. "You'd have very little development -- a few thousand square feet -- anywhere outside Mission Bay," she says.

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