This article is adapted from an illustrated talk given by Jim Chappell at the San Diego Architectural Foundation’s June 4, 2015 “Context Vol. 2: What’s the Big Idea?” Forum on the Upper East Village, aka I.D.E.A. District and Makers Quarter.
The world is filled with good ideas. San Diego has a lot of great architects and urban thinkers. For several years, a group of these dedicated urbanists have been developing and enriching a plan for the Upper East Village. I.D.E.A. = Innovation Design Education Arts. As the next step in the process to implement the District, the Foundation held “What’s the Big Idea?” to explore next steps.
The Vision of the District includes, in their words:
- A future that will see breakthrough products, services, and experiences at the confluence of design and technology
- A future that will be dependent on producing high-paying jobs to attract and retain young, relative and highly educated citizens to ensure our competitive position moving forward
- A future that will witness the increasing importance of cities as the major engines of innovative ideas and businesses
- And, a future enriched by art, entertainment and recreation, the hallmarks of all great livable and vibrant cities.
I.D.E.A. District is a response to this future. The overarching goal is to enable this vision to become a reality and to unleash its potential to drive new businesses and new jobs in the San Diego region.
Based on my experience leading the San Francisco Planning and Urban Research Association (SPUR) for fifteen years, I was asked to reflect on how urbanists had helped spur successful redevelopment in San Francisco. Indeed, SPUR was founded in 1959 to address just such issues: as industries were fleeing the old city and as a new space- expansive ports was being developed in Oakland based on container shipping, how could the city reinvent itself? Over the next five decades, San Francisco, with a lot of input from the kinds of people who comprise the San Diego Architectural Foundation, helped reinvent the economic and land use drivers several times … taking San Francisco from port and manufacturing city to Fortune 500 western headquarters city, then to convention and tourist city, then to dot.com capital, and now to today’s tech capital. None of these futures were preordained, none were part of a comprehensive master plan (which is not to say they were unplanned), and none were assured of success.
As a planner by training, I would like to pull out the P.E.R.T. chart showing the grand scheme. It doesn’t exist. What does exist is a history of one or a few smart people seizing a perhaps unexpected opportunity to solve a pressing societal problem. I propose that the I.D.E.A. District will happen when someone discovers that the District is uniquely positioned to solve a problem that simply must be solved. What might this be? It might be a suburban tech company that can’t keep young creative employees in the burbs; it might be an institution that needs to reinvent its image in a new neighborhood; it might be a political leader who needs to do something dramatic to set him or her apart; it might be an employer desperate for a new campus; it might…ok, you fill in the blank. What it will be is a catalyst that is so unique, so compelling or so surprising that the I.D.E.A. District simply has to happen.
This theory of planning derives from what the British used to call “muddling through” as opposed to American “comprehensive planning”; from years of study and working with David A. Wallace (a dominant American city planner in the 1970s) who established a new strategy for economic development that targeted catalytic actions as the drivers of new developments; and from my years of experience leading SPUR’s efforts to make and keep San Francisco an economically successful, growing, attractive city.
Three simple examples of San Francisco urban developments that might never have happened illustrate the principle of catalytic action:
- Yerba Buena Gardens
- Mission Bay
- “Twitter Zone”
Yerba Buena Gardens, San Francisco
The site of Yerba Buena Gardens was first proposed for a new convention center in 1953. By 1959, when little progress had been made, SPUR was founded to specifically address this challenge. It took 20 years, littered with eminent domain, demolition of a perhaps unsavory but needed single-room-occupancy hotels, and lawsuits over relocation assistance, for the first convention hall to open in 1981. Fast forward to 1987 and there sat the convention hall, surrounded by blocks and blocks of dirt parking lots and underutilized 19th c. buildings, before the catalyst came along. Thirty-five years, tens of millions of dollars spent on planners, architects, landscape architects, attorneys, and on acquisition and demolition, yet conventioneers had to walk two long blocks of no-man’s land to get a cup of coffee.
Then an interesting thing happened. The San Francisco Museum of Modern Art had been founded in 1935, occupying a portion of the Beaux Arts War Memorial Building in the San Francisco Civic Center. Coming late to the scene of modern art acquisition, the collection was spotty. By the mid-1980s MOCA and LACMA in Los Angles were the centers of West Coast modern art. San Francisco already had a general inferiority complex to LA, and the founding of MOCA with a blue-ribbon collection and a stunning Arata Izosaki building put SFMOMA’s trustees on notice. The San Francisco philanthropic community couldn’t begin to compete with LA and the somewhat fusty SF museum building shared with the Veterans of Foreign Wars, didn’t help in attracting major gifts. But the location was great – right across from City Hall and next to the Opera House, a part of North America’s most complete City Beautiful Beaux Arts ensemble.
As the trustees searched for sites, it became apparent that assembly of a Civic Center site was cost prohibitive; downtown was largely fully built out; Golden Gate Park, the location of the de Young Museum and the California Academy of Sciences, was “full up” and anyway, Siberia. Along comes the SF Redevelopment Agency, with its 87-acre failing Yerba Center development project, and a practically free site for SFMOMA. The setting couldn’t be more different from the Civic Center…”South of Market Street” where some Museum trustees said they had never been, on a wide traffic sewer from the Bay Bridge, with the convention center the only active building in sight. The announcement that SF MOMA was moving to this location was treated with widespread shock and disbelief. The trustees hired Mario Botta to design his first American building, and well, the rest is history. The opening in 1995 was hailed as “the most important event on the SF visual arts scene since the 1915 Panama-Pacific Exhibition.” In its first year of operation, museum attendance quadrupled, membership tripled, it became the 9th most attended museum in the country, and had a museum store with the highest sales in the country.
After languishing for 42 years, Yerba Gardens is today home to 7 museums, 2 theaters, 2500 hotel rooms and 2500 residential units, as well as an expanded convention center. There is a multiplex, a park, and the hottest art gallery scene in the city. The very act of faith of moving to a neighborhood that did not yet exist caused that neighborhood to be built. And today SFMOMA is again tripling in size with a plan by SNØHETTA Architects, and will (briefly) be larger than New York MOMA. It continues to attract gifts of a stunning collection of art.
And once Yerba Buena was perceived to be on a roll, “South of Market” was no longer toxic real estate. In 2006, Bloomingdale’s opened, turning its back on the traditional white-glove Union Square shopping district and instead addressing Yerba Buena. Today, office space South of Market commands higher rents than the revered Financial District North of Market, and the new knowledge workers and even the law firms and CPAs that serve them are eschewing the traditional financial district for South of Market.
The surprising, bold decision of SFMOMA over twenty years ago set off a chain reaction of locational decisions, each one easier than the prior decision, that made Yerba Buena Gardens the place for cultural institutions to be. SPUR in fact built a new headquarters Urban Center across the street from Yerba Buena in 2009; the last vacant parcel at Yerba Buena is now under construction with the Mexican Museum and residential tower; a new subway line opens in 2017; and the convention center is expanding into its fourth phase. We just wish we had more available sites.
Mission Bay, San Francisco
About a mile further south of Yerba Buena Gardens sits Mission Bay. Our Mission Bay isn’t a bay at all, having been filled-in in the late 19th century – early 20th c. to serve as the Southern Pacific Railroad’s freight yards. And again, as industry and port moved to Oakland and beyond, the land became an underutilized resource. Here was 300 acres looking for a purpose. In 1980, the Southern Pacific Development Company, formed ten years earlier to monetize SP’s unneeded railroad properties, produced a mundane plan to extend the San Francisco street grid across the site, and parcel it out. The neighbors on the hill above were aghast, worried about their views, and the possibility of downtown expanding southward. So the neighbors did their own plan, this time extending the street grid in smaller blocks across the site, to be filled with single-family residential development. Neither of these plans had what it took to excite anyone in power.
SP morphed into Catellus Land Development, who hired the team of I. M. Pei and Associates of New York and Wallace, McHarg, Roberts and Todd of Philadelphia (the aforementioned David A. Wallace) who produced a brilliant, beautiful plan that everyone promptly hated. The SP and the neighbors plans showed too little moxie; the Pei-WMRT plan too much. It would have truly been a “new town in town” with high-rise towers set on islands and canals in a reconceived bayfront setting. Catellus went on to hire EDAW who produced a beautiful plan that fit better into the fabric of the city; later SOM was hired to tweak the EDAW plan; it was adopted by the city as a Redevelopment District; finally Catellus asked the city to unadopt the Redevelopment District as it was going nowhere with no prospects in site.
Meanwhile Willie L. Brown was mayor of San Francisco, having been termed out as long-time Speaker of the House in Sacramento. And he had a problem. Daily the papers were speculating where UCSF Medical School was going to move. San Francisco expansion was stymied by neighbors around their campus in the western part of the city. One theory had them moving to some undeveloped bayfront land south of the city in Brisbane that had languished for decades. Another rumor reported that a developer on Alameda Island, off Oakland, was giving them the land. Willie did not want to be the mayor who “lost” the city’s second biggest employer, second only to the city government itself.
As Nelson Rising, the then-CEO of Catellus tells it, Willie called him into his office and told Nelson he was going to give 30 acres of Catellus’ Mission Bay land to UCSF; the city would throw in 10 acres; UCSF would stay in San Francisco. Willie’s problem would be solved. And so would Nelson’s. He would have a generator to spin off development of the remaining 270 acres. SPUR had been working for years on creative ways to grow the economy, and here was a scheme to help the professors and the University to commercialize their discoveries. Here we had the potential for what was to become a 2.7 million square foot medical research campus surrounded by prepared land for 3 million square feet of biotech/hi tech R & D/office space. Nelson reports that after he picked himself off the floor, he agreed.
So once again, here was a decision so surprising, so unique, so compelling that it became a force in its own right. After five failed plans and 20 years of failure, in a dozen years we have 10 University research buildings (with more on the way), a 280 bed hospital, 50 biotech startups, 9 blue-chip pharmaceutical and biotech companies, 10 venture capital companies, 2 research institutes, 4,000 jobs, a daytime population of 5,000, 5,000 residential units and more coming, and average household income of $120,000 with 30% of the housing units affordable units, and 75% of the population with Masters or PhDs.
Both Mission Bay and Yerba Buena Gardens had the advantage of utilizing the powers of the Redevelopment Agency to aggregate land and issue bonds with tax increment financing no longer available in California to be used by the I.D.E.A. District, so it is useful to look at another example being done without Redevelopment.
San Francisco’s Central Market Neighborhood
Market Street was San Francisco’s traditional “Main Street.” It was the location of regional-serving retail – department stores, grocery stores/farmers markets, 13 legitimate theaters, and served by four trolley lines down the middle of the street. BART, the regional heavy rail system, and MuniMetro, the local light rail system, were built under the street in the ‘60s and ‘70s. As the region suburbanized, and as the street was torn up for years, Market Street deteriorated badly. Legitimate theaters turned to porno houses; cigarette stores and liquor stores and bottom-feeding retail replaced what had once been a vibrant commercial scene. Hookers came out at night, and the city’s growing homeless population gravitated here. A high-end streetscape by famed landscape architect Lawrence Halprin did nothing to stem the decline.
There were a number of attempts to turn the tide. There was an attempt to form a Redevelopment District in the mid-1980s that was killed by local landowners because “prosperity was just around the corner.” SPUR did a catalytic action plan in 1997. Two years later there was another attempt at forming a Redevelopment District that was killed by the anti-gentrification forces.
Meanwhile tech startups loved San Francisco – the young mobile workforce, the artsy vibe, urban neighborhoods with an edge – all conspired to grow startups like weeds. And then when they became successful, they would decamp to the suburbs. Why? San Francisco was the only city in the state with a payroll tax…1½% of payroll on all companies with a payroll of $250,000/year or more. In 2011, Twitter was about to go public…and announced they were moving to Brisbane first. The way the payroll tax worked, it applied to stock options as well as ordinary salary. The day Twitter went public, its three top individuals had stock options worth a total of $5.1 billion. No one wanted to pay 1½% tax on that when all they had to do was move three miles south.
So after years of dithering, studies by SPUR and the Chamber of Commerce, and economic forecasts, the San Francisco Supervisors passed the Central Market Payroll Tax Exclusion, more popularly known as the “Twitter Tax Break.” It’s a simple law that is basically a tax holiday until 2018 within a prescribed Central Market Area. No Redevelopment Area; no Comprehensive Plan; not even a General Plan. Just a tax law.
Under the law, a business pays 1½% payroll tax on the lesser of its payroll its first year in business or its actual payroll. It does not have to pay tax on additional payroll (including those stock options) for six years. This exclusion expires in 2018 (eight years from passage) by which time San Francisco’s payroll tax will be completely replaced by a gross receipts tax.
In the approximately 100-acre area, which was characterized by historic buildings empty above their substandard ground floors, we now have 7,000 tech jobs in one building alone, Market Square, better known as “the Twitter building,” purchased and rehabilitated by the Shorenstein company. Across the street are 750 new luxury apartments, where a 2-bedroom unit goes for $8500/month, parking extra. 2,200 more apartments have either opened or are under construction within a couple minutes walk, 4,000 more are approved, and 4,000 more are proposed. One of those porn theaters is now a legitimate theater, there are 18 new tech companies, 2 venture capital firms, two co-working facilities, a hotel under construction, a vertical shopping mall under construction, and a whole variety of food halls and other popups in sites awaiting redevelopment.
There are 14,500 jobs in the area, storefront vacancy has been reduced from 30% to 16%, office vacancy from 22% to 3%, 20 formerly vacant historic buildings have been renovated and occupied, there are 15 new community oriented arts ventures, and 22 new small businesses opened. Payroll tax revenue has increased 648% within the zone compared with 47% citywide, from $1.2million to $7.6 million. 27 companies have applied for the exclusion, saving them $6.1 million.
Like Yerba Buena Gardens and Mission Bay, there was a completely unexpected catalyst: the decision of Twitter to move to this area that had essentially been skid row for fifty years. That would not have happened without the Board of Supervisors and the Mayor understanding that you reap more revenue by cutting some taxes.
In each of these instances – Yerba Buena Gardens, Mission Bay, and Central Market, the catalyst has been like a bolt of lightening … you never know when its coming and where its going to strike. What is important for the I.D.E.A. District however is to set up the conditions where lightening can strike. Go out and find Zeus and his thunderbolt. I would be sure there are problems in San Diego that can be solved by building the I.D.E.A District … they and the catalyst just have to be identified by the person with the creativity and will to find the solution.
Postscript: Life After Redevelopment
Yerba Buena Gardens and Mission Bay San Francisco both benefitted from the powers of the Redevelopment Agency, specifically land assembly, and tax increment financing. Since January 1, 2015 there has been a new tool in the civic toolbox, the Enhanced Infrastructure Financing District (EIFD). An EIFD is a public financing authority established by a vote of City Council (or County Supervisors) that can be applied to discontinuous properties in multiple ownerships. Funds can be used for a wide variety of public facilities of “community-wide significance” including infrastructure, office, retail or industrial space, affordable housing, for either new capital construction or rehab (but not routine maintenance). There must be a “plan.” EIFDs are tax increment financing, not a new tax. It merely reallocates property taxes to stay within the district instead of being spent city-wide. EIFDs can have 45-year bonding authority with a 55% vote of the electors (or property owners if there are less than 12 electors).
An EIFD can be an ideal tool to jump start the I.D.E.A. District. Its now time to find that catalyst, and perhaps the EIFD can be the added enticement.
 Conference program
SF MOMA. credit: SF MOMA
UCSF Mission Bay. credit: google earth
Twitter Building. credit: Jim Chappell