Business: Showdown at Showplace Square

Showplace Square doesn’t look like the other neighborhoods of San Francisco. Rows of Victorian houses and newly built luxury lofts can be seen on a rise blocks away, but there are none here. There are also few tourists, though it’s less than a mile from the baseball stadium. The high-rises of the Financial District are within sight, but there are no corporate towers.

Showplace Square could be called an industrial district—a rarity in a city where many residents either serve tourists or process data. It lies at the center of a heated debate about how to retool San Francisco’s industrial neighborhoods to accommodate a mix of uses. Developers and housing advocates have been pushing to transform the area into a dense residential corridor, while the business owners who would be displaced cry foul. At stake are thousands of jobs, hundreds of businesses, and thousands of potential housing units. 

The Showplace Square Proposal

For decades, industrial businesses have struggled against housing advocates for turf in San Francisco’s Eastern Neighborhoods, which include South of Market, Mission, Bayview, Portrero Hill, and Showplace Square. Though the pro-housing camp has been winning the overall war—slowly creeping into, and displacing, industrial uses—a recent turn of events in Showplace Square presents a powerful opportunity for industry advocates to make their case.

The current land-use controversy was ignited by legislation penned by County Supervisor Sophie Maxwell. Maxwell represents the 10th Supervisorial District, one of San Francisco’s poorest districts, which includes most of the Eastern Neighborhoods planning area. Maxwell’s district is also 29 percent African-American, by far the most heavily African-American district in a city which is only 8 percent black.

Maxwell proposed a “Backstreets Task Force,” modeled after Boston’s, to analyze Production, Distribution, and Repair (PDR)—in other words, industrial—issues in the city and recommend policy changes. More controversially, she proposed a moratorium on non-industrial development in the production cluster, which the city’s permissive zoning laws had allowed, until the Task Force completed its work.

Zoning has long been used to protect residents from industry, but Maxwell’s proposal uses zoning to protect industry from residents. The Task Force proposal passed the San Francisco Board of Supervisors without controversy. The proposed moratorium, however, angered groups like the Residential Builders Association (composed of small contractors and developers) and impelled dozens of people to voice their concerns at public hearings. Nonetheless, the Board of Supervisors’ Land Use Committee approved the proposal and passed it on to the full Board of Supervisors. In December 2004, the Board unanimously approved the moratorium. In response to the controversy, they conceded an amendment allowing four already-proposed projects in the area to continue to be processed.

The Argument for PDR

San Francisco has few smokestack industries. The PDR uses—employing 45,000 workers across San Francisco—are primarily light industrial, relying on machinery and technology to process and distribute materials, but without the pollution, noise, and smoke often associated with industry. Showplace Square contains several such uses, organized in geographic clusters. The “design cluster” includes interior design and architecture firms, which are typically housed in attractive, multi-story brick buildings. The “production cluster,” composed of simple one- and two-story structures near 16th and 17th Streets between De Haro Street and Highway 280, includes auto parts distributors, metal fabricators, and beer brewers.

While San Francisco once had a much wider range of industry, it started redeveloping industrial uses for white-collar business as far back as the 1950s, as radical planner Chester Hartman has described. While San Francisco was never a national production center like Detroit, it was once the main industrial center of the Bay Area. The Port of San Francisco—key to certain industrial uses—has been greatly weakened by competition with the fully containerized Port of Oakland. And suburban industrial parks dot the landscape from Santa Rosa to San Jose, with many companies looking farther inland to the cheap land and wages of the Central Valley.

Some wonder why PDR businesses want to stay in pricey, high-hassle San Francisco. Commercial realtor Chris Varney’s answer is that they don’t: “It’s getting to the point that we have very few large PDR users left here in San Francisco.” He lists “easier truck movement, better rail access, lower wages, and lower taxes” as among the reasons companies wish to move. Varney also notes subtler dynamics: losing Bank of America’s corporate headquarters to Charlotte has meant less work for printers. Realtors argue that there is a glut of vacant PDR space in San Francisco; they spent substantial time at each hearing reading a funereal list of vacant PDR space. Given this situation, they see no need to protect additional space for PDR uses.

But others see continuing value in a San Francisco location and note that realtors have a financial interest in encouraging higher-priced uses. They point out that despite realtors’ claims, few “Available” signs are apparent on the streets of Showplace Square.

The largest and most outspoken business in the Showplace Square debate is Anchor Brewing—one of the few area companies that actually has a smokestack. It has been in San Francisco since 1870 and in Showplace Square since 1979. Brewery owner Fritz Maytag emphasizes how important its San Francisco location is for the brewery to tap into the pool of food and wine professionals. “We have dozens of people visit the brewery every day. That wouldn’t happen if we were in a suburban industrial park,” Maytag avers. “I bought the property because it was in an industrial area.”

Custom Furniture Design, another popular area business, loves being down the block from its design industry clients. Owner Tom Featherstone sees little likelihood that his lease will be renewed in four years if the site can be turned into a condominium complex. “If I were in my landlord’s position,” he says, “I’d do the same thing.”

While industrial uses are normally thought of as operating over national, international, even global markets, many San Francisco PDR businesses, like Custom Furniture Design, exist to serve distinctly local demand. Maxwell’s aide Greg Asay cites Economy Restaurant Fixtures as another case in point: “They want to be able to help a restaurant client quickly if a freezer breaks or something like that.” Others speculate that PDR uses in the city reduce truck traffic into San Francisco, though this point awaits further analysis in the Eastern Neighborhoods Plan Environmental Impact Report (EIR).

To these businesses, and to Supervisor Maxwell and her supporters, PDR jobs are an essential part of San Francisco’s economy. They are relatively stable employers in a city at the epicenter of the dot-com roller coaster, and they provide solid jobs for those without college educations in a generally polarized labor market. But to housing advocates, these arguments are dubious or irrelevant—the city’s enormous housing needs must take priority. 

The Pro-Housing Camp

Few would deny the need for more housing—especially more affordable housing—in San Francisco. The median sale price in October 2004 was $666,000, up seventeen percent from the year before. San Francisco is routinely cited as the most expensive large housing market in the country. Meanwhile, the 2000 Census found that almost 40 percent of renters (the majority of San Francisco’s population) were paying unaffordable rents of more than 30 percent of their income.

Michael Yarne, a developers’ attorney and former Urban Ecology board member, believes land in places like Showplace Square is simply too valuable for low-intensity PDR uses employing only a few workers per acre. “It’s a tragedy that this prime land is sitting underutilized.” Yarne argues that there are appropriate places in the Eastern Neighborhoods for PDR, but not here in Showplace Square, where one can walk to the emerging biotech campus of Mission Bay.

Few people argue directly against more housing in San Francisco, though some say that demand is so intense that more supply will do little to reduce prices. They argue instead over where to create it. San Francisco’s housing plan—what’s known as the Housing Element of the General Plan—calls for 29,000 additional housing units spread around the city. The Housing Element would put housing not only in industrial neighborhoods, but in Mission Bay, Downtown, and along transit corridors.

None of these options is without controversy. Housing on transit corridors adjacent to residential neighborhoods has great potential in transit-rich San Francisco but would be sure to ignite a firestorm of opposition. Some cities have found that industrial districts are the most expedient place to build housing, because there are no homeowners to contend with.

But Showplace Square has its prominent defenders. One of them, Anchor Brewing owner Maytag, has been heavily criticized for his efforts. The Residential Business Association attacked him at the hearings on interim controls, charging that Supervisor Maxwell was simply doing Maytag’s bidding in proposing to protect Showplace Square’s PDR uses. Maytag calls the attacks on him “pretty petty.” The Building Association’s O’Donoghue claims that nobody has complained about the activities of Anchor as a corporation, but he adds contentiously, “Maybe we should.”

PDR advocates ask if industrial districts should be sacrificed to the NIMBYism of existing neighborhoods. They note that even if industrial areas were fully built out with housing, there would still be a need for thousands of additional units. Some further caution against an overemphasis on housing development. Tony Kelly, a neighborhood association leader in nearby Potrero Hill, warns against a “binge and purge” approach to planning that results in unbalanced development. “Five years ago the dot-com thing was exploding and everybody was hot to build space to accommodate them. Now there are millions of square feet of empty office space. We don’t want to do that again.” Potrero Hill’s three neighborhood associations support the moratorium, to give the city time to thoughtfully sort out where housing, PDR uses, and transportation improvements should be located.

Questioning the City’s Future

For all the concreteness of this real estate and planning battle, many more elusive questions remain. What kind of place is Showplace Square? Is there room for blue-collar workers, or for industry, in San Francisco? Or is it enough that they exist somewhere else in the Bay Area? Are efforts to retain industry in San Francisco driven by “industrial romance” as Michael Yarne contends, or is an industry-free city a “fantasy island,” as Manhattan has been described?

San Francisco’s planning effort is underfunded, has had uneven leadership, and is subject to enormous political and economic pressures. Even without those limitations, PDR space poses a particularly difficult challenge. Densifying—fitting more activities into existing space—has been the express goal of San Francisco planning for decades. But PDR businesses need large, open, industrial spaces of one or two stories. In a city that has been vertical since the Victorian era and is only getting more so, modern PDR is stubbornly horizontal.

Accommodating PDR in San Francisco is undeniably difficult. There is a fundamental imbalance in the housing-PDR dynamic: housing can go almost anywhere in San Francisco, but PDR uses can only go to a small and decreasing number of locations. Some suggest that former Port or Navy shipyard land can shelter PDR, but much of that area does not even have water or sewer lines. Some would simply bid PDR farewell. Others would “solve” the problem by pushing PDR uses further southeast, into lower value, higher crime, less accessible areas of the city. Perhaps PDR should go south of 23rd Street, it is suggested, or perhaps south of Cesar Chavez (about 26th Street), maybe further south across Islais Creek. But a business owner might justifiably wonder if these areas were also just way stations: just fifteen years ago, Showplace Square was unwanted territory, and it’s not hard to imagine a condo ad in 2015 advertising a “water view” of now-grimy Islais Creek.

San Francisco grew up as a tough, brawling port city—one where labor disputes are memorialized with names like “the battle of Rincon Hill” (now a high-rise condo zone). San Francisco cannot be that city again, nor would it want to. But as industry erodes, San Francisco loses much more than just a few small businesses. The economically stabilizing effect of firms outside the highly volatile information technology sector vanishes. Job options for the youth of the 10th Supervisorial District and the 50 percent of San Francisco residents without college degrees fade. Fast, efficient support services for more glamorous businesses disappear. Perhaps these gaps can be filled, the effect of these losses mitigated, as some insist. And perhaps some political force can overcome the resistance to housing being built in more appropriate locations in existing neighborhoods that could accommodate more density. But nothing in present trends suggests such an outcome. The result may well be a tax base that is richer, but a city that is poorer.

REFERENCES

City of San Francisco

www.sfgov.org

Includes documents on the Eastern Neighborhoods planning process and a draft plan for the Central Waterfront, a largely industrial area near Showplace Square which has had a separate planning process.

Chester Hartman with Sarah

Carnochan. City for Sale: The Transformation of San Francisco. University of California Berkeley Press, 2002. Describes how Redevelopment transformed the eastern South of Market district of San Francisco from working-class to upscale.

“Planners look hard at S.F.’s east flank. Rezoning will decide what’s in, what’s not.” San Francisco Chronicle. Mar. 30, 2002. www.sfgate.com

A brief introduction to the Eastern Neighborhoods planning process.

William Julius Wilson. The Truly Disadvantaged: The Inner City, the Underclass, and Public Policy. University of Chicago Press, 1987.

Argues that the deindustrialization of American central cities has been a significant contributor to urban and African-American poverty.