The Owner of San Francisco’s Largest Hotel Is Just Walking Away | Hacker News Reader

The Owner of San Francisco’s Largest Hotel Is Just Walking Away

viewfromthewing.com

64 pointsCharlesW54 comments

Being a native San Francisco citizen (born, schooled, worked), it's sad. The government officials were riding/wasting tech tax money for 15 years. They were actively hostile to tech companies - thinking that the industry will never leave the city and that the tax well would never run dry. They funneled tech tax money to the lower class in order to win populist votes. Tech tax money made them rich. They paid themselves a higher salary. At the same time, they were publicly anti-tech. It was a stark contrast to the Ed Lee era, where he did everything he can to attract tech companies such as giving tax handouts.

It turns out that tech companies were key to prevent the "Detroit-ification" of San Francisco. Tech companies mixed local drug users, deadbeats, and shady/violent people with Stanford, Cal, MIT, Caltech graduates and generally people who contribute to society. This made the city much wealthier and safer. As a native San Franciso citizen, I welcomed the change.

If you browsed /r/sanfrancisco in 2016, you would have seen how anti-tech everyone was. The users there were convinced that tech companies made the city worse. Now what? Where are those people now? I bet most of them left the city after realizing that the safety and money tech brought is now gone. Isn't this what they wanted?

Ed Lee:

Lee has been credited with catalyzing San Francisco’s tech boom early in his term by passing a business-friendly tax-exemption that he (correctly) predicted would help lure economic development into a distressed part of town. Called the Central Market-Tenderloin Area Payroll Expense Tax Exclusion, it waived payroll taxes for companies whose payroll exceeded $1 million in exchange for a community benefits agreement, and a commitment to build in the Tenderloin area. After Lee used the exemption to harpoon Twitter in 2012, it became sourly known as the “Twitter Tax Break.” Other tech companies like Uber, Airbnb, Pinterest, and Dropbox followed Twitter into the city, bringing with them municipal grants, large philanthropic donations to non-profits, and increased local purchasing—in exchange for whopping tax breaks diverted from the city budget.

https://www.bloomberg.com/news/articles/2017-12-12/what-ed-l...

Without Ed Lee's tech friendly policies, San Francisco's tech industry might have never boomed the way it did.

As a resident of San Francisco from before the tech era, during, and after, I can recall just how awesome and transformative the first wave of tech companies were to the city. Those companies were Twitter, Uber, Airbnb. Maybe a few more that I forgot. They kick started the tech wave. Many tech companies spawned from larger ones.

The results of smart decisions take more than 1 electoral cycle to become apparent, so it seems more of a problem of the fundamental structure and incentives.

San Francisco has a lot of naturally amazing attractions for tech companies. It's a real city so smart, young people from Cal and Stanford want to live in it after graduating. Young adults don't want to move to the suburbs of Silicon Valley. They want something more fun so they want to live in the city. San Francisco also has some of the best weather in the country and is surrounded by nature.

All it takes for San Francisco to have an amazing economy is to not f up.

While I agree with the overall point, the thing that always made me sad was that corridor/area along Market never really got better. Sure, it was a bit safer and cleaner than it was pre-2012 (and than it is now), but it was still not a place I'd choose to hang out.

it's actually really frustrating-- moved to sf during the pandemic. it was empty but didn't feel so bad. it feels way worse now, lots of shops closed up or moved, a lot of sketchy areas downtown, the whole foods closed mid-market, so i'm moving to south bay. can definitely afford it, but wanted the car-free life.

coming from europe, it's sad and disappointing. last time i was in sf was in 2016 or so for work and it felt way better, and that was commuting to soma and walking around market at night

I hosted a lot of couch surfing travelers in the Tenderloin from 2016 to 2019. The first thing each of them commented on was the number of homeless people in SF. It was honestly embarrassing.

The tenderloin was always like that. It was a lot more tolerable in 2016 - 2019 than before and after.

I'm no SF expert and haven't been back in a long time, but I used to travel there in early 2000s and thought the number of homeless and agressive people was a lot more than where I lived in both LA and NYC.

Knowing how post-pandemic and post wealth grab has made the homeless population grow I can only guess how SF looks now.

If you haven't moved yet, and are open to giving SF another chance, pick a new neighborhood. Based on your post, I'm guessing you lived in SoMa? It's... kinda the worst, honestly. I moved to the Dogpatch right before the pandemic (from SoMa) and am fantastically happy. The pandemic did kill a few businesses, but others have sprouted up in their place.

If the Dogpatch isn't your cup of tea, there are many other neighborhoods that are much safer, cleaner, and pleasant to live in than SoMa or thereabouts.

So frustrating as a former resident to see how much the city was taking in via taxes and how little we as residents were getting to show for it. How slowly and how poorly those dollars were being deployed.

There is nothing people hate more than the hand that feeds them. See also Brexit, the Southern US's attitude to the federal government.

>Southern US's attitude to the federal government.

People associate the US South with being poor. And it's true in that they get more federal dollars then pay, mostly from welfare. However the poverty rate in California beats out out every other state in the country.

If California keeps on its trend how long until jokes once about Mississippi or Alabama will instead have California as the punch line?

Maybe. Though of course Cali isn't the one voting to gut all those programs...

The cause of poverty in cali is different though. It’s mostly not lack of jobs. It’s unaffordable housing.

In much of the south it’s lack of good jobs.

The housing problem is easier to fix… not that cali is fixing it.

Mississippification is the term for what's been going on since Prop 13

The Californian poverty rate only beats out the south because Californian standards are way higher. Being poor in Mississippi is way worse than being in poverty in California, we might as well be talking about different countries at that point. This is just another dumb meme (that poor in California = poor in Mississippi, like poor in Switzerland = poor in Cambodia...uhm, no).

I encourage everyone to experience the Mississippi boonies filled with single wides and trash barrels in the back at least once in their lives. Then go check out poor places in California, just see what is really like for yourself.

This is exactly the issue. The city gets handed a goose that lays golden eggs and they completely wasted the opportunity. Then the goose dies and they're left floundering.

The analogy with Detroit is an apt one.

Dutch Disease

Someone borrowing $725 MM (probably interest only) to buy downtown property and having to sell it for no residual equity with rising interest rates isn't a unique-to-SF problem. It's happening in major cities all over the US. Nothing SF specific at all.

/r/sanfrancisco

Is still like that

Geographic subreddits are a poor mechanism to gauge sentiment of a city. Reddit itself is already a very skewed sample, and one does not need to actually live or visit the city to participate.

Yep. Digital divide and Genchi Genbutsu. You have to go there and talk to people.

If I were there, I would head to the Vesuvio Cafe or Specs and ask what people think.

To be fair, many of the people who left did so because rents just got too damn high, and purchasing a home was completely out of their reach.

I do agree with you that the influx of money that came with the tech boom did clean things up a bit, and make things a bit safer (didn't stop me from getting mugged in the Mission in 2013, though, but I digress). But the soaring demand for housing, and the city's complete inability to build more, drove a lot of low- and middle-income folks out.

(And I say this as a tech person who greatly benefited from all this. With very mixed feelings.)

I was never a huge fan of Ed Lee (didn't strongly dislike him, just was kinda meh on him), but after seeing the results of Breed's leadership... wow, I really miss Ed Lee.

Having been to the Union Square/Market/Moscone are many times for the Game Developers Conference, including this year, this is not surprising.

Simply walking from a hotel to Moscone was very stressful. There were no cops but tons of private security to manage a horde of zombie like addicts and mentally ill homeless.

SF will come back because it is beautiful and the weather is great… it won’t become Detroit. Detroit only had lake transport going for it and grew despite harsh winters.

It won’t happen until there are tons of cops, the homeless dissipate (hopefully to somewhere they can be cared for) and then and only then, people feel safe.

If the Game Developers Conference leaves in the meantime, I will be very happy. I don’t want to go back.

This was my experience a couple years ago as well. I absolutely love San Francisco and it's my favorite US city outside of my own. I'm used to the general dirt and grime of cities (my child knows to be suspicious of wet ground, especially when it's in corners and it hasn't rained recently) along with the many colorful people that inhabit them. In my recent trip to San Francisco, things were well beyond what I'd expected. One end of the BART car had a pile of human feces, as did the station, and someone had clearly urinated while on the up escalator to make a nice trail. On Market street, there was trash and tents, and at least one person squatting to go to the bathroom. I popped into a store to grab some sundries, and the interior looked more like the store was at the tail end of a going out of business sale.

Outside of downtown it felt a little better, but it was such a shocking difference from my previous trips to the city.

Your mistake was taking the BART and your use of the word "sundries" caused me to chortle.

The same story exists across the US. How does San Francisco fix a national health issue when Congress refuses to do anything but cut taxes on the rich to force us into begging from someone who is obviously more pious given their wealth in a tilted wealth acquisition game.

How does SF fix a public looking to be served rather than serve themselves? Hypernormalization on fiat economics to accomplish anything is destroying everything.

I'm from Boston and there's really just one area (Mass and Cass) with a serious homeless and drug problem. Our downtown is safe and clean. I'm not sure what SF is doing differently, but it's clearly not enough.

What is SF doing different is not bussing their problem to Texas or Florida as Texas and Florida do.

This culture is a joke. An intentionally unaccountable but highly compensated and connected federal political apparatus is ignored and blame placed on local power for its lack of accountability fixing country-wide issues.

Such exceptional neighbors I have across the country that they put up with this.

Honolulu has a bad homeless problem, but they also provide free one-way plane tickets back to the mainland if there is family who says they'll help them get re-adjusted, so "not bussing (away) their problem" is not the issue.

Sorry this is simply impossible to take seriously as a comparison. Hawaii is literally surrounded by the world's most enormous, unswimmable moat. Homeless are thus predominantly going to come from within the islands existing population, with barely a trickle coming from outside. Compare this to California which you can hitchhike to, ride a boxcar to, drive a $300 beater to, take a greyhound to, or even walk to given enough time.

Even comparing the closest analog to Hawaii for california, Catalina Island, the mere 90 minute ferry ride across the channel is enough to cause a disparity in homeless rates between the city of Avalon on the island, and the city of Los Angeles - visible directly across the water from it - of nearly 50% (higher in LA)

Avalon is also part of Los Angeles County, which adds to your moat analogy.

Honolulu's homeless problem is also nowhere near as bad as SF's, by the numbers. And for whatever reason, Honolulu's homeless seem way less addicted to drugs, and with fewer mental health issues.

SF will also provide bus tickets to homeless people if they have family elsewhere who can help care for them, but to me it seems the program is under-utilized.

This is also a question I’m interested in. To what extent is it:

- better services

- 35% more cops per-capita

- lower tolerance of camps

- something else like the street price of drugs

Honolulu has a bad homeless problem, but they also have a strong, visible police force. Honolulu also provides free one-way plane tickets back to the mainland if there is family who says they'll help them get re-adjusted. So it's probably niether one of those things.

A lot of the problem here is that it is just one area (mostly), but that area is very close to the conference, hotel, and tourism heart. The financial district and other parts of downtown are fine. I also routinely (yesterday for example) hear from people who actually visit sf and realized that while it has problems it’s not the hell scape they were told about

Boston has winters that will kill you. Even if you don't die or get frostbite, it's gonna be a bad time. Shelters are often not places to be.

By comparison in SF you can sleep outside all year round with minimum headaches, and tent / camper / van life is an option. Nationally, over time, the homeless will start moving towards places like that.

SF is also more of a cultural fit than Boston.

Sf decriminalized drugs and petty crime. Then was shocked by an explosion in drugs and petty crime, which then started edging into less than petty crime.

The city’s famously progressive policies were, perhaps, not thought all the way through.

Much poorer countries than the US manage their mental health issues better. Could the root of the problem be in political attitudes rather than raw money?

Taxpayer-funded social welfare spending has massively increased across the US since the 1950s, not just in absolute terms, but as a share of GDP:

https://ourworldindata.org/grapher/social-spending-oecd-long...

Yet you still blame lack of social welfare spending for the deterioration in conditions.

This is a disingenuous comment. Between social security and Medicare, most of this social surrendering is just taking care of old folks

The old folk population has not grown nearly as rapidly as social spending, so your response is what's disingenuous.

Medicare, Medicaid, Supplemental Security Income (SSI), TANF, SNAP (food stamps), Head Start, WIC, LIHEAP, and EITC didn't exist in 1950, and now they do. Society is vastly more social democratic today than it was then.

The game developers conference is jacking up their prices all the time too. It's super annoying that the Vault wasn't included by default with an all access pass. And the division into summits is confusing and annoying as well.

GDC needs competition.

I think Vancouver or Montreal would be a great destination, cheaper too.

> Vancouver > cheaper

wut.

It's one of the most expensive cities in N. America and routinely outranks other cities like Los Angeles as being more expensive. No shortage of homelessness there, too; don't leave stuff in your car cuz it's gonna vanish.

https://www.vancouverisawesome.com/local-news/vancouver-rank...

MTL is cheaper but there are language barrier issues, and it's just a lot further away. SF was the location of the conference since half of the tech world is in California, or is tied to / interacts with California.

San Francisco has major issues, but this could also be interpreted as interest rates returning to the range of historic means causing the waters to recede and show everyone who has been swimming naked. With great leverage comes great risk.

I am sure this is just the beginning. The gym I go to is closing shop because I think the rent the commercial property owner has to charge is not worth it to the gym owner but to charge less is not worth it to the property owner. It is going to end up the bank's problem.

Going from 0 to 5% like this is probably taking the swim trunks off people who did completely prudent due diligence to not swim naked.

This is less interesting IMO when going over the SEC filings of the company. These loans were coming due in Nov 2023, at what would be higher interest rates, and average bookings and occupancy for their portfolio are only 79% of what they were in 2019. It makes for a good story about how shitty San Francisco has become but likely would have any other hotel in this REIT. They operate on rolling over mortgages continually and after more than a decade of low interest rates this roll over greatly effects free cash flow - after hotels got crushed during covid for 2 years and still haven't fully recovered. Also, it appears the hotel is still operating, so how they are just walking away I don't know. Don't worry about the company, while they can't roll over their mortgages they have enough cash flow at the moment for their dividend and buying back $100 million of shares in the last year but do still have billions in debt to roll over in the next few years so if interest rates remain high expect more.

Seems like Vancouver accidentally did something very right when starting in the 1970s it decided that it should actually be putting a great deal of housing right into downtown, only letting up in the late 2000s when developers were so enamored with the idea that they started converting commercial office and city council got nervous about that.

No one would ever suggest that Vancouver doesn't have severe issues with street homelessness and open drug use, and yet Vancouver isn't at all experiencing the same sort of post WFH era hangover that SF and other US cities are experiencing.

It seems pretty clear to me that it's the over focus on commercial in Downtowns that is the city life killer here. Going to be really hard and expensive for cities that are suffering from a surplus of commercial to fix this.

Vancouver and SF is an apples and oranges comparison. SF was a tech hub of the world. Vancouver is where China stashes it's money in real-estate. 1

1 - https://www.google.com/amp/s/amp.scmp.com/news/china/diploma...

> Will this be a wakeup call?

San Francisco permabulls cannot be helped.

But at least artists can live there again! Which seemed to be a goal post. As if every currently-nice neighborhood wasn’t a complete slum underneath a highway the last time artists could afford to live there.

The sweet spot is finding where all the artists are moving there or nearby. Within 10 years it will boom. Then the artists will leave and it'll be Starbucks and 24 hour gyms until it rots into a slum and the cycle starts again.

Sounds like if you’re in a boring nice place you need to keep those pesky artists away :P

I would say get creative to address the issues:

- Turn the non-room areas into coworking spaces with nice art and design. Fresh flowers are relatively cheap and make a space look nice.

- Bring in cafes, art shops, and anything to bring foot traffic, including art studios.

- Turn the rooms into a shelter with 2 double bunk beds per room. That's enough space to house ~12000 people.

Reply on news.ycombinator.com