San Francisco - America,s Havana

FROM THE MAGAZINE

America’s Havana

Thousands say ciao to San Francisco.

Michael Gibson

Spring 2020 

California

Cities

Economy, finance, and budgets

On January 8, London Breed, San Francisco’s mayor, was sworn in for her first full term. House Speaker Nancy Pelosi congratulated her in a tweet, saying, “I look forward to working with you to continue San Francisco’s proud tradition of standing as a guiding light for progress across America.” I don’t know what definition of “progress” Pelosi is using, but any candid observer would rate the city a catastrophe. Mayor Breed was inaugurated on the same day that I moved from San Francisco to Los Angeles, after ten years working at the cutting edge of science and technology.

Even before the current Covid-19 pandemic, San Francisco was a deeply troubled city. It ranks first in the nation in theft, burglary, vandalism, shoplifting, and other property crime. On average, about 60 cars get broken into each day. Diseases arising from poor sanitation—typhoid, typhus, hepatitis A—are reappearing at an alarming rate. Fentanyl goes for about $20 a pill on Market Street, and each year the city hands out 4.5 million needles, which you can find used and tossed out like cigarette butts in parks and around bus stops. The city’s department of public works deploys feces cleaners daily—a “poop patrol” to wash the filth from the sidewalks.

This is just a brief summary of the lack of hygiene and common decency. A reasonable person might declare an emergency, but in her first official act, Breed swore in Chesa Boudin, San Francisco’s new district attorney, before a packed house at the Herbst Theater. “Chesa, you have undertaken a remarkable challenge today,” said U.S. Supreme Court Justice Sonia Sotomayor in a congratulatory video message. “I hope you reflect as a great beacon to many.” Boudin’s résumé boasts of a stint working directly for the late dictator Hugo Chávez in Venezuela, who turned a once-rich nation back to the dark ages. “We will not prosecute cases involving quality-of-life crimes,” Boudin promised during his campaign. He must have witnessed the success of that policy in Caracas, which was voted the world’s most dangerous city in 2018.

Even the sights and sounds of the city suggest a certain derangement. When the Bay Area Rapid Transit (BART) system was first built in the 1970s, its designers failed to understand the acoustics between wheel, track, and tunnel. Since the nineteenth century, competent railroad engineers have known that a tapered, flanged wheel will handle turns better and generate less noise. For some reason, BART designers ignored this design in favor of a cylindrical wheel with a straight edge. Years of wear and tear have degraded the screech into a mad howl. According to a recent count by the San Francisco Chronicle, BART has lost nearly 10 million riders on nights and weekends because of the noise, grime, and lack of safety. It doesn’t help that it has also become a de facto shelter for drug addicts and the mentally ill.

Today, it’s nearly impossible to build anything in San Francisco. Infrastructure projects balloon indefinitely. In 2001, the city proposed a new bus lane on Van Ness, one of the main arteries. Nearly 20 years later, the new lane’s opening is slated for 2021; Van Ness remains a mess of potholes, equipment, and detours. It wasn’t always this way. In the 1930s, the Golden Gate Bridge was built in three and a half years. To commemorate its completion, as an encore, the city created an artificial island in the middle of San Francisco Bay. Treasure Island took under three years to finish.

The city no longer builds housing, either. Due to the nation’s tightest zoning rules and land-use restrictions, developers struggle mightily to put up new apartments and houses. Even after getting permission to build—following years of scrambling through a dysfunctional approval process—it costs about $700,000 to construct a single new apartment unit. Consequently, the cost of housing has skyrocketed. The median price for a one-bedroom rental is the most expensive in the nation, at about $3,700 per month. To buy a single-family home, a family needs $1.5 million, on average—and they’d better be a cash buyer.

But the culmination of local incompetence and misplaced priorities has to be the blackouts and fires. The monopoly utility, PG&E, began rolling blackouts this past autumn to prevent sparks in dry and windy weather. Millions went without power for days. Many of the company’s electric lines contain components that go back to the 1950s; some date to the 1920s. These parts have ignited 1,961 fires since 2014, according to the company. The 2018 Camp Fire, the deadliest in California’s history, was caused by a broken hook on a tower. It killed 85 people and torched 150,000 acres; a year later, near Sonoma and Napa, vineyards burned among 190,000 acres, and 22 people were killed. Smoke drifted over San Francisco and choked its residents for weeks. For the duration, San Francisco became one of the most polluted cities in the world. People now stock up on air filters and masks every October for the season of ash.

San Francisco is a city overwhelmed by its own stupidity, but painful adjustments are coming. For the seventh straight year, more people have left California than have moved in. Tech companies are reconsidering the importance of being in San Francisco. Oracle, for example, has moved its yearly conference to Las Vegas. After nearly 50 years, Charles Schwab is moving its headquarters out of town. And in a recent earnings call with investors, Jack Dorsey, Twitter’s CEO, said that the company planned to have a more distributed workforce in the future and be less concentrated in San Francisco. With tech companies operating remotely while their employees shelter in place, how many of these workers will return to their San Francisco offices after the Covid-19 crisis subsides is an open question.

“For the future to have power over the present, it has to be different from the present,” Peter Thiel said in a recent interview with Peter Robinson of the Hoover Institution. “The future has power because it is a time that will look different.” San Francisco is trapped in the past. The future will be built elsewhere. I left to find it.

Michael Gibson is a cofounder of 1517 Fund, a venture-capital firm in California.