The 950 Journey – Part 2

February 25, 2015

It is my hope the 950 Journey will be instructive to all current and future arts and arts eduction advocacy efforts.  It is a remarkable story that has involved many twists and turns.  Undoubtedly the media will only touch the surface, as in the recent JK Dineen article in the Chronicle.   The summary that follows is to help clarify what happened, with some commentary on my part.  After all, I was invited by this city to do community development through the arts.  Six years later I do have a few things to say.

The arts organization’s (950 Center) development team, the SF Foundation (previous top leadership, not the program officer) and Group i had several project development meetings in 2013 that led to a simple agreement: the SF Foundation would 1) keep up with quarterly development expenses related to the arts space, and 2) take point on raising the funds to build the building/get the campaign going. Group I would take point on project management and endowing an operating fund that would subsidize small-budget groups to ensure access to the Center. Group i would create this endowment based on the incentives the mayor’s office promised, i.e. additional value from additional height. We all knew that a debt free space wasn’t good enough – we would also need an operating subsidy. Group i retained a highly respected local philanthropy advisory firm to begin the process of structuring this endowment.

At the conclusion of these meetings, contrary to JK’s reporting, there was total clarity and agreement between the arts organization and Group i.   Group i never “insisted that the arts nonprofits pay 50 percent of construction costs.” It didn’t have to – the SF Foundation pledged to take leadership on this since the project – in addition to landing ACT’s great drama school for the Tenderloin – was conceived to serve groups that did not have that capacity.   For this same reason, i.e. the SF Foundation’s commitments, the arts groups never were “pushing for the developer to bankroll construction.” In fact there was just one “art group” – the 950 Center group – not “arts groups” at all.

I can’t explain why the promised support did not materialize. Not one agreed-to quarterly funding milestone for the arts program was met. I can report, however, that the arts group learned much later that the SF Foundation (previous senior brass, not the program officer) and the mayor’s office were engaged in talks that the arts group was not aware of. I was stunned (20 years of working with foundations, big and small, local and national, I’ve never experienced anything like this) and should have jammed on the brakes right then, one of the many times I should have. The deal we had with the SF Foundation slowly and mysteriously vanished, though the arts group team didn’t realize it at the time. Or perhaps refused to believe it. It seemed impossible this would happen. Years after the foundation said it was going to buy the properties, but then didn’t, while subsequently not returning emails or phone calls, I refused to believe there could be a second astonishing disappointment.  Not twice.

In the absence of special use legislation for the arts being introduced and passed, JK is inaccurate in his reporting that the city was willing to rezone the property. In fact, in June, 2014, Tom DeCaigny, Director of Cultural Affairs, reported to over 40 arts organizations that the mayor and Supervisor Kim were going to co-introduce the legislation last fall. This did not happen.

Perhaps rather than going by what city officials “felt,” (JK’s term) we all should have gone by what Keyser Marston, an objective third party economics/feasibility analysis firm highly experienced in real estate development, proposed in their September 13, 2013 report to the mayor’s office.   Their “Preliminary Draft Assessment of Arts Incentives Options,” provides a detailed, well, assessment of options to the city.

As it turns out Keyser Marston’s analysis of the economics validated Group i’s analysis. In fact, it calls for options that went far beyond what Group i proposed the city could do to help build the project. Unfortunately neither the arts group nor Group i knew that since the report was not made available until more than a year later.   It was lost, misplaced, forgotten, who knows.

It is also notable that Tom DeCaigny, one of the city’s two highest level arts leaders who had been participating in the city’s project meetings, was also unaware of the existence of this report. (I’m certain Kary Schulman, Director of Grants for the Arts, was also kept in the dark, though I was told she, along with DeCaigny, were closely involved in discussions. Guess they weren’t as close as they thought.) This report could have been the ultimate blueprint for how to make projects like 950 possible.   The catch? The missing report called on the city to do much, much more than what it has done historically to support the development of affordable space.

The report also validates the advocacy letter from over twenty community based organizations that called, nearly three years ago, for Mayor Ed Lee and Supervisor Kim to utilize a tax increment strategy to help make projects like 950, CounterPulse and Luggage Store pencil.   The letter was ignored.

The mayor’s development director claims the project died “despite their best efforts.”  It is very troubling to think that misplacing or losing or ignoring the one third-party objective analysis that could have fixed everything constitutes the city’s “best effort.”   You best check on that best effort Mayor Ed Lee.

I can’t say if Keyser Martson’s analysis validated the city’s analysis because, it appears, the city goes by what it “feels.”   That famous breakfast meeting the mayor hosted, over two years ago, to tell the development community his shop was going to develop incentives for arts space development seems to have translated into “feelings.”

I collaborated a while back with a city hall veteran who shed some light on these municipal moods.  He told me the city looks at the St. Regis super luxury hotel and MoAD as its reference model, i.e. find a high-end/luxury project and tack on a cultural facility (whether the location makes sense for the cultural facility or not, and is a complete afterthought, or even sucks, design-wise). That is not “creative placemaking” Mayor Ed Lee, that is expedient mall making. In contrast, Group i positioned the 950 Center in a highly integral and prominent way. And it was going to go up in the ‘hood, not in a super high-end/luxury residential and commercial district.  In fact, Group i was pressured by city hall spokespersons to go super uber-luxury on both the 950 residential and hotel components to follow the St. Regis and Millenium Partners models. This, while Group i has been struggling at each step of the design and cost engineering process to keep residential price points well below the median home price and introduce a moderate price point hotel that would match well with the local fringe oriented arts scene.

Some outsiders (none in the Tenderloin) have questioned my allegiance since I’m close to Group i and its president.   To them I say my allegiance lies with Keyser Marston’s report.   (To my knowledge I don’t know anyone at Keyser Marston.)   If the city had adopted its recommendations 950 would have been well on its way and a new, fantastic and successful model would have been established to build additional cultural facilities, or affordable housing, or community facilities assets period, arts or otherwise.

A word from Banksy: “The most dangerous phrase in language is “we’ve always done it this way.” (Don’t know if Banksy really said that. No matter, it applies here big time.)

Speaking of a new successful model, there’s another developer with a prominent site along mid-Market (he asked not to be identified) that took keen interest in doing an arts facilities or artist housing project after learning about 950.  They approached Group i over a year ago.  Group i brought this developer to the city in the interest of working together to truly build a mid-Market arts district (remember those days?).  The mayor’s people wouldn’t agree to meet with them together (We all wondered, huh? But now I understand why). This other developer concluded that there wasn’t any proof – or even signs of proof – of legitimate incentives from city hall that would justify taking on the huge additional risk inherent in incorporating an arts project, so he’s going forward with an as-of-right project sans the arts.  Bummer…we could have been a contender.

As for Supervisor Kim, if she’s “disappointed” as she claims to be she should have showed up with legislation to help make it happen. The Tenderloin just lost $24 million (and this is the figure that was already committed before the capital campaign started) for thousands of feet of permanently protected arts space and a landmark arts education school that would have been at our kids’ front door. This happened under her and Mayor Ed Lee’s watch. And for that matter Grants for the Arts and the SF Arts Commission, though they, as has been explained, were effectively lost.

Another JK error, the SF Foundation did not file the paperwork necessary to establish a nonprofit to oversee the project.   This was done on the recommendation of a consultant who concluded the project was going nowhere until it had autonomy from the foundation. Group i, as did I, parted ways from this group once it became clear it was taken over by de facto city hall spokespersons and legacy ambassadors of “but we’ve always done it this way.” These spokespersons failed to name a successful case study when asked.  Despite this fact, the mayor’s office mandated Group i work with Team Status Quo, who were, in addition to their devotion to said status quo, too calcified to realize they were in fact arguing against years of arts/cultural equity advocacy and the most important how-to-build affordable arts facilities policy paper in the city’s history, or at least mid-Market’s history.  The city hall appointed spokespersons began to advocate that Group i go high-end luxury (like the aforementioned St. Regis/MoAD and Millennium Partners/Mexican Museum.) Group i, again, committed to make the project as affordable as possible with zero subsidy to work with, refused.

Team Status Quo clearly felt Turk & Taylor is comparable to the site for the future super-luxury Millennium Partners Tower/Mexican Museum, which will be surrounded by the Four Seasons Hotel, the St. Regis Hotel, the Paramount, the new $800 million (give or take) SFMOMA and Yerba Buena Center for the Arts.  (All that luxury surrounding the new museum – my fellow Latinos, we have arrived!)

On height. Everyone should understand 950 could only pencil if the project went over the existing decades-old height limit. The local TL arts groups knew that. That was always the case, barring significant public subsidy which we all know is not a possibility in this town. It’s nice to read my old crew at TEDP chiming in as arts promoters. Now, are they willing to back a project when it gets challenged for going above the zoning limit? If not it’s a meaningless, rhetorical promotion. There were already threats being made against the project going above 120 feet, regardless if the additional height bought affordable arts space or affordable housing.  Are we as a city willing to go taller to get affordable arts space or affordable housing?   Signs are mixed at best.  In the Tenderloin, signs are unequivocally bad.

This is one of the great errors I’m personally guilty of. When I began work on 950 back in 2010 I just did not know this town is aggressively anti-height, anti-density, regardless if that buys affordability. After hearing some of the static – and realizing the promised help with the campaign would not come – I thought perhaps we should proceed with a shorter project: a) A.C.T.’s landmark drama school, b) a black box – primarily for Lorraine Hansberry Theater, which I had been trying to land in the neighborhood for years – and c) some rehearsal and classroom space. But then I heard talk from a senior city hall official that the “temperature” wasn’t right for passing legislation that would help a “wealthy and white” institution, regardless of its plans to build an amazing school that would benefit thousands of underprivileged kids and adults.   Okay, how about small people of color organizations?  Not so fast, the little guys don’t have the requisite operating reserves and make funders nervous.

So, no to height, no to density, please no to poor people of color and no to wealthy white people willing to invest millions in building an arts school our residents can go to in their neighborhood (there is no higher “creative placemaking” than putting it in our neighborhoods). I mean, I confess, I didn’t know all this back when we started.  For real.

Something about this whole episode reminds me of the way city hall dealt with the payroll tax break. The community got duped into going after Twitter and their brethren for Community Benefit Agreements to fix terrible conditions resultant from decades of neglect – or systems intentionally designed and maintained – when the real focus should have been placed squarely on the city.   But corporations – good ones, slacker ones, it doesn’t matter – are easy targets for supervisors and city hall to hide behind with easily digestible rhetoric offered to the masses. (My friends at Market Street for the Masses – you listening? Hey, I know we’re all dependent on city grants that perpetuate the status quo, but …)

Back in 2013, when the 950 properties were up for sale, the mayor’s director of development told a 950 arts consultant “the winning bid had better not include an arts component.”   How odd, given that the mayor had just broadly announced to the development community his office would incentivize a major arts program at the site.  Now, with the media inquiring, he’s heralding the success of the “arts district” by pointing out a few groups, though failing to mention all but one he lists have a lease time-bomb ticking.   Just a few meetings ago – with a major arts organization sitting across from him bringing millions of dollars to the table – he inexplicably and unilaterally announced he’s stopping the 950 project and that the arts group is forbidden to raise funds.  I mean, what is this?

Well I guess we should have listened, city of San Francisco.  At its core 950 was about disrupting the intense concentration of extreme poverty in the Tenderloin.  As it turns out there is no interest – on the part of the city and the major nonprofits that systematically maintain it – in disrupting the intense concentration of extreme poverty in the Tenderloin.  The mayor is satisfied with it.  Supervisor Kim celebrates it.  Changing this status quo is, clearly, the kind of non-algorithmic, disruptive innovation San Francisco is profoundly uncomfortable with.