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Daniel Lurie, San Francisco’s 46th mayor, took office this month vowing swift action to fix the myriad crises that have dampened the Californian city’s fortunes from its tech boom-era highs.
The model that once made San Francisco one of the most desirable cities in the US to live and work has largely broken. For two decades, the city had ridden the tailwind of the success of the tech industry, but high taxes, expensive housing and burdensome regulations for businesses have been compounded by the blows from the coronavirus pandemic and a fentanyl crisis.
Remote working and fleeing businesses have meant more than a third of offices are empty, the highest of any major US city; retailers and hotels have suffered from the drop in worker footfall and tourism; homelessness and drug overdose deaths reached record levels in recent years and have overwhelmed some neighbourhoods with petty crime and drug markets.
Lurie campaigned on a “common sense” plan to turn that all around. The rhetoric is optimistic, but some doubt whether he can succeed where many of his predecessors have failed, particularly as this is his first role in public office. The 47-year-old founded anti-poverty charity Tipping Point Community in 2005 and has run it since then. Through his stepfather Peter Haas, the great-grandnephew of Levi Strauss, Lurie is an heir to the fortune of one of the wealthiest families in San Francisco.
His mayoral campaign pitched him as an outsider to the city’s political establishment, which has faced criticism for excessive bureaucracy and corruption. Perhaps more effective was that he drastically outspent his rivals, including incumbent London Breed, putting nearly $9mn of his own money into his campaign and receiving a $1mn donation from his mother, Mimi Haas.
In his first speech as mayor, Lurie pledged to end unsheltered homelessness within six months and revitalise San Francisco’s economy and reputation. First, he wants to combat the fentanyl crisis that has contributed to more deaths from overdoses than Covid-19 in the city since 2020, arguing that it is the only way to bring back workers and businesses. He has published a package of ordinances allowing private donations to fund shelter beds and cutting red tape to improve policing resources.
Like President Donald Trump, Lurie has sought allies among wealthy tech executives. He appointed Sam Altman, co-founder and chief executive of OpenAI, and former Twitter chief financial officer Ned Segal as advisers to his transition team. He must use these connections to persuade industry leaders to bring more tech workers back into the city.
The frenzy in artificial intelligence has already gone some way towards reviving San Francisco’s tech scene, and the opportunity it presents for the city is vast. OpenAI has quickly grown to one of the largest occupiers of commercial real estate, increasing its floor space as traditional tech companies have cut back, now leasing as much office space as Salesforce, the city’s largest private employer. OpenAI’s investment in the city means San Francisco is the undeniable centre of the AI world, attracting the best global talent. Other AI start-ups have followed in its wake.
But Altman, like other start-up founders in the city, has been lobbying for tax breaks. The question for Lurie is whether the potential benefits of continuing to cosy up to AI groups outweigh the risk of lost tax revenues in the short-term. San Francisco is facing a precarious financial situation. It is suffering from a predicted budget deficit of $800mn over the next two years as expenses have soared and revenues have slumped, particularly the money the city collects on transactions from its hard-hit commercial property market.
That crisis will deepen if Trump follows through on threats to withhold federal funds from “sanctuary” cities, which limit co-operation with Washington DC’s immigration policies. San Francisco, with its reputation as a bastion of progressive ideals, is an easy target.
For now, there are glimmers of hope. Tourism is still below 2019 levels but numbers are recovering, with 23.9mn visitors predicted this year. Accidental overdose deaths are at a five-year low, and both property crime and violent crime rates dropped last year to numbers not seen since 2001. How far the recovery goes, like San Francisco’s fortunes in the last two decades, will be closely linked to how the tech industry, and AI, evolves.
tabby.kinder@ft.com
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