Tech Industry, Activists Talk Past Each Other At The Crunchies

Inside San Francisco’s Davies Symphony Hall was a packed hall with hundreds of tech’s well-to-do in ties, slacks and cocktail dresses for the so-bad-it’s-good awards show, The Crunchies.

Outside, there were about 50 protesters, beating drums and awarding toilet plungers as trophies to activists posing as Ron “The Con” Conway and Marissa Mayer for “The Crappies,” their own unofficial version of the event.

While both sides called for solutions, it seemed like the activists and the tech community were largely talking past each other, not with each other.

Here’s what each had to say:

The Tech Side

Ron Conway, the hyper-connected angel investor and “Godfather of Silicon Valley” who has delved into politics recently by founding advocacy non-profit, pull out a call to action.

“I want to make sure every person in our region has an opportunity to be part of the new economy. We may not agree with everything the protesters outside have to say, but they do represent anxiety over a widening income gap. My message tonight is that we — that means all of us — must be leaders in tackling the challenges of housing, transportation and education.”

He went on, “We are in this together. Our entire city is in this together.”

Conway had a couple big goals for the tech community this year.

First, he wants tech companies to donate 1 million hours of community service to the region. (Salesforce is already projecting 125,000 hours of service this year.)

He also wanted 1,000 companies to join Marc Benioff’s 1-1-1 effort, where they donate 1 percent of their equity to form a foundation by the time they IPO, 1 percent of their employee hours to community service and 1 percent of their product (if applicable).

He also mentioned two new efforts where tech companies will able to “adopt” a school, and respond to requests for help from the principal or teachers. “We’ll let the educators tell us what to do,” he said. There are already non-profits around like DonorsChoose, which lets donors respond to specific requests from teachers for help with funding trips or materials, and MissionBit, where developers can teach free after-school programming classes to San Francisco high school and middle school students.

Another effort from Sf.Citi is a matching program where tech companies can donate their extra office space to local San Francisco non-profits.

“Many non-profits are being pushed out of their offices because of costs,” Conway said.

In a report last year from the city’s budget and legislative analyst, there are about 6,000 non-profits in the city of San Francisco. In the last two years alone, commercial rental rates have risen by 32.8 percent per square foot, according to the report. About one-third of the non-profits the city surveyed last fall said their leases would be up at the end of 2013, meaning that rising commercial rents would likely eat into their budgets or they would have to move.

The Activists’ Side

Meanwhile, the protesters outside focused on two issues: 1) displacement of longtime San Francisco residents because of rising rents and Ellis Act evictions and 2) a call for tech companies to pay more in taxes to the city.

Tony Robles, who came from San Francisco’s Senior & Disability Action and whose family has lived in the city for five generations, wanted help from the tech community to overturn the Ellis Act at the state level.

“My family has lived through many waves of displacement. We’re from communities that are under attack,” he said. “If you’re an elder living on a fixed income, and you’re evicted, you’ll have nowhere to go.”

The Ellis Act was originally designed for landlords to go out of business, but housing activists say it is being abused in San Francisco by real estate interests who evict longtime rent-controlled tenants in favor of bringing in new, more affluent tenants at higher market rates or turning these units into tenancies-in-common or condominiums.

Ellis Act evictions rose 170 percent to 116 in 2013, from 43 in 2010, according to an October report to San Francisco’s Board of Supervisors. Activists say that case numbers might be four or five times higher because tenants with little ability to protect themselves like illegal immigrants get pressured into taking under-the-table Ellis buyouts.

Overturning or amending the law is a politically challenging task, however, because it only drastically affects two rent-controlled markets in the state: San Francisco and Santa Monica. That may not create enough political will to overcome the powerful real estate lobby in Sacramento. Nevertheless, state senator Mark Leno is introducing a bill this year to amend the law by allowing cities more flexibility to regulate Ellis Act evictions.

Robles’ wife Lisa Gray-Garcia, an editor at Poor Magazine, also had a long list of suggestions for people in the tech community, including: taking public transportation instead of the private shuttle buses, urging employers like Google, Apple and Facebook to stop offering the buses and spending a percentage of their wealth to buy back housing for the elderly and low-income residents who have been evicted.

The second issue frustrating activists was the Twitter tax roll break, which protesters claimed cost the city as much as $600 million in foregone revenues, according to a flyer they passed out.

In 2011, the city’s Board of Supervisors voted to offer companies with at least $1 million in payroll taxes a partial exemption from the city’s tax if they moved to the Mid-Market area. Twitter and other tech companies like Spotify, One King’s Lane and Zendesk took the deal. At the time, Twitter was threatening to leave the city, in part because payroll tax was the only one of its kind for a city in the state of California (especially the part where the city taxed employee stock options).

The city subsequently reformed the tax to focus on a business’ gross receipts, instead of their payroll size. That new tax structure will be eased in over the next few years.

Opponents of the tax exemption say the city has potentially foregone tens of millions of dollars in revenue from those employee stock options.

But proponents of the exemption say Twitter and other growth-stage tech companies could have moved slightly south, meaning San Francisco would have missed out on these business taxes entirely. (Many of their employees probably would have continued living in San Francisco too, which means there would still be pressure on the city’s housing market.)

San Francisco’s chief economist Ted Egan told the San Francisco Chronicle that the initial deal preserved at least $10 million in base revenue from the company for the city over six years. With unemployment also dropping by half from 2010, San Francisco was able to close a $124 million budget deficit last year, thanks in part to $55 million more from business payrolls and property taxes.

But activists still took issue with taxes, saying that the tech industry has to do more to preserve the city’s socioeconomic diversity and combat a widening income gap.

“There’s a new industry in town and it’s got a lot of money. We have to work for new possibilities in closing the wealth gap,” said Kathy Lipscomb, a Noe Valley resident who has lived in San Francisco for 22 years. “There were 1,600 millionaires created by Twitter. We need money for low-income housing and teachers.”

Lipscomb added that she didn’t necessarily blame individual tech workers.

“Many people in the tech community are very sincere,” she said, adding that she has a nephew-in-law who works for Salesforce. “It’s very nice to give computers. It’s very nice to give time. But what we need is for CEOs to pay their taxes.”