Report citing possible cuts to mayor's downtown recovery plan draws heat

Mayor London Breed’s office and a coalition of San Francisco business groups reacted hotly this week to a budget analyst’s report that highlighted $15 million in downtown-recovery spending that could be trimmed from Breed’s proposed budget.

The report from the Budget and Legislative Analyst recommends cutting $750,000 from Breed’s “Downtown Core Recovery Project,” including some permit office staff funding and $500,000 of roughly $2 million that could help activate vacancy-pocked Powell Street.

But the analyst’s office, a joint venture employed by the Board of Supervisors, identified the question of whether to fund the mayor’s entire $15 million downtown initiative as a “policy matter” for the Board of Supervisors, which is in the midst of budget hearings as The City faces a projected $800 million budget deficit over the next two years.

Supervisor Connie Chan, chair of the supervisors’ budget committee, on Tuesday questioned the relative need for multiple elements of the mayor’s proposals in the Office of Economic and Workforce Development budget — including 24-hour security patrols in the Union Square and Yerba Buena areas, temporary free parking to lure shoppers and funding related to marketing — given the cuts facing other city programs, including those focused on food and health.

“I think that there are many things that we would like to have, and it’s good to have. Unfortunately, at this moment, if we continue at this rate of spending, we will be facing a fiscal cliff,” she said.

The mayor’s proposal , which Breed touted at a Powell Street press conference two weeks ago, includes $4.5 million for around-the-clock patrols in Union Square and Yerba Buena, and funding to support marketing campaigns, the budget analyst report stated. The two districts house half of The City’s hotel rooms, 3.5 million square feet of retail space, and numerous museums, theaters and performance venues.

The analyst’s report also identifies $3 million proposed for free parking on nights and weekends to attract shoppers and visitors, $1 million for programming in Union Square, and money for projects on Powell Street , which is lined with numerous empty retail spaces from Market Street to Union Square .

The mayor’s proposal, the report states, includes $3 million citywide for storefront improvements, storefront opportunity grants and the Vacant to Vibrant program, which has put pop-up businesses in vacant retail spaces downtown. In addition, the report lists nearly $1.5 million for a leasing specialist in the Office of Small Business and permit-center staffing.

Chan predicted that her committee would vote on the mayor’s downtown funding package at a Thursday meeting. She warned that big cuts to city spending are needed to prevent The City going off a “fiscal cliff” come January, and she announced a plan to put 10% of the salaries for elected leaders and top city staff into reserves.

Jeff Cretan, the mayor’s spokesperson, called the idea of slashing the downtown core recovery funding “hugely problematic,” and urged supervisors to reject it. He said investing in downtown brings benefits to the whole city because the area contributes so much economically.

“This will hurt jobs, small business and the growth that provides revenues for programs across The City,” Cretan said.

“A vibrant downtown generates the revenue that we need to provide the services in our neighborhoods,” said Cretan, citing city functions ranging from street cleaning to policing. “All of those things are funded by a strong economy, which includes a strong downtown.”

The budget analyst issued its wide-ranging, nearly 250-page report late Monday night. By Tuesday morning, a coalition of local business groups representing the travel, restaurant, retail, and commercial real-estate industries, among others, had crafted a statement urging supervisors to maintain the mayor’s funding proposal targeting downtown.

“Downtown’s future is San Francisco’s future,” said Rodney Fong, president and CEO of the San Francisco Chamber of Commerce. “As we recover from the pandemic and revitalize our city, we must make investments in downtown where 70% of our city’s jobs are and where we generate over $1 billion in business, sales, and hotel tax revenue. This funding is a down payment on San Francisco’s future economic health.”

The coalition also included the San Francisco Travel Association, Golden Gate Restaurant Association, Hotel Council of San Francisco, Yerba Buena Community Benefit District, Union Square Alliance, the commercial real-estate group BOMA San Francisco, the business group Advance SF and SF New Deal, which administers the Vacant to Vibrant program.

The groups’ collective statement cited challenges to downtown, which has been plagued by record-high office and retail vacancies in the wake of the COVID-19 pandemic, as reflected in depressed hotel and sales-tax revenue and other economic indicators.