Tech, poverty and the Tenderloin

Can forcing wealthy companies to give back weaken the effects of gentrification?

By Alexia Underwood

Why are tech companies flocking to the Tenderloin district of San Francisco, notorious for its high crime rate and soaring levels of poverty?

In 2011, the city of San Francisco offered tax breaks to companies to entice them to set up shop in this disadvantaged area of the city. The proposal was known in some circles as the “Twitter tax break,” and was engineered by Mayor Ed Lee to keep Twitter and other tech powerhouses from moving to the heart of Silicon Valley. Under the agreement, the companies could forgo owing a payroll tax for new jobs created within a six-year period if they stayed within a certain geographic area in San Francisco. Twitter alone was forecast to save almost $60 million.

There was a catch, though. Twitter, Zendesk, Zoosk, Spotify, One Kings Lane and Microsoft’s Yammer were asked to sign broadly-defined Community Benefit Agreements (CBA), with the goal of “stabilizing the existing community” in the face of potential gentrification.

This move was seen as a way to mitigate the effects of tech companies moving into low-income areas. (One in four Tenderloin residents lives below the poverty line.) Some of the requirements included supporting local non-profits and small businesses, creating jobs and hiring locally, and encouraging employees to volunteer. (Twitter’s agreement with the city stipulates they “embrace digital inclusion to reverse the digital divide” and “create meaningful engagement with the community.”)

How have such agreements fared? It’s still early, so it’s hard to know. Zendesk, which is worth about $1.3 billion, is one example of a company that seems to have embraced the concept. They facilitate regular community litter pick-ups, donate money to local charities, and more than 90 percent of their San Francisco employees volunteer with the local community, serving meals to the homeless and tutoring local residents in basic computer skills.

But in spite of these efforts, in a city where gentrification is a huge topic of conversation, many people continue to see the influx of tech workers as the real blight on the neighborhood. (According the Guardian, more than 10,000 tech employees started working in the Tenderloin and adjacent areas in recent years.)

And regardless of the benefits provided to the community by CBAs, such agreements do little to offset the immense wage gap between upper class workers and community locals caught in the cycle of poverty. The influx of tech workers in various neighborhoods around the city also exacerbates a housing shortage that has reached crisis levels. (San Francisco topped Forbes’ 2015 list of the worst cities for renters, and a report released earlier this year says attempts to evict residents increased by more than 50% in the last five years.) The Anti-Eviction Mapping Project’s data indicates that the rate of evictions increases exponentially in areas close to tech shuttles and tech bus stops.

So are city-enforced agreements that require volunteer work and local investment from companies a solution to the myriad problems of gentrification? Do they really “mitigate” the effect? And is this something we should expect to see more of in the future?