Billionaire-Backed Nonprofit to Fund San Francisco’s Downtown Recovery Projects

Mayor Daniel Lurie is banking on San Francisco’s wealthy elite to finance downtown revitalization.

On Tuesday, several of Lurie’s supporters with backgrounds in finance, tech and philanthropy announced the Downtown Development Corporation (DDC), a new nonprofit that will raise money for projects aimed at improving street conditions and business opportunities downtown.

The move is the latest step in Lurie’s play to prop up major public-private partnerships to boost San Francisco’s economic comeback as the city faces a nearly $1 billion budget deficit. It’s also raised eyebrows among some government ethics watchdogs who say that a small but powerful business class is gaining influence in City Hall.

“San Francisco’s comeback depends on the recovery of our downtown, and we are bringing every tool to the table to secure that future,” Lurie said in a statement. “The Downtown Development Corporation … will help bring to life our plans for downtown by driving investment, supporting small business, and partnering in our work to keep downtown safe, clean, and vibrant.”

The DDC is led by David Stiepleman, co-president of the investment firm Sixth Street, as well as Sam Cobbs, CEO of Tipping Point Community, the anti-poverty nonprofit that Lurie founded before becoming mayor.

Other heavy hitters on the DDC board include cryptocurrency company founder Chris Larsen and former eBay CEO and one-time California gubernatorial candidate Meg Whitman. SFMOMA board chair Bob Fisher, San Francisco Housing Accelerator Fund CEO Rebecca Foster and SEIU Local 87 president Olga Miranda are also on the board.

“We’re assembling the right team to raise funds and help execute on the mayor’s vision for downtown,” Stiepleman said. “We feel great urgency to convert the amazing resources of our community and to get to work revitalizing our city center.”

Lurie’s latest fundraising drive has set off alarm bells for some skeptics of private interest in politics, including Sean McMorris, program manager for transparency, ethics and accountability at California Common Cause, a nonpartisan nonprofit focused on government transparency.

“It’s not that it’s not a worthy cause,” McMorris said about the DDC’s goals to improve downtown. “But it raises the issue of purchasing influence. I’m sure the people who are being solicited are pretty well-heeled and have their own interests with the city.”

Even simple beautification projects can be a concern, he said: “That has to do with housing and real estate.”

San Francisco voters in 2022 passed a law making it harder for public officials to solicit private donations after a massive corruption scandal sent former city leaders, including Public Works Director Mohammed Nuru, to prison.

For the DDC, Lurie will seek a waiver for behested payments — essentially donations requested by public officials for city projects or funds. But this effort is separate from the expanded authority that Lurie gained shortly after taking office through his fentanyl emergency ordinance, which allows him to accept private dollars for programs and services related to homelessness and overdose response.

The DDC will primarily be focused on downtown recovery through “physical upgrades like trees and outdoor dining to economic tools like credit and small business support,” according to a press release.

The group could potentially fundraise to get housing projects off the ground faster as well, according to Stiepleman.

“Shelter and housing are covered by an actual department of the city. And that’s where it ought to be. But to the extent we can be helpful in supplementing plans that bear on making downtown more economically viable, we will be open to that,” he said. “We’re not going to be prescriptive.”

Stiepleman did not share what the group’s initial fundraising goals are or which of the city’s mega donors are tapping in.

Another question McMorris raised: What happens to these private fundraising streams once a new mayoral administration steps in?

“When you’re constantly relying on the private sector to implement or buy into your policies, you become reliant upon them, then the efficacy of government becomes less,” he said.

Stiepleman said the vision is to use private capital to move more quickly on essential projects downtown in the short term, but he hopes the efforts can eventually transfer over to public financing pipelines.

“If we’ve done our job correctly, this becomes a sustained generational kind of effort. Eventually, that has to be generated from public funds,” he said. “But in the meantime, we’re going to get it going with a substantial private capital base.”