San Francisco is entering uncharted territory as Mayor Daniel Lurie proposes a radical shift in downtown economic development. With city budgets tightening, Lurie is turning to private philanthropy and wealthy donors to rescue the struggling downtown core, traditionally a responsibility of municipal government.

The San Francisco Downtown Development Corporation (DDC), a newly created nonprofit, will spearhead these efforts. Backed by billionaires like Chris Larsen, Bob Fisher, and Meg Whitman, the organization aims to revitalize areas hit hard by post-pandemic economic challenges.

The stakes are high: downtown generates 40% of the city’s tax revenue and hosts 40% of its jobs. Budget cuts have significantly impacted the Office of Economic and Workforce Development, with nearly $57 million slashed from its budget. This reduction threatens critical programs supporting small businesses, street improvements, and downtown attractions.

Lurie views private funding as “start-up capital” – temporary investments meant to kickstart initiatives that could eventually transition to public funding. The initial focus will be the Hospitality Zone, encompassing Moscone Center, Yerba Buena Gardens, and Union Square, areas crucial for tourism and economic activity.

Critics worry about entrusting economic recovery to private entities with limited municipal experience. Steve Gibson from the Mid-Market Business Association notes the uncertainty, acknowledging that city support will be significantly reduced.

The approach mirrors Lurie’s previous work with Tipping Point Community, where private donations funded innovative projects. However, questions remain about the long-term sustainability of relying on philanthropic interventions for core municipal services.

As San Francisco navigates this experimental economic strategy, the success of the DDC could set a precedent for how cities address post-pandemic urban challenges. The coming years will reveal whether private sector involvement can effectively resurrect a downtown struggling to regain its pre-pandemic vitality.