Dot-com growth measure narrowly loses in San Francisco

SAN FRANCISCO (Reuters) - Final results in a battle over dot-com development in San Francisco showed voters narrowly rejecting a ballot measure to slap tough new limits on office construction, officials said Wednesday.

Results posted by the San Francisco Department of Elections showed Proposition L, which had been backed by activist groups but strongly opposed by major business interests, failing by a margin of 49.8 percent to 50.4 percent, or 1,315 votes.

Early results had shown the measure ahead immediately following election day, but its lead shrank steadily over the week as officials completed the vote count.

Last week San Francisco voters also turned down a less stringent growth control alternative favored by Mayor Willie Brown -- leaving the city without an agreed policy for dealing with the boom in high-rent, dot-com development which many critics say is exiling artists, musicians and nonprofit groups.

Gavin Newsom, a member of the city's governing Board of Supervisors, said work would begin immediately on trying to find a solution "that provides the best of both" proposals for controlling growth.

"I think that's achievable if we get out of this political morass that we're currently in," Newsom told reporters.

Prop. L., which was placed on the Nov. 7 ballot by artists and community groups, sought to suspend office construction in some neighborhoods and ban it in others, while closing a loophole by defining all dot-com "live-work" lofts as office space.

Critics including Mayor Brown had charged that the measure was unnecessarily harsh and would choke off San Francisco's economic renaissance, and developers and business interests spent some $2.3 million to defeat it at the polls.

Brown's measure, which lost by a far larger margin, would have doubled the amount of new office space approved next year and did not provide the same kind of building moratoriums in some of the more residential neighborhoods that the competing proposal did.

Both sides agree the situation in San Francisco is becoming dire. Commercial rents in the city have more than tripled in the past five years as the high-tech revolution has attracted many firms, and average office rents are now $78 a square foot, compared with $67 per square foot for a similar space in Manhattan.

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