BAY AREA COUNCIL
On the Record: Jim Wunderman
Sunday, February 27, 2005I
Jim Wunderman's professional life has been closely woven into the fabric of Bay Area business and politics for three decades. In the 1980s, he was a special assistant to then-San Francisco Mayor Dianne Feinstein and, later, general manager of Norcal Waste Systems. In the early 1990s, he was deputy mayor and chief of staff for then-San Francisco Mayor Frank Jordan. Then, after a stint as head of his own political and public affairs consulting group, he joined Providian Financial Corp., the San Francisco credit card company.
Last year, he was named president and chief executive officer of the Bay Area Council, one of the region's most influential business organizations, which counts more than 275 of the area's largest employers as members. He succeeded Sunne Wright McPeak, who was tapped by Gov. Arnold Schwarzenegger to become California's secretary of business, transportation and housing.
Wunderman talked to The Chronicle about some of the issues businesses care about most: transportation, housing, jobs, regulation and political clout. The following has been edited for space and clarity.
Q: With former state Sen. John Burton forced out by term limits and controversy surrounding state Sen. Don Perata, D-Oakland, hasn't the Bay Area lost a lot of clout in the Legislature?
A: Of course, we had the political clout in the state for a couple of generations. What was good for San Francisco, particularly, was good for California.
By a narrow margin, we have retained the president of the Senate. As a result, we see some of the key committees in Sacramento on the Senate side have also gone to Bay Area folks, like (Tom) Torlakson (D-Antioch) and (Carole) Migden (D-San Rafael). We're still in a fairly influential position considering the fact, that from a population basis, we represent a fairly nominal piece of the state.
Q: How do we benefit?
A: The discussion on the Bay Bridge is an example. If we didn't have these leaders, we could expect things not to go well at all for us in the debate over bridge financing and other transportation financing.
There's been an accepted notion that even though we have a more expensive infrastructure to maintain because of these bridges, we should get a fair share of state money to repair and maintain it. We need to pay our fair share, but the state needs to be a partner.
Q: That leads us to Perata, who is caught up in an FBI investigation into the profitable relationship he has with his son Nick Perata's consulting firm. You supported Perata. What's your view now?
A: I think the controversies will play themselves out one way or another. What I would say is Don is a leader of the Senate because of the accomplishments that he's had and the leadership that he has shown in that house and the Assembly when he was there, and as a member of the Board of Supervisors in Alameda County.
Q: That's a good segue to talk about the governor. What's your take on his current budget proposals, and what's your strategy to deal with it?
A: We like the fact that he realizes that there is a bottom line for business. And if you're really interested in having a strong economy and building the job base in the region, you have to have a competitive environment.
He seems to have staked out a strong piece of territory that says California must recover its competitiveness. It requires swallowing a bitter pill at times in order to do it, because we're in a fiscal mess.
In general, we support what he's doing. One area that we would like him to focus on a little differently is transportation. We think there needs to be an absolute commitment to transportation funding, not only in the future, which he says he'll do, but more currently to keep some key projects going.
Q: What is the business climate in the Bay Area? What needs to happen? What is your key reform to making the climate better?
A: We're in a period of gentle rebound, and it's been long awaited. What we see is that there is general confidence in the overall quality of the business environment. But it's nothing to celebrate by any means. It hasn't been sustained long enough or thoroughly enough to be as meaningful as we would like it.
We do a business confidence survey every three months at the Bay Area Council to check this. It's been up. It came down a little bit, and it'll be back up again. We need to sustain it. We would like to see it increase more before we'll see the level of investment taking place in the small and midsize businesses which really drive this regional economy to maximize the potential of (our location). I know that's not exciting, but that's where I think we are.
Q: What about the perception that the Bay Area is antibusiness?
A: The Bay Area is California, and it's the state as well that's considered, in general, to be antibusiness. Over a several-year period, a number of bills passed and were signed that were considered to be highly irregular for a place that would be interested in encouraging business to come there. So we need to begin to turn some of those things around.
The reform in workers' compensation that took place last year is beginning to show some effect, so that's a good start. The ballot measure to reform some of the litigation taking place against businesses was passed by the voters by a wide margin. That should send a positive signal. We need to do more of that to create the new perception that California is OK.
An advantage is that we have a very popular governor in Arnold Schwarzenegger, who sees himself as a salesman for the state, so that's a positive.
Q: Your council has been generally perceived as more conciliatory toward labor and business and environmental interests and other so-called progressive causes than the California Chamber of Commerce. How would you distinguish your role in public policy issues from the state chamber's? You've had some major disagreements with some of its stances.
A: I look at it as a sense of enlightened self-interest. I think that a sustainable environment and a sustainable economy are good for business. Having an education system that's prepared to provide for the workers of the future is very smart business. It costs money, but it's smart business. Making sure that the higher-education system, which has really been the lifeblood of this great community for a century, is maintained and developed properly is in our interest.
We have what might be described as more progressive views than the state chamber, but we look at it as working with the community and being part of the greater community that's also concerned about the environment.
Q: What initiative would reduce the cost of housing in the Bay Area?
A: From the time that development is proposed to the time that it's completed should be shorter. That would do wonders to reduce the cost. We achieved, a couple of years back, a legislative change on construction-defect litigation. Once, you would build an attached product or condominium, and automatically as a developer, you get sued down the road. We changed that.
What we would like to do is make one further change, where we speed the clock up. It started as a 10-year period in which folks could sue, and that was about two years ago. If we could push that clock up a few years to end the time when this would happen, it would improve things very quickly.
We need to be able to identify specific areas of land that would be zoned for housing, so we open up the amount of land cities have to plan for. That makes it much more competitive. I think that would bring down the price.
We also need a better fiscal relationship between the state and cities. It's essentially broken now, and cities are dependent on the most volatile sources of revenue in order to keep their operations going. Cities should be depending on property taxes. It's a much more solid and dependable source of revenue.
Too much of that money goes to the state. The cities get a known share of revenue from sales tax. As a result, they support retail development, as opposed to housing. We would like to see that change, so that cities would have greater incentive to provide housing.
Q: Are we in a bubble with regard to housing prices, and will the market take care of the astronomical costs of housing?
A: It won't if the economy continues to rebound. I'm not a predictor of real estate prices, but one thing I know is that every year I read the same articles that you read -- we're at the top, and things are about to burst. It just seems to keep going up. I keep hearing anecdotally about this very thing happening. I have a friend who just bought a house in San Francisco that was priced, I think, at $990,000, and they barely got it for a million and a quarter.
We haven't built the housing. We've created a limited ability for people to live in a place, and they want to live here. If the job picture continues to be on the positive side, which we think it will, it's not going to take pressure off the housing market. It's going to put more pressure on it.
Q: We're talking a lot about housing, but what do you have to say about an economy that doesn't produce jobs? We lost 450,000 jobs, yet housing goes through the roof.
A: There's no question the people living at the median income and even above it are having a more difficult time entering the housing market, although that isn't a new story. We've been hearing this for a long time. It is absolutely one of the major challenges we have in this region. It stands to reason that if people can't afford to live here, companies are not going to add new jobs.
If we got really serious about building housing for families and individuals that want to work here, we could impact the price. We could make it more possible for people to come here, and we could give them more choices than they currently have. I think we can address this problem, but it's not going to happen overnight.
Q: I'm wondering whether the trajectory of business nowadays leaves people behind. Profits grow, and employment doesn't. Business calls it productivity. (San Francisco Federal Reserve President and CEO) Janet Yellen sat in that chair a few weeks ago and said she was worried about this growing income disparity between the top and the bottom. Do you worry about that?
A: We're very concerned about it. We don't want to end up in a two-tiered society, and there are indications that we are headed in that direction.
We need to get back to a place where people are willing to take more risks. I think there is a combination of factors: Sept. 11, the Enron and WorldCom situations, and the overreaction and overregulation that followed. These and other factors have resulted in an environment in which everyone, including the business community, is unwilling to take risks.
Because most of these companies are public companies -- they have an interest in being profitable -- the way they are going has been through cost- cutting. They've done a reasonably good job, and they've increased productivity. But they've done so without any significant increase in employment.
Ultimately, that has to change. It will change when individuals and companies become less risk-averse. We as leaders need to remind our community that it's time to start putting money back into people, and it's time to put money into the community. We need to look at our problems head on and see how we can make a difference.
At the Bay Area Council, we started to raise money from our business members in three separate funds called the Family of Funds. So far, we've raised about $170 million. There's a real estate fund, which we call a smart- growth fund. There's a business fund, which we call the community equity fund. There's an environmental remediation fund.
These funds go into lower-income communities to encourage development and provide equity and job opportunities for people in areas that have received less attention. We want to focus on property that was getting ignored because of environmental problems.
It's worked well so far. At some point, we will come back to you and report on some of the projects and programs that have happened as a result of this.
Q: The thrust that I hear from you is: Let's unshackle business. Let's not burden business with regulations and rules. Where can we see the evidence that this is going to benefit people?
A: For the kind of economy we have in the Bay Area, overregulation is particularly harmful. We have benefited from an innovation economy. If we had put all these regulations on people in the Gold Rush, no one would have come here. This is the kind of people we are. Those companies that started in people's garages never would have happened in an overregulated environment. So whether it's the government, which regulates programs in general, or universities, which fund a lot of things, or the business and venture capital communities, which decide where money goes, we have to let business have its own life.
We have to consistently innovate. It's the one thing that we know about this region that absolutely sets us apart from every other place, and it's our strategic advantage. We have an opportunity to take the lead and be the leader as there's a convergence of technologies. Through information technology, biotechnology, the life sciences and nanotechnology, a new technology emerges.
It's not going to happen if we try to overly get our arms around it. We have to let it take shape. I absolutely support what the governor and the state chamber (of commerce) are saying. Let business flourish. Let the innovators innovate.

ON THE ECONOMY
“We’re in a period of gentle rebound, and it’s been long awaited … But it’s nothing to celebrate yet, by any means.”
ON INCOME DISPARITY
“We don’t want to end up in a two-tiered society, and there are indications that we are headed in that direction.”
ON HOUSING AND JOBS
“It simply stands to reason that if people can’t afford to live here, companies are not going to add new jobs.”

Beyond the boardroom
What do you wake up worrying about in the middle of the night?
Protecting the Hetch Hetchy Reservoir, which some people want to remove.
What do you do to relax?
I read fiction on BART on the way to work. Right now I'm reading a book by Ken Follett. It's a biotech thriller ("Whiteout"). In each of these books, you learn about some part of life you didn't know about before.
Back in college, what did you think you might be doing once you graduated?
Business. I defied my mom, who said I'd never get a job in politics. Most of my work has been around politics or public affairs, half in the private sector, half in the public sector. I've never been too far away from public life, which I really enjoy.
What's your dream vacation?
Friends of mine recently went to Tanzania to the Serengeti Plains. I think that would be just about it.

Briefcase
Name: Jim Wunderman
Age: 47
Job: President and CEO, Bay Area Council
Education: Graduated with honors from San Francisco State University, where he majored in political science. Earned an associate degree (summa cum laude) from Kingsborough Community College of the City University of New York, where he majored in business administration.
Affiliations: Former chairman of the San Francisco Chamber of Commerce and co-chair of the Public Affairs Roundtable of the Bay Area Council. He serves on the board of directors of several nonprofit organizations.
Family: Married, three children with one on the way.
Participating in the discussion were Chronicle Business Editor Ken Howe; Deputy Business Editor Al Saracevic; Assistant Business Editors David Tong and Sam Zuckerman; reporters Tom Abate, Birgitta Forsberg, Dan Fost and Kelly Zito; and editorial assistant Steve Corder.