As Mayor Edwin M. Lee Cultivates Business, Treatment of Backer is Questioned

Excerpt from an article in

The New York Times

Sunday, April 01, 2012

As Mayor Edwin M. Lee Cultivates Business, Treatment of Backer is Questioned

By MATT SMITH

Two days after the Nov. 8, 2011, San Francisco mayoral election, Mayor Edwin M. Lee and his top campaign contributor, the Silicon Valley investor Ron Conway, met for a two-hour dinner at Café des Amis in San Francisco’s tony Marina District.

The topic, as Mr. Conway described it: how to “preserve the momentum” of the independent expenditure committees for which the investor had raised $600,000 to help elect Mr. Lee. The outcome of the dinner was the San Francisco Citizens Initiative for Technology & Innovation, or sf.citi, a nonprofit technology business league with the goal of helping to lure technology companies to San Francisco.

Five months after the election, however, questions have been raised about Mr. Lee’s actions on behalf of companies in which Mr. Conway has a financial interest. The mayor’s actions follow a controversy in 2011 in which Mr. Lee, while serving as interim mayor, helped steer local tax breaks to Twitter and Zynga, two other companies backed by Mr. Conway.

Mr. Lee told The Bay Citizen that he has intervened to attempt to prevent the city’s tax collector from charging a 14 percent hotel tax on short-term apartment rentals arranged by the online booking agency Airbnb, a company that received major backing from Mr. Conway’s SV Angel investment firm. And Mr. Lee’s staff has moved to help another company backed by Mr. Conway, Square, which makes a device that allows users to collect credit card payments on their smartphones. Mr. Lee said his office has intervened to keep the city’s taxi regulators from banning the device, which the regulators contend may be viewed with suspicion by passengers.

“This is less about Ron Conway and more about sf.citi and how we can help companies that are giving back to San Francisco,” Mr. Lee said.

Tony Winnicker, an adviser to Mr. Lee who served as his campaign spokesman, said the mayor made support for local technology investments a key part of his 2011 campaign message, and that aiding local startups is a matter of following through on a promise to voters. As of late 2011, a document obtained by The Bay Citizen revealed, Mr. Conway’s SV Angel firm has or had investments in 69 San Francisco-based companies. Mr. Winnicker said it would be impossible to pursue a local tech-industry policy without somehow benefiting Mr. Conway’s investments. Other investors in his SV Angel funds include former Gov. Arnold Schwarzenegger.