“Marketplace Morning Report” has been following cities’ efforts to recover from the effects of the pandemic, and we’ve kept a close eye on San Francisco. A month ago, we spoke with San Francisco Mayor London Breed about the troubles the city has run into after its success managing the pandemic’s threat to public health.

For example, the office vacancy rate grew to 32% in the second quarter of the year. Reporting about crime and big retailers like Nordstrom leaving the downtown area may be discouraging tourists from visiting.

To solve these challenges, the World Economic Forum, San Francisco-based tech firm Salesforce and consulting group Deloitte are teaming up. They’ve launched an initiative called the Yes San Francisco, Urban Sustainability Challenge. Kirsten Rhodes, San Francisco managing principal at Deloitte, spoke with “Marketplace Morning Report” host David Brancaccio about the project. An edited transcript of their conversation follows.

David Brancaccio: Cities across the country are struggling to get back on their feet from pandemic and people still liking the arrangement of working from home, leaving some downtowns looking more for a purpose. What’s this about, this project? Like, what — the people who brought us the digital revolution and the biosciences revolution and the (artificial intelligence] revolution ought to be able to come up with something to help cities like San Francisco?

Kirsten Rhodes: Well, I certainly think that is a part of it. San Francisco has changed the world through big ideas. But, as you suggest, we have certainly experienced an economic downturn and a stagnant recovery since COVID. And it’s made the location, the city itself, a less attractive place to live and work. Occupancy remains at roughly a third of pre-pandemic levels, lower than about 50 other major cities across the country. And the downtown occupancy challenge on San Francisco’s economy is significant. With office-based industries accounting for nearly three-quarters of the city’s gross domestic product, the government now forecasts $780 million in a deficit in the upcoming two fiscal years. And so we actually think it’s going to take extensive resources from all parts of the private and public sectors to address the challenges facing our beloved city. And we believe that our expertise and resources are really well served by helping to lean in and support local entrepreneurs, driving this initiative through social impact efforts. And so that’s why we created, in collaboration with the World Economic Forum and Salesforce, as you suggested, our challenge really to help bring back San Francisco vibrancy.

Brancaccio: OK, and if people come up with ideas, there’s an important stipulation: The challenge is mindful of United Nations development goals. I mean, particularly the one to make cities more inclusive, safe, resilient, but do it sustainably. That’s the key word.

Rhodes: That’s exactly right. This is a unique call to action for entrepreneurs to submit sustainable solutions that contribute to the significant needs of San Francisco and think about opportunities and improvements to both urban spaces and green spaces. This is so needed, if you will, in order to reimagine and transform the city. So we’re hoping that, again, development of outdoor spaces, boosting urban food production, enhancing water conservation and creating jobs is best for everyone.

Brancaccio: Now I spoke with San Francisco Mayor London Breed on this program earlier this summer, and we were talking about many of these challenges: what to do about empty downtown office space, what to do about crime, homelessness. And about some retailers leaving that city. On this last point, it was the mayor’s view that there’s still plenty of retail thriving there. This is what she said:

London Breed: A lot of our luxury brands in San Francisco have had record sales. People are still coming here to Union Square to shop. We made a lot of changes to the area. We make sure that we have sufficient law enforcement, we are making sure that the streets and the areas around parking garages and other places are clean. So we’ve really put in a lot of effort. And I think that the hotels and a lot of the retailers are really noticing it.

Brancaccio: If there’s this good base the city can build on, what are you inviting contestants to try to do? How can they build on that idea?

Rhodes: Look, I think some of the solutions could include new approaches to urban food production, as I mentioned, water resources, waste management. There is plenty to think about and to innovate on. If I think about the needs of San Francisco beyond, certainly, a flourishing luxury brand, I would say that cities are home also to the majority of our world’s populations. And they account for 80% of the overall GDP. Despite occupying only 3% of the world’s land, cities consume two-thirds of global energy demand and 70% of CO₂ emissions. So that’s why we think it is so incredibly important to, again, create a challenge that has sustainability at the forefront of how we’re trying to innovate and bring people back into the city, both from a work perspective, but also from a play and live perspective.

Brancaccio: Getting early interest from people who think they have good ideas?

Rhodes: We certainly are. We are incredibly pleased with the amount of submissions to date. This is the first local-based challenge that the World Economic Forum has produced. And we are very, very thrilled. We have additional collaborators, local collaborators, that we’ve brought to the table as well. We couldn’t be more excited to announce the winners in September at Dreamforce [an annual conference organized by Salesforce].

Brancaccio: Another thing that the San Francisco mayor talked about as she talked about the city’s ambitions, is to become the artificial intelligence capital of the world. And I saw a Brookings report that found that 60% of new AI job postings were in 15 metropolitan areas, and San Francisco was at the top of the list. And here’s what Mayor Breed had to say about why companies choose her city:

Breed: One of the things that they talk about as to why they’re choosing San Francisco — of course, many of the investments and the angel investors and the folks who are located in this area, but also they say this is the densest population of engineering talent anywhere in the world.

Brancaccio: So, Kirsten Rhodes, you must be hearing the two letters “AI” in some of the ideas.

Rhodes: It’s consuming every conversation that I have, David, with clients, with partners, and it’s pretty exciting as to what this technology is going to be able to enable. I couldn’t agree more with Mayor Breed as to the impact that I believe this technology is not only going to have on organizations, on the city at large, but even the broader set of ecosystem opportunities. And I would agree with her: We do see early-stage investors building capabilities here. And certainly you’ve got some of the dominant players right here in our backyard, broader in the Bay Area, that are putting incredible resources and dollars to invest in AI.

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