Thomas Baltimore Jr., the chairman and CEO of Park Hotels and Resorts, announced earlier this month that his company would stop paying a $725 million loan on two of San Francisco’s largest hotels, Hilton San Francisco Union Square and Parc 55.
Baltimore cited low demand and “concerns over street conditions” as reasons to stop payments on the hotels, which will be returned to the lender.
The decision is another blow to downtown San Francisco and California, which has experienced a massive outflow of people and businesses. In fact, the list of companies that have left the Golden State is far too long to enumerate in a single article and includes established Fortune 500s such as Hewlett-Packard, Chevron, and Pabst Brewing, as well as rapidly growing ones such as Snowflake, Palantir, and Tesla.
There’s no single reason companies are abandoning California in droves. Aggressive lockdown policies likely didn’t help, and California’s tax and regulatory climate also played a role. And then there is the problem of crime, which Park Hotels discreetly sidestepped .
Few would deny crime is a growing concern in the Golden State, especially in major cities. In 2021, New York Times journalist Thomas Fuller went to a San Francisco Walgreens to buy a toothbrush and saw a man walk into the store, grab a bunch of beef jerky, and walk out.
“I’m new to San Francisco,” Fuller said to the clerk. “Is it optional to pay for things here?”
Fuller was referring to what he called an “ epidemic of shoplifting ,” which he traced to changes in California law that reclassified thefts as misdemeanors if the stolen goods totaled less than $950. Videos on social media show people walking into stores, loading up on goods, and walking out.
The culture has caused companies such as Walgreens, which shuttered 22 stores in San Francisco alone over a period of five years, to cease doing business in many of these locations. Many accused Walgreens of “crying wolf” on the matter of retail theft, and California lawmakers recently made it clear they don’t take the matter seriously.
Earlier this month, the California Senate passed Bill 553 , legislation that would discourage retail store employees from confronting shoplifters. The legislation — passed weeks after a Home Depot security guard was shot and killed during a Pleasanton, California, robbery — is designed to protect employees, supporters say, by forbidding employers from instructing employees to confront shoplifters.
“What we're saying in the bill is it's not OK for employers to take a rank-and-file worker, somebody whose job is really something else ... and say, 'Hey, you know, if there's an intruder, we're going to deputize you to intervene,'” California state Sen. Dave Cortese told a local news station.
Even accepting Cortese’s argument that the legislation doesn’t prevent employees from intervening in cases of theft and only makes it unlawful for employers to ask employees to stop thieves from stealing, the legislation would be disastrous.
A law that would prohibit employers from telling their employees that customers are not allowed to take whatever they want without paying would clearly incentivize shoplifting. It would further promote the culture Fuller described, one in which it is viewed as “optional” to pay for things.
This is the culture that is driving companies out of California. It’s not just crime or high taxes or pandemic mandates. It’s a culture that shows disdain for property rights, which are the wellspring of all human rights and a pillar of civilization.
“The moment the idea is admitted into society that property is not as sacred as the laws of God and that there is not a force of law and public justice to protect it, anarchy and tyranny commence,” John Adams famously wrote in 1787. “If ‘Thou shalt not covet,’ and ‘Thou shalt not steal,’ were not commandments of Heaven, they must be made inviolable precepts in every society, before it can be civilized or made free.”
California lawmakers have shown utter contempt for property rights for years. Making it illegal for employers to instruct employees to stop customers from stealing is just the latest example.
Until California changes this culture and demonstrates it respects the property rights of people and businesses, it will continue to decline — and lose beautiful hotels such as Hilton San Francisco Union Square and Parc 55.