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Proposition C: Is it the right move for homelessness now?

Marc Benioff and London Breed weigh in on financial tech companies and the city’s most contentious measure this election season

Proposition C, the measure that would raise around $300 million per year to fight homelessness in the city, triggered a spat between billionaire CEOs, unified the city’s vocal progressive wing, and even won support from more moderate organizations like YIMBY Action and urban think tank SPUR. But several politicians with reliable track records of supporting homelessness programs have joined the Chamber of Commerce and several tech companies to oppose the initiative.

Those opposing Proposition C know that they have taken an unpopular position, and in recent weeks, harsh political winds have blustered in their faces.

Earlier this month, Marc Benioff, CEO of Salesforce, the city’s largest private employer, publicly voiced his support of the measure and called out Twitter CEO Jack Dorsey for his opposition, adding that many of the city’s billionaires don’t do enough to help the city’s charities in a New York Times opinion piece published yesterday.

This public shaming falls over a city where voters are fed up with decades of City Hall policies that have failed to get ahead of the humanitarian crisis on the city’s streets.

”We do need housing now,” said Margaret, 77, on Larkin Street near City Hall. She has been homeless for three years. “Later is going to be too late for these people.”

“Everyone knows that companies like Salesforce and Twitter, Square, Stripe—these are the most successful companies in the world,” said Benioff in a conversation about Proposition C, which would tax companies’ earnings when they surpass $50 million per year.

With Salesforce’s revenue hitting $10.48 billion in fiscal 2018, he expects his company to pay about $10 million per year in additional taxes if Proposition C passes.

“These are just a few million dollars that we have the ability to easily give back,” he said.

The homeless advocates behind Proposition C agree that big businesses can afford the new taxes, especially after the Trump tax cuts, but some disagree, and several tech companies have poured millions into both sides of the fight.

Last week, Jack Dorsey, who is CEO of both Twitter and Square, offered a clue about why financial tech companies like Square and Stripe oppose the measure.

Sound Ventures Presents Their Tech Competition, PerfectPitch, at SXSW
Marc Benioff speaking onstage at SXSW in 2018.
Photo by Joe Scarnici/Getty Images for Sound

“Hypothetically Square could pay over $20 [million] more in 2019, while Salesforce (4x bigger than Sq) pays less than $10 [million],” Dorsey wrote in a tweet before deleting it. “Not an issue for Salesforce/Twitter, but unfair to Sq and fintech startups.”

Dorsey’s objection stems partially from the fact that companies like Square and Stripe would pay a higher tax rate than Salesforce. Another factor is how the city would calculate fintech’s revenue, says a financial tech executive who spoke anonymously to protect his job. When calculating their total revenue, these companies prefer to exclude their most significant expense: fees paid to credit card networks like Visa and American Express.

If a grocery store applied the same accounting method, for example, its revenue would include the markup on an apple—but not what the store paid for the apple itself. Proposition C would tax both supermarkets and tech companies on their total revenue, including substantial expenses.

“I don’t know if you’ve looked at their stock chart over the last five years,” said Benioff, noting that Square achieved a market value of value of $30 billion. “I would say that they seem to be doing just fine.”

Over in the Tenderloin, the Sunday morning service at Glide Memorial Church, which provides social services to the homeless and welcomes them into its congregation, offered a contrast to Dorsey’s comments. Toward the back of the church sat several people with their belongings stuffed into sacks, grocery baskets, and dirty jackets. When the pastor called for tithings, most congregants reached into their pockets.

The Glide Ensemble choir.

Today, San Francisco’s homeless population counts 7,500 people, and the Yes On C campaign says it has a plan for most of them. The proposition would fund 4,000 new permanent housing units within eight years and add 1,075 new shelter beds. It would expand mental health and substance abuse care. And to prevent people from becoming homeless, it would enlarge an existing program that helps people pay their rent.

“We’re not claiming to end homelessness with this,” said Friedenbach. “We were really careful to put together a plan that was doable.”

Opponents of the initiative emphasize this harsh fact.

“What we can tell from past experience is that five years from now you’re still going to have 7,000 people out on the street,” said Jim Lazarus of the Chamber of Commerce, who also runs the No On C campaign.

Although homelessness today looks much like it did in the 1980s, San Francisco’s efforts have slowed the growth of the homeless population. Most of the city’s $271 million homelessness budget goes toward providing 7,500 housing units to people who would likely be on the streets without it, a point data from the city’s chief economist backs up: Between 2014 and 2017, the homeless population in West Coast cities grew by 38 percent, but in San Francisco the number was seven percent.

But if Proposition C succeeds in adding thousands of permanent housing units in San Francisco, the overwhelming need for shelter across the Bay Area could prevent the new housing from making a noticeable impact on the streets.

Though most homeless people in San Francisco are longtime Bay Area residents, research SPUR compiled indicates that homeless people often migrate within regions, from smaller cities and suburbs to larger cities.

Across the Bay Area, there are 28,240 homeless people, according to the 2017 count from the Department of Housing and Urban Development. With the average affordable housing unit in California costing approximately $425,000 to build, multiplying these numbers provides a very rough estimate of what it would cost to create housing for all of the region’s homeless population: $12 billion.

“We need to address homelessness in a regional way,” said San Francisco Mayor London Breed. “We need to work with other cities and counties and the state.”

Newly Sworn In San Francisco Mayor London Breed Attends Meeting On Emergency Preparedness
San Francisco Mayor London Breed.
Photo by Justin Sullivan/Getty Images

Shortly after being sworn into office, Breed declared homelessness her top priority. She asked voters to reject Proposition C to allow time for her administration to assess the city’s existing homelessness programs and develop a new plan.

In fact, the city already dramatically increased spending and restructured how it provides homeless services so recently that the results may not be visible yet on the street.

The $271 million San Francisco will spend on homelessness this year is an increase from $167 million in 2014 (and just 3 percent of the city’s total budget). In 2016, the city also created the Department of Homelessness and Supportive Housing. The new department streamlined how different city agencies respond to problems on the streets while working to create new permanent housing and navigation centers, and more shelter beds.

Many agree that these changes have shown “slow but steady” progress and most were made possible with the support of Breed, state Sen. Scott Wiener, and Assemblymember David Chiu—all of whom oppose Proposition C—when they served on the Board of Supervisors. But unlike these earlier reforms, which passed with broad political support, Proposition C is a measure led by activists.

“I was not engaged on the issue or in the process that took this measure to the ballot,” said Breed. “Tax measures normally go through a robust public process, not just a few meetings.”

Jennifer Friedenbach of the Yes On C campaign says they sought input from city agencies and the Chamber of Commerce. But elected officials have criticized a process that failed to involve them and a broader range of stakeholders. If Proposition C passes, the mayor will become suddenly responsible for an enormous amount of money with little flexibility in how it is spent.

“Other people have the luxury of making decisions to support Prop. C, or any issue, without having the ultimate responsibility for success or failure,” said Breed. “I don’t have that luxury.”

The initiative would be the most substantial tax increase in San Francisco’s history, says Wiener. That could make it harder for the city to raise money in the future for problems like preparing for climate change or responding to a potential earthquake.

Karen Blake, 58, panhandles outside of the Twitter building in the Mid-Market District. She has been homeless 12 years.

“We have a limited ability to raise taxes in San Francisco; it’s not infinite,” said Wiener. “If you’re now taking $300 million off the table for one purpose only, how is that, over time, going to affect other critical needs?”

But if officials want to use the typical consensus approach to fund a new homeless plan, the result may be more modest than the $300 million Proposition C would provide. Wiener faced this reality this spring when he asked for $1.25 billion per year to support new state homelessness and housing programs. When the legislation passed, just half of the money came through—$600 million.

The normal process of politics also takes time. For homeless people, however, the situation is urgent.

“There are too many people on the street and every day there’s more,” said Margaret, 77, who declined to use her last name. She was the first to rise on Sunday morning among a group of people whose sleeping bags rested against a wall along on Larkin Street, just around the corner from City Hall. “They need help now.”

Margaret became homeless three years ago after her boyfriend of 45 years, a San Francisco firefighter, died and she was forced out of his home in Bernal Heights. On her first night of homelessness, someone assaulted her.

“Things haven’t got any better,” she said. “Because I still don’t know what to do.”

She feels safer on the streets than in shelters, especially after a friend of hers, also in her 70s, was raped twice while staying in a shelter. But she would prefer a place of her own.

When asked if voters should act now or wait for solutions from politicians, her response was straightforward.

“Later is going to be too late for these people,” she said. “People are dying every day.”