Homeless aid on ballot has little impact on jobs, city says

If San Francisco voters pass Proposition C — a measure to raise taxes on the city’s largest businesses to fund a variety of homelessness services — in November, the economic impact would be “small in the context of the city’s job market and economy.”

That’s the conclusion of an study by the city’s Office of Economic Analysis, which also determined that Prop. C would probably succeed in reducing the city’s homeless population.

The report sought to assess the tax’s im-

pact on the city’s business climate and whether it might drive companies out of town. The findings are also expected to influence Mayor London Breed’s decision on whether to endorse Prop. C.

Also referred as the “Our City, Our Home” initiative, Prop. C would impose an average of about 0.5 percent in gross receipts tax on corporate revenue above $50 million. It would bring in $250 million to $300 million a year to pay for new shelters, mental health treatment and services to prevent people from falling into homelessness in the first place. The measure mandates that half of the money go to housing for the formerly homeless.

The report, released by San Francisco’s chief economist, Ted Egan, said that if Prop. C passes, it “will likely reduce homelessness in San Francisco, improving health outcomes and reducing the use of acute and emergency services in the city.”

But the tax hike could cause businesses to move jobs out of San Francisco, the report said. Over the next two decades, Prop. C could cost the city from 725 to 875 jobs. From 300 to 400 of the largest businesses in San Francisco would be impacted by the tax, according to the report.

“If the tax doesn’t increase, the job loss doesn’t compound,” Egan said. “After 20 years, the city would have 725 to 875 fewer jobs, not 14,500 to 17,500 fewer jobs”

Supporters and opponents of the measure alike said the findings underscore their own arguments about its potential impact.

At a brief rally on the City Hall steps Wednesday, Jennifer Friedenbach, executive director of the San Francisco Coalition on Homelessness and a leading proponent of Prop. C, said the report “basically vindicated all of our positions. The measure has a negligible effect on jobs.”

“Tell that to the 875 people who stand to lose their jobs on this — the retail clerk at Safeway or the brewer at Anchor Steam,” said Jess Montejano, a spokesman for those opposed to Prop. C and a longtime aide to former Mayor Mark Farrell. Last month, a report from the city’s Office of Economic and Workforce Development raised concerns that the measure could have a disproportionate impact on mid-level jobs.

Some businesses have taken a clear stance against the measure. This month, Gensler, a design and architecture firm, donated $10,000 to the Chamber of Commerce’s “No on Prop. C” campaign. Stripe, which makes payment processing software, donated $19,999. Jon Zieger, the company’s general counsel, wrote an opinion piece in The Chronicle urging a no vote on the measure.

While acknowledging the importance of addressing the city’s homelessness crisis, Prop. C’s opposition, led by the San Francisco Chamber of Commerce, contends the tax would place too great a burden on businesses and that the city should spend the hundreds of millions of dollars it already allocates to homelessness more prudently.

“It’s clear that just spending more money is not the sole answer to the crisis that San Franciscans deserve,” Montejano said.

The money raised by the new tax would nearly double the amount the city spent on homelessness in the 2017-18 fiscal year — around $380 million. The businesses subject to the tax make up 15 to 20 percent of the city’s job base and pay around 40 percent of its business taxes. Hearst Corp., the parent company of The Chronicle, would be subject to the tax.

According to the report, Egan estimates the tax proceeds could provide housing for around 5,000 people, generate from $60 million to $75 million for mental health outreach and treatment, and enough money for 1,000 new temporary shelter beds.

The measure has divided the Board of Supervisors. Progressive lawmakers Hillary Ronen and Sandy Lee Fewer rallied alongside Prop. C supporters Wednesday on the City Hall steps. A day earlier at the same spot, Supervisor Katy Tang, a moderate, and the Chamber of Commerce’s senior vice president for public policy, Jim Lazarus, came out against the measure.

Tang stressed the need to “evaluate” whether the city’s existing efforts around homelessness “are actually leading to changes and improvement here in San Francisco.”

“We have a big fight ahead of us,” Friedenbach said.