Legal challenge likely to Prop. C tax for homeless
San Francisco voters passed Proposition C by a wide margin Tuesday night, turning on a fountain of tax money to pay for expanded homelessness programs starting next year. But those programs are going to have to wait a while — possibly years.
On Wednesday, Controller Ben Rosenfield sent a letter to Mayor London Breed and the Board of Supervisors indicating that the city won’t spend the hundreds of millions of dollars Prop. C would bring in annually until a prickly legal dispute is resolved. The tax money will be collected, but it will sit in reserve.
After a contentious campaign that drew national attention, the measure’s success is now largely out of its supporters’ hands. Unlocking up to $300 million a year to combat the city’s enduring homelessness crisis now rests with City Attorney Dennis
Herrera.
The legal uncertainties prompting Rosenfield’s decision stem from a lawsuit over a June ballot measure that sought to bring in about $146 million a year for child care services and early education by raising taxes on commercial rents. It was also designated Proposition C.
The Howard Jarvis Taxpayers Association and a coalition of commercial property owners sued the city in August, claiming that the simple-majority voter threshold used to pass the child care measure violated the state Constitution.
For more than two decades, since voters approved Proposition 218, passing a new tax measure where the proceeds are used for specific purposes has required a two-thirds majority. But last year, a memo from the city attorney’s office interpreting a recent state Supreme Court ruling argued that proposed tax measures put on the ballot by citizens — and not government officials — required only a simple majority to pass. On Tuesday’s ballot, Prop. C required 50 percent plus one vote to pass.
The San Francisco Department of Elections had about 139,000 ballots left to count as of Wednesday morning. Prop. C, which was at 60 percent yes votes, would need to pick up nearly seven more percentage points to be insulated from a similar legal challenge. That appeared unlikely.
To date, the city attorney’s rationale around the simplemajority voter thresholds has been applied to the child care and homelessness measures and Proposition G, another initiative from the June election that would generate $50 million a year to boost teachers’ salaries by levying a $298 parcel tax.
In September, Herrera made a pre-emptive strike to get the courts to validate the use of the simple-majority threshold to pass Prop. G — before anyone decided to file a lawsuit over that measure, too. Because the cases are somewhat intertwined, if the courts side with Herrera over Prop. G, it would provide ammunition in the city’s defense against the taxpayers association.
Rosenfield has taken a similar tack on the child care measure and Prop. G. Conservatively, that means that up to $500 million in annual revenue flowing from voter-approved ballot measures could be entangled in legal proceedings for years.
Spending the money brought in from any of the ballot measures would be highly risky: If the courts disagree with Herrera’s memo, the city would be forced to pay back the money out of its general fund.
Herrera remains sanguine about his chances in court.
“San Francisco is confident that when voters exercise their constitutional rights of direct democracy to place an initiative on the ballot, a simple majority vote is required for approval,” he said in an email sent by a spokesman.
“The California Supreme Court clarified ... that certain restrictions bind local officials but do not bind the voters themselves. A two-thirds majority is required when local officials — not the voters — place an initiative on the ballot. Proposition C was placed on the ballot by the voters. We take our duty to protect the will of the voters very seriously. A clear majority of voters passed Proposition C, and we will defend their decision in court,” he said.
Breed, who had opposed Tuesday’s Prop. C, took an upbeat tone Wednesday as she toured the city’s newly opened Bayshore Navigation Center.
She said she had spoken with representatives of both sides of Prop. C after its win, and that although it appears its funding will be tied up for at least a while, she would like both sides’ input into how to move forward — with or without the new $300 million a year.
“It’s clear the voters have spoken,” she said. “There’s no doubt we all want to address the serious challenge of homelessness, and my goal is to bring all the stakeholders together, because ultimately we all want the same things.
“Unfortunately, I don’t know what the answers are on the legalities,” she said. “There is still some uncertainty, but we can’t wait for Prop. C to move forward. The election is over, and now it’s time to address this issue, talk about real solutions.”
She said part of those conversations will involve regional approaches to providing housing and services, and that she has already spoken extensively with the mayors of San Jose and Oakland.
In the meantime, anticipating that the funds will remain frozen until any lawsuits work their way through the courts, Jeff Kositsky, director of the city’s Department of Homelessness and Supportive Housing, said his office will work with the resources it has.
“Our focus is going to be on continuing to use the funds we have as efficiently as possible. We’re going to continue to implement our strategic plan and continue to be accountable to the goals in that plan as we house homeless San Franciscans,” he said.
Breed, like Kositsky, said any delay in Prop. C would not affect the city’s five-year plan to cut the number of hard-core homeless people in half and end large tent encampments. The plan is in its second year, and Breed recently added the goal of adding 1,000 new shelter beds by the end of next year.
“We can’t wait. We’ve got to move forward,” she said.
At the new Navigation Center, which brings the city’s total back to four after the closure last month of the original Mission Street facility, sentiment among the residents was firmly in favor of batting down legal challenges quickly and replicating the services like the one that now put a roof over their heads.
“I don’t trust the courts, but they should do the right thing and let this proposition thing go through right now,” said Michael Kane, 54, who’d been homeless for eight years in San Francisco before scoring a bed at the Navigation Center this week. “The big companies are making so much money here, they might as well give some of it back. I mean, really, we need the help.
“You think we actually want to be homeless? No. It’s very hard out there.”
“It’s clear the voters have spoken. There’s no doubt we all want to address the serious challenge of homelessness.” Mayor London Breed