Rich San Francisco Businesses Could Face Homelessness Tax

San Francisco has come to be known around the world as a place for aggressive panhandling, open-air drug use and sprawling tent camps, the dirt and despair all the more remarkable for the city's immense wealth.

Some streets are so filthy that officials launched a special "poop patrol." A young tech worker created "Snapcrap" — an app to report the filth. Morning commuters walk briskly past homeless people huddled against subway walls. In the city's squalid downtown area, the frail and sick shuffle along in wheelchairs or stumble around, sometimes half-clothed.

The situation has become so dire that a coalition of activists collected enough signatures to put a measure on the city's Nov. 6 ballot that would tax hundreds of San Francisco's wealthiest companies to help thousands of homeless and mentally ill residents, an effort that failed earlier this year in Seattle. Proposition C would raise $300 million a year, nearly doubling what the city already spends to combat homelessness.

"This is the worst it's ever been," says Marc Benioff, founder of cloud-computing giant Salesforce and a fourth-generation San Franciscan, who is supporting the measure even though his company would pay an additional $10 million a year if it passes.

"Nobody should have to live like this. They don't need to live like this. We can get this under control."

"We have to do it. We have to try something," said Sunshine Powers, who owns a tie-dye boutique, Love on Haight, in the city's historic Haight-Ashbury neighborhood. "If my community is bad, nobody is going to want to come here."

The proposition is the latest battle between big business and social services advocates who demand that corporate America pay to solve inequities exacerbated by its success. In San Francisco, it's also become an intriguing fight between recently elected Mayor London Breed, who is siding with the city's Chamber of Commerce in urging a no vote, and philanthropist Benioff, whose company is San Francisco's largest private employer with 8,400 workers.

Breed came out hard against the measure, saying it lacked collaboration, could attract homeless people from neighboring counties to the city, and could cost middle-class jobs in retail and service. San Francisco has already dramatically increased spending on homelessness, she said, with no noticeable improvement.

San Francisco spent $380 million of its $10 billion budget last year on services related to homelessness.

"I have to make decisions with my head, not just my heart," Breed said.

"I do not believe doubling what we spend on homelessness without new accountability, when we don't even spend what we have now efficiently, is good government."

Cities along the West Coast are grappling with rampant homelessness, driven in part by growing numbers of well-paying tech jobs that price lower-income residents out of tight housing markets. A family of four in San Francisco earning $117,000 is considered low-income.

Business prevailed in Seattle, when leaders in June repealed a per-employee tax that would have raised $50 million a year, after Amazon and Starbucks pushed back. In July, the city council of Cupertino in Silicon Valley scuttled a similar head tax after opposition from its largest employer, Apple Inc.

Mountain View residents, however, will vote this fall on a per-employee tax expected to raise $6 million a year, largely from Google, for transit projects.

The San Francisco measure is different in that it would levy the tax mostly by revenue rather than by number of employees — an average half-percent tax increase on companies' revenue above $50 million each year. It was also put on the ballot by citizens, not elected officials.

Online payment processing company Stripe has voiced opposition and contributed $120,000 to the campaign against Proposition C, but other companies have stayed quiet. The San Francisco Chamber of Commerce, whose board includes representatives of Microsoft, LinkedIn and Oracle, is leading the fight.

Up to 400 businesses would be affected, with internet and financial services sectors bearing nearly half the cost.

The city says confidentiality precludes revealing tax information, but some of the companies expected to pay the most are big names across major industries. Wells Fargo & Co., retailer Gap Inc. and ride-hailing platform Uber declined to comment.

Pharmaceutical distributor McKesson Corp. referred questions to a private-sector trade association, the Committee on Jobs, which called the measure flawed. Utility Pacific Gas & Electric Corp. said it has not taken a position. Twitter declined to comment, but chief executive Jack Dorsey said via tweet last week that he trusts Breed to fix the problem.

"Anyone can take a look at the status quo and understand it's not working, but more money alone is not the sole answer," says Jess Montejano, spokesman for the "No on C" campaign.

Benioff disagrees. A $37 million two-year initiative he helped start with the city and to which he contributed more than $11 million has housed nearly 400 families through rent subsidies, he said.

Benioff has pledged at least $2 million from company and personal resources for the November tax campaign. He said he was ultimately swayed by a report from the city's chief economist, which found the measure would likely reduce homelessness while resulting in a net loss of 900 jobs at most, or 0.1 percent of all jobs.

"I said, 'Well, I'm the largest employer in the city, and the city is in decline from homelessness and cleanliness. We have to take action now,' " he said.

At least half of the new revenue would go toward permanent housing, and at least a quarter to services for people with severe behavioral issues. A 2017 one-night count found an estimated 7,500 people without permanent shelter in San Francisco. More than half had lived in the city for at least a decade.

Tracey Mixon and her daughter, Maliya, 8, are among the hidden homeless.

Mixon, 47, a San Francisco native, lives and works in the notoriously dangerous and drug-infested Tenderloin neighborhood. They were forced out of their rental this summer, partly because the company that managed her property lost its federal accreditation, she said on a recent afternoon while working a crossing guard shift.

One of the hardest parts was finding a place to go for the day when mother and daughter were kicked out of an overnight-only emergency shelter.

"I have to shield her from people that are using drugs," she said. "I have to shield her from people who might be fighting."

Hanging out on Haight, the street that played a central role in the "Summer of Love," Stormy Nichole Day, 22, says she would love a place to live. Currently, Day is sleeping in a doorway. She could thrive if her basic needs were met, she said.

"And that includes a house, and a place to cook food and a place to take a shower."