Prop C hurts more than helps

A few years ago, Micah moved in with our family. A Navy veteran with a ready smile and a bent towards hard work, she had found herself living in her car after not being able to make ends meet as a house cleaner. After many nights playing board games and sharing meals with Micah, I can tell you that people experiencing homelessness aren’t “other” — they’re us. They deserve a thoughtful and aggressive plan to end this crisis.

Homelessness is out of control in San Francisco, across California, and in many of our nation’s cities. Changing this trajectory will require new solutions, a more effective government, and smart coordination between multiple parts of our community, including business leaders.

My company, Stripe, makes it easier for people anywhere to start and run a business online. We employ about 1,000 people in San Francisco. We’ve contributed to efforts to expand affordable housing and to help former homeless or incarcerated San Franciscans get back on their feet. We don’t deserve special credit for these efforts. However, because we care about our city and the issues of housing and homelessness, opposing Proposition C, a measure on the San Francisco ballot this November, is an unlikely and uncomfortable position for us. We know that opposing it will lead to criticism. We’ve heard privately from many policymakers and business leaders across the spectrum who agree that Prop C is bad policy that will hurt San Francisco, but who fear opposing any measure addressing homelessness. But we also know how easy it is for well-intentioned measures to fall short of their desired goals. Because of the importance of the homelessness issue, it’s important to be rigorous in assessing Prop C’s merits, especially since its consequences will be enormous and long-lasting.

Prop C would permanently raise taxes and double spending for homeless services without a concrete plan, at a time when the city already lacks accountability for the more than $300 million it’s spending on homelessness every year. Prop C taxes gross receipts, not profits. It will especially hurt retailers, manufacturers and others who have low profit margins, many of which are already struggling as the economy transforms. It will hurt companies like Stripe, too.

While well-intentioned, Prop C will likely hurt more than it helps. Here’s why:

First, the city has spent roughly $2 billion over the past decade on homeless services but through most of that period has had no effective system even to track how the money is spent, who’s being helped, and which programs are working. While there have been modest improvements in accountability since 2017, the budget has more than tripled, from less than $100 million in the year 2000 to over $300 million today, and the homeless population has only grown, from around 5,600 people in the year 2000 to more than 7,500 today. To be fair, holding the rate of homeless population growth at this level represents some achievement amidst rapid housing cost inflation and a nationwide opioid epidemic. But the city’s dramatic increase in spending has failed to meaningfully change the trajectory of the homeless problem here. There is no evidence that spending even much more, without other changes, will help.

Second, Prop C will place new burdens on San Franciscans who are already struggling to stay afloat, and could easily push more people into homelessness or out of our city altogether. The city’s own Office of Economic and Workforce Development says that the measure will disproportionately impact San Franciscans who work in grocery stores, retail shops, and other low-margin businesses. This new tax could kill their jobs and raise the already-staggering cost of living even higher.

Third, Prop C doesn’t do enough to address the real issue: housing. The lack of affordable housing, driven by a combination of land use policies, restrictive building codes, and a variety of other barriers that increase cost and reduce supply of new housing, is a main driver of homelessness throughout the U.S. Multiple studies have found that when rents rise, so does homelessness. Researchers say a five percent increase in rents in already-expensive cities like San Francisco could lead to thousands of people losing their homes and that even a $100 increase in the area’s median rent could cause a 15 percent rise in homelessness. The Chronicle Editorial Board put it bluntly: “Homelessness arises from a lack of homes.” The newspaper notes that it makes no sense to spend more on homeless services while also blocking measures that would expand the supply of housing and slow skyrocketing rent increases. The Chronicle is right. To really tackle the homelessness crisis, the city and state must make it easier to build apartments, protect tenants, and require that new housing projects include more affordable units. By subsidizing demand without expanding supply, Prop C offers only a costly and ineffective band-aid. In the end it may drive up costs and exacerbate the housing affordability crisis.

Finally, this is a regional problem that requires, at a minimum, a regional solution and coordination between service providers, law enforcement, hospitals, courts, and many others. Prop C will achieve none of that. As Lt. Governor Gavin Newsom recently said, Prop C could make the problem worse by encouraging more homeless people to come to San Francisco.

Prop C was devised without consulting Mayor Breed and, to date, she has not endorsed it. The mayor is bringing fresh thinking and a renewed focus on homelessness and housing affordability to City Hall. The city elected her to lead, but doing so takes time and consultation. We should give her a chance to develop a comprehensive plan to tackle homelessness and fix a broken bureaucracy — not dump an extra $380 million per year of dedicated revenue onto an already broken system.

Dealing with homelessness is a moral and civic responsibility for people and companies who, like Stripe, call San Francisco home. We’re eager to work with the mayor, community leaders, and service providers to develop a comprehensive approach to homelessness and the broader housing crisis. We are not opposed to additional taxes on businesses or new revenue for homeless services. And, while it would be convenient if we could neatly solve the problem with a simple ballot measure, sensible analysis suggests that we can’t. We should take homelessness seriously and insist on solutions that will work.

The choice in November is not between fixing homelessness through Prop C and not fixing it at all. Instead, the choice is between an ill-conceived half-measure in Prop C and giving the mayor San Franciscans elected the time to develop an approach that will work.

This is the unedited version of an Op Ed published in the San Francisco Chronicle on Sept 25, 2018.