Compromise measures

Housing and business tax propositions don't solve the city's problems, but both sides say they're the best we can expect

A pair of fall ballot measures would spur affordable housing development in San Francisco.

San Franciscans are poised to vote this November on two important, complicated, and interdependent ballot measures — one a sweeping overhaul of the city's business tax, the other creating an Affordable Housing Trust Fund that relies on the first measure's steep increase in business license fees — that were the products of intense backroom negotiations over the last six months.

Mayor Ed Lee and his business community allies sought a revenue-neutral business tax reform measure that might have had to compete against an alternative proposal developed by Sup. John Avalos and his labor and progressive allies, who sought around $40 million in new revenue, although both sides wanted to avoid that fight and find a compromise measure.

Meanwhile, Mayor Lee was having trouble securing business community support for the housing trust fund that he pledged to create during his inaugural address in City Hall in January. So he modified his business tax proposal to bring in $13 million that would be dedicated to the Affordable Housing Trust Fund, but that didn't satisfy the Avalos camp, who insisted the city needed more general revenue to offset cuts to city services and help with the city's structural budget deficit.

Less than a day before the competing business reform measures came before the Board of Supervisors on July 24, a compromise was finally struck that would bring $28.5 million a year, with $13 million of that set aside for the affordable housing fund, tying the fate of the two measures together and creating a kumbaya moment at City Hall that was reminiscent of last year's successful pension reform deal between labor and the business community.

But there was one voice raised at that July 24 meeting, that of Sup. David Campos, who asked questions and expressed concerns over whether this deal will adequately address the "crisis" faced by the working class in a city that will continue to gentrify even if both of these measures pass. Affordable housing construction still won't meet the long-term needs outlined in the city's Housing Element that indicates 60 percent of housing construction would need public subsidies to be affordable to current city residents.

It's also worth asking why a business tax reform measure that doubles the tax base — just 8.4 percent of businesses in San Francisco now pay the payroll tax, whereas 16.4 percent would pay the gross receipts tax that replaces it — doesn't increase its current funding level of $410 million (the $28.5 million comes from increased business license fees). Some industries — most notably the technology and restaurant industries that have strongly supported Mayor Lee's political ambitions — could receive substantial tax cuts.

Politics is about compromise, and Avalos tells us that in the current political climate, these measures are the best that we can hope for and worthy of progressive support. And that may be true, but it also indicates that San Francisco will continue to be more welcoming to businesses than the working class residents struggling to remain here.



As Mayor Lee acknowledged during his inaugural speech, the boom times in the technology industry has also been driving up commercial and residential rents, he sought to create "housing for the 100 percent."

The median rent in San Francisco has been steadily rising, jumping again in June an astounding 12.9 percent over June of last year, according to real estate monitor RealFacts, leaving renters shelling out on average an extra $350 a month to landlords.

Driven by a booming tech industry and a lag in new housing, the average San Francisco apartment now rents for $2,734. That's an annual increase of $4,000 per unit over last year, in a city that saw the highest jumps in rent nationally in the first quarter of 2012. Even prices for the average studio apartment have edged up to $1,800 a month.