Critics Warned the Largest Tax Increase in San Francisco History Would Be Ill-Spent. It's Now Funding $60,000 Tents for the Homeless.

San Francisco politicians are raising eyebrows at the high costs of an emergency program that provides secure camping sites to the city's homeless.

When San Francisco voters were considering a 2018 ballot measure that would impose the largest tax increase in city history to fund homelessness services, critics warned that the initiative's spending plan was vague and unaccountable. Now, a chunk of that money is going to fund some very expensive tents.

On Wednesday, staff for the city's Department of Homelessness and Supportive Housing went before the Board of Supervisors' Budget and Appropriations Committee to request $20 million over the next two fiscal years to continue operating six "safe sleeping" tent encampments.

This safe sleeping program was launched early in the pandemic as a way of getting people out of crowded shelters, and into open-air, socially distanced camping sites where the homeless had access to showers, meals, and around-the-clock security.

The total cost of the program in its first year was roughly $18.2 million for around 260 tents, which the San Francisco Chronicle notes is about $61,000 per tent per year or twice the median cost of an apartment in the city.

Those high costs, and city staff's proposal to continue funding what was supposed to be a temporary, pandemic-era program, raised eyebrows among supervisors at Wednesday's meeting.

The $20 million being requested for the program "seems like an exorbitant amount for something that we're trying to transition [away from] as quickly as possible," said Supervisor Ahsha Safai at the hearing. "When you factor in 260 beds at $15 million for year one, that's $57,000 per tent."

Gigi Whitley, a Department of Homelessness and Supportive Housing staffer, told Safai that of the $18 million the city had spent on safe sleeping sites, about $1.2 million was for the showers, $3 million was for providing meals on-site, and $13 million was going to provide round-the-clock staffing and security.

That $13 million was needed for the city to be "good neighbors and good stewards," said Whitley, telling Safai that 24-hour staffing was "necessary so that someone doesn't leave the site and go into the neighborhood and maybe establish their tent there."

The $15 million the department was asking for over the next fiscal year reflected expected cost reductions, she said, citing assumed savings from streamlining the administration of the program and finding less expensive vendors to provide showers.

The existing safe sleeping sites are needed to absorb the people who the city is trying to move out of hotels, where they've been lodged during the pandemic. Currently, there's not enough shelter capacity in the city to house all the homeless currently in these hotels.

The entirety of the funding for the safe sleeping program comes from money raised by the controversial Proposition C, which voters passed in 2018. That initiative hiked San Francisco's already high business taxes by 33 percent with the goal of raising around $300 million per year to be spent on homelessness, supportive housing, and mental health services—almost double the $380 million the city was already spending.

One might think that a ballot initiative that taxed businesses to pay for homeless services would be popular in the ultra-liberal San Francisco. And at least with voters, it was. Proposition C passed with 60 percent of the vote.

(Whether the measure needed a two-thirds majority to pass was a major legal controversy that was only resolved in September of last year, when the California Supreme Court declined to take up a challenge to the law.)

The ballot initiative attracted some vocal opposition from business leaders, including Twitter CEO Jack Dorsey, and many of the city's elected officials including Mayor London Breed, state Sen. Scott Wiener (D–San Francisco), and state Assemblymember David Chiu (D–San Francisco).

Some big sticking points for critics were the size of the tax increase included in Proposition C and the fact that it was a gross receipts tax, which taxes companies on their overall revenues regardless of how profitable they are. Tax policy wonks are generally pretty down on gross receipts taxes, arguing they raise prices and limit economic growth. States and cities (with some notable exceptions) have been transitioning away from using them.

Another big issue raised by critics was that the city was already doing a bad job effectively spending existing homelessness dollars, and Proposition C would only make that problem worse.

"Proposition C does not audit the money the City already spends. It does not include a detailed spending plan for the $300M in taxes it seeks to add, nor regular audits of that money, nor adequate public oversight over how it's spent," wrote Breed in a now-deleted Medium post. "Our homelessness spending has increased dramatically in recent years with no discernible improvement in conditions. Before we double the tax bill overnight, San Franciscans deserve accountability for the money they are already paying."

That criticism appears vindicated by the high costs of the safe sleeping program.

This isn't to say that the program provides no value to its beneficiaries, as the Chronicle reported in March:

A young man who lived at the site said it was still dramatically better than living on the street, even though his tent was battered by wind the night before. At the site he has food and security guards looking out for him, and he also knows that if he leaves his stuff will probably be safe.

Jennifer Friedenbach, the executive director of the city's Coalition on Homelessness, said the city made the right decision at the beginning of the pandemic to create the tent program as quickly as possible. She said many homeless people even prefer the sites to traditional shelters, as a tent gives them more privacy than a cot in a large room.

That said, having privacy and a secure place to leave your possessions are also benefits provided by traditional housing of the type that San Francisco makes incredibly difficult and expensive to build through excessive regulation.

Were the city more friendly to new development, odds are it would have far fewer people on the streets and dependent on an inefficient city bureaucracy for shelter.