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ballot analysis
november 2004
A Comprehensive Guide to San Francisco's Ballot Measures
September 9, 2004
SPUR's Ballot Analysis
Fourteen City measures and one Regional measure appear on the San Francisco ballot on November 2, 2004 . As we do each election, SPUR has thoroughly analyzed every measure. Our Ballot Analysis Committee met with representatives of both sides of the issues, debated the merits, and provided recommendations to the full Board of Directors. The Board then considered each measure. It takes a 60 percent vote of the Board to make a recommendation.
A well-meaning proposition isn't enough to earn an endorsement?it needs to propose a viable fix to a real problem. Ill-considered and politically motivated measures always end up on the ballot, but they don't have to become law.
For each of these fifteen measures we asked: is it necessary and appropriate to be on the ballot? Is it practical, and if enacted, will it achieve the result it proposes? And most importantly, we ask if it is a worthy goal, one that will make San Francisco a better place to live for everyone.
Proposition A
Supportive and Affordable Rental Housing
and Homeownership Bonds
This ordinance, placed on the ballot by the Board of Supervisors, seeks voter approval of a $200 million general obligation bond, to finance:
• Development of supportive housing (affordable housing that includes medical and social services) for people who are homeless or at risk of becoming homeless earning up to 30 percent of the area median income ($90 million)
• Acquisition, construction, and/or rehabilitation of affordable rental housing for qualifying low and very low?income individuals and families earning up to 60 percent of the area median income ($60 million)
• Construction of homes affordable for purchase by qualifying low- and moderate-income individuals and families earning 60?90 percent of the area median income ($25 million)
• Down payment assistance in the form of loans to prospective qualifying homebuyers earning 80?100 percent of the area median income ($25 million)
Landlords are permitted to pass through 50 percent of any additional property tax burden associated with this bond measure to tenants. This measure requires a two-thirds vote in support to pass.
The Mayor's Office of Housing has estimated that a total of 3,350 housing units will be produced by the bond. The San Francisco Controller's Office estimates that the bond will cost an additional $52.62 per year in property taxes to the owner of a home valued at $300,000.
Background
In 1996, San Francisco voters approved Proposition A, a $100 million affordable housing bond. In the years since, that bond has been a major source of funding for affordable housing development in the city. According to a recent study by the Local Initiatives Support Corporation, that bond was responsible for the construction of 2,125 units of affordable housing and beds in emergency or transitional housing, and 249 down-payment-loan-assistance subsidies to homebuyers.1 But the funds from that bond have now all been used or committed. In 2002, another affordable housing bond, Proposition B, went before the voters and received
a 57 percent ?yes? vote, but failed to gain the two-thirds threshold necessary for passage. The City is out of money for additional affordable housing unless the voters approve a new funding source.
1 http://www.bayarealisc.org/bay_area/resources/publications_5474/index.shtml
Analysis
In 2002, SPUR conducted an independent analysis of the 1996 affordable housing bond. The purpose of that analysis was to determine how the bond money had been used, how many units and loans it was responsible for, and to what degree it was used to leverage other sources of revenue. Our analysis concluded that the funds had been used effectively. The bond had an enormous effect in terms of increasing the number of affordable housing units produced during the period that the funds were spent. In addition, it found that the money was used to effectively leverage other sources, and provided deep subsidies to create housing for very-low-income households.
Prop. A bonds administered by the Mayor's Office of Housing after the 1996 measure, plus tax-increment bonds issued by the San Francisco Redevelopment Agency (SFRA), have been funding about 700 affordable rental units per year since 2002 and an average 268 annually during the previous five years.
Prop. A proved successful in producing 2,125 new and rehabilitated nonprofit rental housing units and beds in emergency and transitional facilities. The bond leveraged approximately $2.20 in outside funding per dollar during its lifecycle.
Supportive Housing
The biggest difference between this year's bond and the 1996 bond is the inclusion of a ?supportive housing? component. This grows out of a remarkable consensus in the city that the most viable long-term solution to homelessness is to get people off the streets and into housing that is accompanied by the array of services homeless people need to put their lives back together. These support services range from medical care to job training to psychological counseling. SPUR's 2002 study Homelessness in a Progressive City found that shifting money from crisis medical care and jail to supportive housing would be both more effective and less costly than current practices.
The City has a goal of creating 3,000 supportive housing units over six years, which is expected to save millions of dollars per year in housing and medical costs. The City's recently released 10-Year Plan to Abolish Chronic Homelessness found that there are approximately 15,000 homeless people in San Francisco . It estimates that some 3,000 of those people?one in five?are chronically homeless (meaning that they have been homeless for over a year or have experienced four or more periods of homelessness over three years), and use 63 percent of total homeless services. According to that report, supportive housing that offers services costs approximately $16,000 a year per person. By contrast, incarceration costs $22,000 per person per year and, coupled with emergency hospitalization, can run as high as $61,000 per person per year.
San Francisco 's Direct Access to Housing (DAH) program already treats nearly 400 chronically homeless people in supportive housing. That program, established in 1998 by the San Francisco Department of Public Health, has been the City's primary effort to create supportive housing to date. DAH operates 360 units of supportive housing in five single-room-occupancy hotels and 33 units in a residential-care facility.
The $90 million commitment in bond funds for supportive housing in this bond measure, plus the completion of the 10-year Plan to End Chronic Homelessness , positions San Francisco to receive another $260 million in state and federal matching funds and grants needed to greatly expand its response to chronic homelessness. The investment in supportive housing would also save the City money on jail, medical, and other expenses that would otherwise be needed for those who will occupy the new housing.
Rental Housing
ABAG forecasts a San Francisco population of 811,000 by 2020, with 111,200 net new jobs. It has estimated a need for creation of 2,700 units annually of all kinds within the city limits, and 13,000 net new low- and moderate-income units between 1999 and 2006, or almost 2,000 per year.
The number of rental units created by the proposed bond measure would depend in part on what income level the units serve. While the measure restricts the bond to be used for housing serving households earning up to 60 percent of the area median income, the funds could be used to build housing for lower-income groups. If housing is constructed to serve the city's poorest households, deeper subsidies would be required from the bond, and fewer units would be produced. Thus, the City would likely need to confront a tradeoff between creating more units at higher income levels, or fewer units serving lower income levels. In addition, the number of units produced will depend on other factors including the availability of other funds to leverage and inflation in the cost of construction. However, if the proposed bond were used to produce units at the same cost per unit and leverage ratios as the 1996 bond, it would be expected to produce approximately 2,250 new rental units, excluding supportive housing units.
Down-Payment Assistance
The 1996 housing bond included $15 million for down payment assistance for first-time homebuyers. The City loaned money to first-time homebuyers with below-median income to use as part of a down payment on a home. When the home is sold, the money is repaid to the City, along with a portion of the home's appreciation in proportion to the City's participation in the down payment. Since 1996, 240 loans have been processed with a combined value of $14.2 million?an average of $59,200 each. That translates into a 9.1 percent down payment at today's median home price, and 11?12% for a market-rate condominium in San Francisco . The $25 million allocation for down-payment assistance in the current bond proposal would, at that amount, be initially extended to some 420 applicants. However, because of the structure of the program, once the loans are repaid to the City the funds can be used again for a loan to another homebuyer, meaning that over its lifespan the down payment program would continue to fund home purchases for many more individuals.
The purchase assistance program would be available to households earning between 60 and 100 percent of the area median income, or up to $65,000 for an individual and $95,000 per year for a family of four. Much of the political controversy that went into the development of the bond centered on this question: how high should the income limits be to participate in the subsidized ownership program?
Production of New Ownership Units
The second part of the proposed bond's home ownership component is new: $25 million for production of new ownership housing units. While the down payment assistance portion of the bond would be used to help people buy existing housing, this portion of the bond funds would be used to subsidize the development of new ownership housing that would be affordable to households earning between 60 and 90 percent of the area median income, or up to $59,850 per year for an individual and $85,500 for a family of four. Because there was no similar program in the 1996 housing bond, it is not clear exactly how the money would be used. Generally speaking, it would be used to help developers overcome financial hurdles, allowing them to build housing cheaply enough to sell to low- and moderate-income families. The details of how this program would work would be fully developed in the implementing ordinance required by the bond measure.
Criteria for Distribution of Funds
Loans or grants funded by bond proceeds must be by competitive bid. Projects that leverage bond proceeds to obtain non-City financing will receive priority. In addition, the measure directs the Mayor's Office of Housing to give preference to projects that use green-building techniques and encourages those seeking bond funds to offer direct employees and subcontractors living wages and family health benefits, and to respect employees' rights under law to form unions. The measure also would direct the Mayor's Office of Housing to give preference to projects that are found by the Landmarks Preservation Advisory Board to be in compliance with federal guidelines for preservation and rehabilitation of historic buildings.
Pros
Those who support Proposition A state:
• San Francisco has a housing crisis that cannot be addressed without significant public investments to bring down the costs. Because of the high costs of housing and because of the inequality of wealth in our society, there are many working people who will never be able to afford a decent, modest life in San Francisco without the assistance of affordable housing. While subsidized housing is not the whole solution to the housing crisis, it is a critical part.
• While $200 million is not enough to meet the city's need for affordable housing, it is a big step in the right direction and is politically manageable at this time.
• The only way to make a dent in the city's homeless problem is to invest in supportive housing, so we can get people off the streets and give them the ability to stay off. This bond helps redeem the promise of the Care Not Cash initiative that SPUR and the voters supported.
• This bond package does a fair job at trying to balance the competing ideas about the best way to allocate affordable housing money. The three-way split between traditional affordable rental housing, supportive housing, and subsidized ownership housing is a good compromise that will help several different segments of the population.
• Funding for affordable housing from the federal government has declined dramatically over recent decades. As a result, the burden of producing affordable housing increasingly falls to local governments. Issuing bonds is an effective and practical way for San Francisco to fulfill this responsibility.
Cons
Those who oppose Proposition A state:
• General obligation bonds in support of affordable housing focus too great a cost burden on San Francisco property owners.
• We should be using public funds to test out new approaches instead of issuing another bond, from providing vouchers to needy families to having the city ?buy down? the cost of market-rate units in specific developments.
• The income limits for participation in the homeownership portion of the program are too low. By not offering moderate-income housing options or down-payment assistance up to 120% of median income, most truly eligible buyers would remain frozen out of the market, earning too little to afford a market-rate mortgage and too much to get any help from the city.
Recommendation
SPUR recommends a ?yes? vote on Proposition A. This measure is the key to breaking the policy logjam on two key long-term issues facing San Francisco : chronic homelessness and access to affordable rental and homeownership housing. It reflects a refreshing consensus among typically polarized community interests. Analyses of the 1996 affordable housing bond show that it was successful, and that the money was well spent. In the long run, San Francisco must find ways to lower housing prices by correcting the imbalance between supply and demand for housing, which is the fundamental cause of our city's high housing prices. But while there is much more to do, this bond is a practical amount to invest at this time toward the critically important goal of increasing San Francisco 's supply of affordable housing.
Proposition B
Neighborhood Historical Resources Preservation Bond
Proposition B would authorize issuance of up to $60,000,000 in general obligation bonds to help finance the acquisition, rehabilitation, renovation, improvement, construction, or preservation of historical resources and structures benefiting historical resources. The specific projects that would receive funding would be selected through an implementing ordinance to be developed if the bond passes. However, the text of the measure lists examples of the kinds of projects that would be financed. The measure was placed on the ballot by the Board of Supervisors, and requires a two-thirds vote of the electorate to pass.
The San Francisco Controller's Office estimates that the owner of a home with an assessed value of $300,000 would pay an additional $14.47 per year in property taxes to pay for the bonds.
Background
The City owns a number of historical resources that are in need of substantial investment to seismically strengthen, preserve, rehabilitate, and place them into useful service. There is not enough money available to pay for this work. Advocates for projects involving historic resources worked with the Board of Supervisors to develop this bond measure to provide a funding mechanism to help improve those resources.
Analysis
In an era of limited City resources and many competing capital improvement needs, it is unlikely that many (or any) of these historical resources will receive the investment required to improve them through the normal annual budget process. If this measure passes, the City would be authorized to issue up to $60,000,000 in general obligation bonds to help finance the acquisition, rehabilitation, renovation, improvement, construction, or preservation of historical resources and structures benefiting historical resources. General obligation bonds allow the City to borrow money for major capital projects, which it repays over time through increased property taxes.
Due to constraints imposed by the California Environmental Quality Act, the measure does not identify the specific historical resources that will receive funding. It does, however, list examples of historical resources, and structures benefiting historical resources, that may apply for bond proceeds. These example projects include the Old Mint, the Palace of Fine Arts , Coit Tower , a Waterfront Pavilion to house the City's historic 7,000-pipe concert organ, McLaren Lodge, Trocadero Clubhouse, the Geneva Car Barn Building , the San Francisco Unified School District 's School of the Arts's Nourse Auditorium, the Sunnyside Conservatory, the Moscone Fieldhouse, and the Bayview Opera House.
If voters approve the measure, the Board of Supervisors will adopt an implementing ordinance specifying procedures for the administration and oversight of the funded projects.
No single project would be permitted to receive more than 20% of the total bond proceeds. In addition, in order to qualify for funding, a project must demonstrate that it will have sufficient funding from other sources plus the bond proceeds to ensure completion of the project. The idea is that this bond measure will serve as the City's ?match? against other funding sources. Almost all of the examples of projects listed in the ordinance have active private fundraising campaigns underway. Although being listed in the measure does not technically guarantee a project will receive funding, it would certainly provide a boost to those fundraising efforts.
Pros
Those who support Proposition B state:
• Important historical resources are worth preserving, and without a bond measure, funds are not available for this purpose.
• This measure is balanced in that it envisions funding several projects throughout the city.
• The bond will assist the implementation of the Recreation and Park Capital Plan. The $110 million Neighborhood Park Bond anticipated funds from other sources in order to meet the Recreation and Park Department's capital-improvement need. Due to the lagging economy, those anticipated sources have not materialized. If passed, this bond will help provide funding for several of the department's facilities, reducing the need to use future open space revenues or park bonds.
• This $60 million bond will be used to leverage a large amount of financing from other sources. In many cases, grant applications require matching funds from local agencies. If passed, the bond proceeds will allow the City to compete for state, federal and local grants and help secure philanthropic donations that benefit city residents.
• This bond is relatively small compared to the City's available debt capacity.
Cons
Those who oppose Proposition B state:
• There are a large number of worthy capital improvement projects within the City, but the City has no comprehensive, prioritized list of projects to be funded. The City is in the process of developing such a plan, which would propose a sequence of bonds based on public priorities. Because of other more urgent needs, some question whether the projects listed in this bond measure will be high in the list of the City's priorities. It should be noted that the City's Capital Improvements Advisory Committee did not endorse this measure partially for this reason. This measure advances the restoration of historical resources to the front of the line in awarding scarce funding resources.
Because Proposition B lists example projects that may never receive bond funding, it may mislead voters into believing those projects will benefit from the bond. On several occasions in the past, bond measures have been unable to fund all of the projects initially promised, leaving voters and community residents frustrated and disappointed.
Recommendation
SPUR recommends a yes vote on Proposition B. We believe the purpose of this measure is important and the funding amount is appropriate. Following the grand restorations of City Hall and the Ferry building, which have added so much to the fabric of San Francisco , we agree that it is time to invest in the rehabilitation of the next set of publicly owned facilities.
We are sympathetic to the criticism that this bond measure short-circuits the process of prioritizing capital needs, but while we commend the City for beginning an effort to prioritize capital projects, the truth is that this process is not yet complete or functional. SPUR will be working with the City to develop a comprehensive capital planning process over the next few years. But for now, we are left with the traditional process of evaluating each bond proposal on its own merits, and we find this one to be worthwhile.
Proposition C
Health Services System
Currently, the City Health Service System (HSS), which provides medical benefits to employees and retirees of City government, is administered by the Department of Human Resources with the system director appointed by the Department of Human Resources director. The proposed Charter amendment would place the administration of the HSS under the jurisdiction of the Health Services Board, which currently has some rate and plan control but does not have administrative authority. It would also replace the Health Services Board seat held by the City Attorney with an employee or retiree elected position, giving the control of the board and its premium rate and program setting functions to current employees and retirees.
Background
The HSS, first established by the voters in 1937, provides medical benefits to employees and retirees of City government, the Community College District and the San Francisco Unified School District . About 110,000 employees, retires and dependents are covered by the system. The Health Services Board consists of a member of the Board of Supervisors, the City attorney, two members appointed by the mayor, and three members elected by employees and retirees.
In the 1990s, after serious fiscal, audit and program problems, administration of the HSS was taken away from the Health Services Board and placed under the jurisdiction of the Department of Human Resources. After several years, the problems have been addressed and the system has operated well.
The health services administrator is appointed and serves at the pleasure of the Department of Human Resources director. The administrator administers the HSS including making recommendations to the Health Services Board regarding annual premium rates and medical programs. Besides the health system, Department of Human Resources oversees other employee benefit programs such as disability, dental, term life insurance, and ?cafeteria? programs (flexible benefit programs).
The Health Services Board sets the rates and benefits for the system, which must be approved by a supermajority of the Board of Supervisors. However, the Health Services Board does not have authority over the day-to-day administration of the system, since the system administrator reports to the Department of Human Resources directors.
The proposed Charter amendment is sponsored by Protect Our Benefits, a political action committee of retirees. It was placed on the ballot by the Board of Supervisors.
Analysis
Passage of this Charter amendment would shift control of the Health Services Board to current employees and retirees. It would eliminate the seat on the board now occupied by the City attorney and replace it with a seat occupied by another employee or retiree. This change would mean that employees and retirees would occupy four of the seven seats on the board, giving them a majority. The proponents argue that the removal of the City attorney as a voting member of the board is justified because there is a deputy city attorney assigned to the board, so legal counsel is present with or without a seat on the board.
In addition, Proposition C would take away the authority of the Department of Human Resources director to appoint the system administrator, and give that authority to the Health Services Board. This means the system administrator would answer to the board, giving it substantially more authority over the system's administration than it currently has.
Retired employees do not have the collective bargaining right to negotiate with the mayor and Board of Supervisors for premium rates and medical care options or other benefits. Active employees do not negotiate rates and benefits either, but they do negotiate the amount the City contributes to help cover these benefits.
The group of retirees behind this measure claim that there could be a ?raid? on the HSS fund, where funds would be diverted to other City government activities. The measure is designed to give greater control to employees and retirees to protect this from happening. The measure inserts the word ?Trust? into the section of the Charter discussing the HSS fund, presumably to ensure money is not diverted from the fund.
As a consequence of the City's arcane civil service rules, the current Department of Human Resources?appointed administrator has a higher personnel classification level than one that would serve under the Health Services Board. This distinction could have implications for the oversight and management of the system.
The Health Services Board is directed by the Charter to conduct a survey of the 10 largest counties in the state to determine the average contribution by those counties toward health plans. The results of this survey are used to determine the City's contribution toward health coverage. The language in Proposition C allows the Health Services Board to develop rules and regulations to avoid ?unavoidable gaps in survey data.? However, it is unclear how this change would affect costs to the system.
In sum, Proposition C would shift a great deal of control over health benefits to employees and retirees. It would remove administration of HSS away from the Department of Human Resources and into a separate bureaucracy controlled by the Health Services Board. At the same time, the measure would shift majority control of the Health Services Board away from City government officials and toward employees and retirees. Pros
Those who support Proposition C state:
• An independent HSS controlled by elected employees/retirees will be more responsive to their concerns than one controlled by the Department of Human Resources, which is not entirely focused on retiree programs.
• This measure is necessary to protect the HSS and its funds from efforts to divert them to other uses.
Cons
Those who oppose Proposition C state:
• Voting control of the HSS board should not reside with elected employee/retiree representatives. It is logical that employees/retirees should have an important role on the board. However, because these individuals are in a position to benefit from the board's decisions, there is a potential conflict between their own interests and fiscally sound management of premium rates and program options.
• Removal of the HSS from the Department of Human Resources will likely increase the system's overhead costs, since there are efficiencies in operating all benefit services under a single integrated bureaucracy.
• Many currently negotiated employee benefits are not under the control or oversight of the Health Service Board. It is unclear how administration of these benefits could be affected if the proposed Charter amendment were to pass. It is possible that a duplicative and parallel bureaucracy would be required to process these negotiated benefits for employees while the revised HSS deals only with the health benefits of employees and retirees.
Recommendation
SPUR recommends a ?no? vote on Proposition C. The system is working well in its current form. It is important that retired City employees feel the system is responsive to their needs. However, the contemplated Charter change could require a duplicative new bureaucracy as administration of all kinds of benefits is removed from the Department of Human Resources. It makes sense to have an integrated human resources function, rather than administering some benefit components separately. In addition, it is unsettling that the Charter amendment would shift control of the system into the hands of its beneficiaries.
Proposition D
Multiple-Subject Charter Amendment
This proposed Charter Amendment contains six distinct provisions. It would:
• Extend most time deadlines for Board of Supervisors action during board recesses
• Lower the number of votes required for the board to take action when board members are disqualified due to conflicts of interest
• Prevent appointed members of boards and commissions from remaining in their positions for more than 120 days after their appointments expire (it would eliminate extended ?holdover? appointees)
• Expand the scope of matters under the purview of the Commission on Aging to include issues affecting adult dependents
• Remove limits on the Commission on the Environment's ability to consider building and land use issues in its review of the environmental sustainability of proposed City policies
• Remove from the Charter the limitation of two legislative aides per member of the Board of Supervisors and allow the number of aides to be set through the normal legislative process
This measure was placed on the ballot by the Board of Supervisors. The measure is on the ballot to consolidate a number of amendments proposed by various supervisors.
Analysis
The measure contains six distinct sections. While ordinances are restricted to apply only to a single subject, Charter amendments such as Proposition D may address any number of subjects.
Board Deadlines During Recess. This provision would extend any deadline for action by the Board of Supervisors during periods when the board is in recess. The board generally goes into recess, meaning that no committee meetings are held or other legislative action taken, for periods of one to two weeks during the winter holiday season and again near the end of August. Many legislative actions have a time limit attached to them, meaning that the board must act on them within a specific amount of time. Currently, these deadlines remain unchanged when the board is in recess, meaning no additional time is allowed to accommodate these ?breaks.? This measure would change the rules so the time limits would only count during periods when the board is active, not when they are in recess. For example, the board currently is allowed 30 days to override a mayoral veto. If the board were in recess for five days after a mayoral veto, the deadline to override would be extended to 35 days. The extension rule would not apply to deadlines for preparing and adopting budgets, for calling or conducting elections, or for collective bargaining. Additionally, under the rule, the extension cannot exceed 45 days (i.e. total time to override Mayoral veto could not exceed 75 days).
Votes. When Board Members Are Disqualified Due to Conflict of Interest . The City's ethics laws sometimes prevent members of the Board of Supervisors from voting on certain matters. For example, a supervisor who owns property may be disqualified from voting on legislation that may affect the property's value. Currently, when one or more members of the Board of Supervisors are disqualified from voting on an item before the board, the number of votes required for passage does not change. Under this measure, the number of board votes required would be calculated based on the total number of available potential votes from members who are not disqualified. For example, for a vote requiring a board majority where two members out of eleven have been conflicted out, the current Charter still requires six yes votes (a majority of all eleven) to pass. Under Proposition D, only five votes would be required (five out of nine votes would constitute a majority of the remaining qualified members).
Holdover Appointments. Many positions on City government boards, commissions, and advisory bodies have specific term lengths for the people appointed to them. Currently, however, these terms are not strongly enforced. Individuals can continue to serve in their positions after their terms have expired. These appointed individuals whose terms have expired but who have not been reappointed or replaced are known as ?holdovers.? Under Proposition D, no member appointed to a City board, commission, or advisory body of any kind could serve as a holdover for more than 120 days after expiration of the member's term. After 120 days beyond the end of his or her term, the person could no longer continue to serve in the position without being re-appointed. The appointing authority would have to either re-appoint the individual or appoint a new person to the position, or the position would go unfilled until such an appointment was made.
Commission on Aging. Currently the Department of Aging and Adult Services provides services to the elderly and to adult dependents. However, different functions within the department are overseen by different people. Presently, the Commission on Aging has authority over issues affecting the elderly, but not adult dependents. The department's director, who is appointed by the mayor, has authority over the remaining services affecting adult dependents. Proposition D would rename the Commission on Aging to the ?Commission on Aging and Adult Services? and give it authority to oversee the entire Department of Aging and Adult Services. Thus, authority over the department would be consolidated in a single body.
Commission on the Environment. Currently, the Commission on the Environment has the authority to review proposed City policies for conformity with existing policies related to environmental sustainability. However, the one limitation the Charter places on this authority is that the commission may not consider building and land-use issues. This measure would remove that limit, but clarify that the commission's review does not supersede the powers and responsibilities of the Building Inspection Commission or Planning Commission. In other words, the Commission on the Environment would be allowed to make non-binding comments on land-use and planning issues. Proposition D does not specify which ?environmental? criteria the commission would use when making these comments?for example, whether it would view infill development as good or bad for the environment, or whether it would focus primarily on ?green building? issues.
Legislative Aides. Proposition D would allow Board members to have as many (or as few) legislative aides as the annual budget allows, subject to mayoral veto. Currently, the Charter specifies that each board member may have only two staff members. Other City agencies do not have their staffing levels determined in the Charter. Legislative aides assist in analysis of legislative proposals, respond to constituent inquiries, and help with the enormous range of tasks involved in governing the City. Pros
Those who support Proposition D state:
Board Deadlines During Recess. The measure would allow enough time to be involved with legislative actions. Many board actions must be heard on compressed timelines. Some items require multiple committee hearings and readings before the board, meaning that a two-week recess can dramatically limit the amount of dialogue needed to craft sound public policy.
The measure would prevent the mayor or policy bodies from taking an action just before a scheduled board recess, thereby forcing the board to act in haste or not at all.
Before scheduling a recess, a resolution must be introduced, heard in committee, and voted on by the board. This process is long and unpredictable enough to prevent the board from ?gaming the system? by scheduling recesses in order to postpone decisions for political reasons.
Votes When Board Members Are Disqualified Due to Conflict of Interest. When members are disqualified, it is more difficult for the board to take action. A disqualified board member, as a practical matter, counts as a ?no? vote, since he or she cannot vote ?yes? but the threshold for approval is not reduced. This measure would make passage of legislation and adoption of board actions more likely when a disqualifying conflict arises, thus preventing unnecessary legislative gridlock.
Holdover Appointments. Appointments have terms for a reason. Terms encourage reevaluation of appointees, turnover as deemed necessary by successive administrations, new people and ideas in government, and greater attention by the administration to the activities of City commissions and other bodies. Allowing holdovers undermines the intent of term appointments.
Many fixed terms expire mid-year. This means that with the four-month grace period provided for in this legislation, newly elected officials would have 10 months to reappoint or find replacements?which is plenty of time.
Commission on Aging. Because issues involving adult dependents and the elderly are substantially similar, it is logical for the commission to oversee the department that manages these issues.
Commission on the Environment. Building and land-use issues are inextricably intertwined with environmental sustainability, as is environmental justice. For example, ?green? building policies and the relationship between residential density and automobile use are building and land-use policies that have profound environmental implications. The Commission on the Environment should be able to consider these issues.
The legislation ensures that Commission on the Environment reviews would not in any way limit the powers of the Planning Commission or Building Inspection Commission. This means the legislation will not add another layer to San Francisco 's already complex and dysfunctional building and land use processes.
Legislative Aides. Serving as a board member is very demanding, and most are inadequately staffed to respond to the needs of their constituents.
The budget process, not the Charter, is the appropriate way to dictate how many aides each board member should have based on the job demands.
Limiting the number of legislative aides is a poor place to target cost savings in government; the cost of additional legislative aides would be more than offset by the improvement in quality of legislation and governance they would provide.
No other department has its staffing levels determined by the Charter, except for the minimum staffing requirements for the Police Department. These kinds of staffing rules do not belong in the Charter. Cons
Those who oppose Proposition D state:
Board Deadlines During Recess. This measure may permit the board to vote to go into recess after the clock for board action starts ticking, thus postponing important decisions for political reasons.
The measure appears unnecessary given that board is in recess only a few times per year and usually for short periods.
The public is not served by potentially long delays in legislative or administrative acts by the board.
Votes When Board Members Are Disqualified Due to Conflict of Interest. As a general matter, this measure would increase the probability of legislation getting passed. Lowering the threshold for approval of legislation is unwise, because in some cases it may allow a small minority of board members to adopt ill-conceived and harmful legislation.
Property- and business-owning board members are more likely to be disqualified due to conflicts of interest. This change would make it easier for the board to adopt legislation that property- and business-owning board members are often disqualified from voting on, substantially shifting the legislative balance of power in City government. In this way, Proposition D is an attempt by one end of the political spectrum to change the rules of the game to their benefit.
Holdover Appointments. Difficulty in getting appointment confirmations could lead to boards, commissions and advisory bodies lacking sufficient members?for extended periods of time?to take action. In many cases, the executive and legislative branches of government must approve the other's appointments. This change could leave important positions unfilled when the mayor and Board of Supervisors cannot agree on appointments, preventing City government from functioning properly.
Holdovers allow incoming mayors the opportunity to review individual commissioners before re-appointing or replacing them. In some cases, limiting holdover lengths may compel mayors to make more rushed and less thoughtful appointments.
Commission on Aging. The needs of the elderly are different in many ways from those of adult dependents. It makes sense to keep the commission focused on a single issue.
Commission on the Environment. Land-use decisions are already hopelessly fragmented, leading to a situation where anyone who opposes change has disproportionate power. This measure could further confuse the City's planning processes and result in conflicting direction to property owners, project sponsors and residents. Just as the state made a terrible mistake by establishing the California Environmental Quality Act outside of land-use planning law, the City could once again be adding to fragmentation of the planning process. If our Planning Code does not already reflect environmental concerns, the Code should be changed rather than creating one more power center to weigh in on the planning process.
The Commission's new authority could be used as a political tool to further obstruct planning decisions, rather than as an unbiased source of information that policymakers can use to improve the quality of land-use and building decisions. Although technically the Commission on the Environment's comments would be non-binding, one must presume that the proponents expect it to have some effect.
Legislative Aides. The Board of Supervisors holds the purse strings of City government. Because it has large influence over the budget process, the board should not be given the opportunity to increase its own staff size at taxpayer expense.
The board does not need additional staff. Each member represents only a single district, not the entire City. Thus, the workload is small enough to be handled by a supervisor and two paid staff members. Recommendation
SPUR recommends a ?no? vote on Proposition D. A Charter amendment of this complexity, with multiple provisions on multiple subjects, will inevitably have both strengths and weaknesses. However, because the six provisions are packaged together in a single amendment, we cannot pick and choose, but must weigh the good against the bad. On balance, SPUR believes that this measure's negatives outweigh its positives.
Some provisions in the measure are sensible. In particular, we agree that the number of Board of Supervisors legislative aides should be taken out of the Charter. Two staff is not nearly enough to support the enormous workload faced by our City legislators, and their ability to attend to constituents and matters of policy suffer mightily because of this shortsighted constraint. In addition, the consolidation of authority over the Department of Aging and Adult Services is a sensible way to allocate control over two similar services.
However, this measure may be something of a wolf in sheep's clothing. In many ways Proposition D appears to be an innocuous ?housekeeping? measure, but it could have numerous significant unspoken?whether intended or unintended?consequences. The changes with regard to holdover appointments could lead to significant problems for City government. Two years ago we learned about the potential problems resulting from power struggles over the appointment process when the Board of Supervisors and mayor reached a standoff over Planning Commission appointments, causing the commission's work to cease for months. Although holdover appointments have their problems, this change could lead to additional problems as the branches of government are pushed into struggles over appointments. Additionally, the provision lowering the threshold to pass legislation when board members are disqualified due to a conflict of interest could have very serious consequences for what type of laws are adopted by the City. Because of the small size of our legislature, a few disqualifications could dramatically shift the outcome of legislation, allowing a minority of board members to dictate City policy.
Proposition E
Increase In Benefits to Survivors of Police Officers and Firefighters Who Die in the Line of Duty
Proposition E is a Charter amendment placed on the ballot by a vote of the Board of Supervisors. If adopted by a vote of the people, it would increase the retirement benefits of qualified survivors (spouses, domestic partners, minor children, dependent children, dependent parents) of certain police officers and firefighters (safety employees) who die ?in the line of duty.? The measure would make the benefits for those who were hired after 1976 equal to such benefits payable to survivors of such safety employees who were hired before 1976.
Background
Under the current Charter, there are different benefits for the survivors of safety employees hired after 1976 than for those hired before 1976. Upon the death in the line of duty of both a pre-1976 and post-1976 safety officer, the qualified survivor receives the deceased safety officer's salary being paid at the date of death until the earliest date at which the deceased safety officer would have been eligible to retire, which is both reaching age 50 and having completed 25 years of service.
After the date that a pre-1976 deceased safety officer would have been eligible for retirement, the qualified survivor is paid 100% of the retirement benefit the deceased safety office would have been entitled to. By contrast, the qualified survivor of a post-1976 safety officer is paid only 75% of the retirement benefit.
Analysis
There are currently survivors of 11 deceased safety officers who would immediately begin receiving this increased benefit. In addition, the qualified survivors of all post-1976 safety officers who die in the line of duty and who are currently employed, as well as all those to be employed in the future, would be entitled to this increased benefit.
Of the 3,800 safety officers who are currently employed, over 90% are post-1976 employees.
Although the phrase ?in the line of duty? suggests death by a violent hazard while on duty, it also includes death caused by a disease that is determined to be related to performance of duties up until five years after retirement.
The controller has estimated that the cost to San Francisco of this increased benefit would be approximately $1 million per year.
Pros
Those who support Proposition E state:
• As a matter of simple equity the survivors of post-1976 safety officers who die in the line of duty should receive the same retirement benefits as pre-1976 officers.
• It is the least we can do as a community to generously compensate the families and loved ones of those who expose themselves to physical risk and disease in service to the public.
• Relatively few survivors of safety officers will qualify for this benefit, and the cost will therefore be small compared to the total cost of safety officer retirement benefits.
Cons
Those who oppose Proposition E state:
• The argument that this benefit will equalize pre- and post-1976 employees' benefits is misleading. The vast majority of active safety employees were hired post-1976, so nearly all of these employees have equal benefits right now. In addition, the change will apply to all safety employees hired in the future. This measure is not about equalizing benefits, it is about increasing benefits.
• The Charter Amendment that reduced retirement benefits for post-1976 safety officers was part of a large reduction in benefits to employees all across City government. If this measure passes, other types of employees will feel that they too deserve to return to a pre-1976 benefits package, which would have huge costs for the City. If pay and benefits in the City must always be ?equal? to those with the best deal, it becomes impossible for the City to make cuts for budgetary reasons or to phase in a workforce with less ?rich? benefits.
• At a time of City budget deficits we should not add $1 million to the annual cost of government.
SPUR's Position
SPUR recommends a ?no? vote on Proposition E. While we do not in any way intend to diminish the important contributions that our safety employees make to our city, especially those who lose their lives as a result of public service, our opposition to this measure stems from a larger concern about the process for establishing and changing benefits to City employees.
San Francisco voters are usually very generous when it comes to granting pay and benefit increases to public employees. In many cases, the motivation for this generosity is sound. We need to offer sufficient compensation in order to ensure that we continue to recruit the right people to work for the City and receive a high level of public service.
However, at almost every election, voters are asked to modify the terms of employee and retiree health and other benefit and pension plans. This piecemeal approach is confusing to voters, who are not provided adequate information comparing employee and retiree salaries, benefits and pension programs with comparable jurisdictions, long-term fiscal ramifications or what may be proposed on the next ballot by a City employee group trying to ?catch up? with another group.
Nobody can seriously argue that the pay and benefits packages for City workers are meager. It is unwise and unreasonable to make individual decisions to grant increases in pay and benefits to some groups without understanding how those decisions fit into the larger picture of employee compensation citywide. The City needs to make fundamental changes in the way compensation packages are evaluated and established. SPUR has repeatedly called for more information and analysis to help the voters make rational decisions about the City's benefit programs, and we renew that call here.
Proposition F
Non-Citizen Voting in School Board Elections
Placed on the ballot by the Board of Supervisors, this amendment would grant parents and legal guardians of public schoolchildren who are not citizens of the United States the right to vote in San Francisco Board of Education elections.
Background
This measure was placed on the ballot by the Board of Supervisors. From 1776 until the 1920s, many states in the United States allowed non-citizens to vote in elections?and even hold office in some cases?based on a desire to encourage newcomers to invest in local civic institutions as quickly as possible. San Francisco has attempted to extend voting rights to non-citizens in the past. In 1996, California 's Secretary of State ordered county voter registrars not to permit non-citizens to vote in the November elections. A judge ruled that the proposal conflicted with the California Constitution, which he interpreted as requiring U.S. citizenship in order to vote. Over the past three decades, local governments in Illinois , Maryland , Massachusetts , and New York have granted non-citizens the right to vote in some elections, most often those involving local school boards or other educational bodies. Washington , D.C. is also currently considering such a measure.
Analysis
Although the San Francisco Unified School District (SFUSD) doesn't keep track of its students' citizenship status or country of origin, the district reports that 30 percent of the its students are learning English as a second language, and the latest Census reported that 37 percent of San Franciscans immigrated from abroad, so it is estimated that as many as one-third of children in the system have at least one immigrant parent.
If San Francisco voters approve the amendment, the Department of Elections would need to work with SFUSD officials to develop a list of people with children in the public schools who would be eligible to vote. According to City elections officials, the measure could be implemented in any of several ways. The department could create separate ballots for non-citizen parents to use in already scheduled general elections, or separate elections could be scheduled for school board races, an option chosen by some other local governments.
This Charter amendment does not distinguish between legal and illegal non-citizen residents. Non-citizens would be allowed to vote regardless of immigration status. This is in part due to the fact that it would be extremely difficult administratively to require that the Department of Elections monitor immigration status of potential voters.
If adopted, the proposal is expected to face court challenges by opponents who claim it is in conflict with state law. The City attorney has said the measure may very well be found to conflict with California constitutional requirements on voter eligibility. ?There is a substantial likelihood that a court would conclude that the amendment conflicts with the California Constitution and is therefore invalid,? the City attorney said in an advice memo. However, the City attorney also notes there is precedent for the supervisors to introduce legally questionable legislation or ballot measures to challenge the limits of a law or overturn legal precedent. ?It is the prerogative of the city's elected policymakers to challenge the limits of the law ... so long as there is a cognizable legal argument in support of their challenge,? the memo states.
A central legal issue involves Article 2, Section 2 of the California Constitution, which states that ?A United States citizen 18 years of age and resident in this State may vote.? While this statement affirms the rights of citizens to vote, it does not directly state that non-citizens cannot vote. In addition, proponents of the measure argue that Articles 9 and 11 of the California Constitution permit charter cities such as San Francisco to pass laws in areas of local concern (such as school board elections) that do not mirror state law. The U.S. Supreme Court has ruled that non-citizens can vote if permitted by non-federal law.
Pros
Those who support Proposition F state:
• Educational studies show that when parents are involved in the school system, the entire school system improves. This measure would help to increase parent involvement.
• Whether or not they are citizens, all parents have a stake in their children's education. Non-citizens should not be excluded from decisions that will affect their children's future. This is especially true for those parents who are in the midst of the multi-year bureaucratic process of becoming citizens. If parents are allowed to vote in school board elections, their concerns and issues are more likely to be heard and addressed by school board members.
• Historically, most major steps forward in social policy have faced legal challenges. The threat of a lawsuit should not stop us from doing what we believe is right and defending it through the legal process. In any case, with the narrow focus on local school board elections, the proposal is likely stand up to a legal challenge.
• Our democracy will benefit from bringing more people into civic life. One of the most important and beneficial changes we have made to the way we govern ourselves over the past century has been the move toward greater inclusion of different groups in the electoral process. There is little to lose by allowing more people a voice in our democracy.
Cons
Those who oppose Proposition F state:
• The amendment is unfair to those immigrants who have fulfilled the requirements to become a U.S. citizen, a process that takes five or more years. Allowing voting rights to non-citizens will reduce the value and importance of attaining citizenship.
• Allowing non-citizens to vote in school board elections puts the City on a slippery slope where non-citizens will receive other privileges.
• There is no question that improving our schools should be a priority. But voting rights are not the only, nor are they the most important, way for parents to become involved in their schools. They can still participate by joining the PTA, volunteering, or through other avenues.
• While it may make sense to allow legal non-citizen residents to vote, the City should not extend this privilege to those who are here illegally.
Recommendation
SPUR has no position on Proposition F. The SPUR board was unable to achieve the 60 percent majority needed to either support or oppose this measure. Perhaps this reflects the conflicts between deeply held values that are embedded in this issue.
SPUR has worked for decades to increase participation in the civic decision-making process. We strongly believe that a responsive, effective government requires a high level of involvement by the city's residents. Declining voter participation over recent years seems to indicate that San Franciscans are becoming less engaged in our democracy. For these reasons, we believe Proposition F has merit in that it would open participation in public decisions to a wider group?a change that would likely benefits our schools and our city as a whole.
At the same time, the relationship between citizenship and voting rights has both practical and symbolic importance. The rights and privileges of citizenship take years to earn, and obtaining citizenship is a long-established precondition to voting in any American election. Encouraging immigrants to achieve citizenship is also an important way to increase participation in civic institutions, and benefits our democracy by integrating new people into public life. Allowing non-citizens to vote in school board elections could decrease the incentive to go through the naturalization process, and undermine the achievements of those who already have.
Proposition G
Authorizing Health Plans for City Residents
The Health Service System was established in the Charter in 1937 to provide medical benefits to employees and retirees of the City, College District, and School District , and their dependents. It is currently managed by the Human Resources Department with rate and plan decisions proposed by the Health Services Board and approved by a supermajority of the Board of Supervisors. This amendment would authorize the Health Services Board to adopt plans or make other provisions for health or dental benefits for residents who have never been employed by City government.
Background
Nearly 45 million Americans, or 15.6 percent of the country's population, were without health insurance in 2003 according the United States Census Bureau. The uninsured are disproportionately concentrated in central cities, where 19.5 percent of all residents are without coverage. Lack of health insurance is even more prevalent among immigrants and the poor.
A non-binding policy statement was adopted by the voters early in the Brown Administration urging creation of a resident health plan. The Mayor's Office and Health Department spent some time exploring options for coverage but the effort stalled as the economy faltered.
Proposition G was placed on the ballot by the Board of Supervisors.
Analysis
Under the current Charter, the City cannot offer health plans to residents who are not City employees. This measure would authorize the Health Service Board to consider methods of creating a resident health insurance program and set forth the procedures for adopting such a program. It does not articulate the details of any such plan or how one might be funded; it simply makes it explicit in the City Charter that the City is allowed to provide insurance coverage to non-employee residents and defines the roles of various governmental entities in investigating and drafting such a plan.
The Health Services Board would be authorized to propose a plan, which would require approval by two thirds of the board. It would also require an ordinance approved by three-fourths of the members of the Board of Supervisors detailing how the plan would be implemented. Any plan would also be subject to the regular annual budget process set forth in the Charter.
The measure specifies that the Health Service Trust Fund, which funds coverage for City employees and retirees, could not be used to fund resident coverage.
Pros
Those who support Proposition G state:
• The voters have already encouraged the City to develop resident health insurance. This will vest in a City department the authority to research and recommend, if feasible, such a plan.
• Prop. G sets forth supermajority requirements for adoption of any such recommendations. The amendment is a reasonable grant of authority to a department that maintains appropriate oversight controls.
Cons
Those who oppose Proposition G state:
• The Health Service System has gone through a very difficult decade and only recently got its management house in order. Adding this potentially huge undertaking to the department could again result in mismanagement of the employee-retiree health plan.
• While expanded public health coverage is an important goal, it only makes sense for the state or federal government, not the City, to provide it. If San Francisco provided health coverage for residents, it would provide an incentive for people to move to the City who have health problems and need insurance, resulting in higher costs and undermining the original intent of providing insurance.
• It is very unlikely that a cost-effective resident plan could be developed just in San Francisco . Despite the best intentions, this measure could end up creating huge new costs for City Government.
Recommendation
SPUR recommends a ?yes? vote on Proposition G. Furtherance of health coverage is a sound public policy objective and there is no reason the City should not at least explore the options for implementing such coverage for residents.
While the measure causes some concern that a poorly designed health plan for residents could unintentionally lead to large cost increases for City government, the measure contains adequate safeguards to ensure any proposed plan will not be adopted without a high level of public scrutiny. It is not clear at this time whether a viable San Francisco?only health plan could work, but we don't lose anything by exploring the option.
Proposition H
Naming The City-Owned Stadium ?Candlestick Park?
This ordinance would preclude the City from selling naming rights to Candlestick Park . The wording of this ordinance suggests it is intended to apply only to the current stadium and exempt future stadiums built on the site, however, it appears that the actual effect of the legislation could be to prevent the sale of naming rights to any stadium in that location, current or future.
Background
Absent an ordinance of the Board of Supervisors, decisions regarding naming of park and recreation facilities are made by the Recreation and Park Commission. In 1996 the City entered into a multi-year contract with the 49ers to allow for the marketing of the Candlestick Park stadium name, which resulted in a five-year deal to name the park ? 3Com Park .? The ?3Com? naming right expired in 2001 and the Board of Supervisors rejected a subsequent Recreation and Park Commission contract proposal.
As part of this year's budget negotiations the Board of Supervisors approved a proposed contract with the 49ers to again market the stadium's name. An upfront payment of $3 million from stadium naming was included in the Recreation and Park Department's budget for the current year. The contract included a list of pre-approved names for the facility, such as Wells Fargo, Virgin, Macromedia, and others. Naming rights would last for the remaining four seasons on the lease or any extensions. However, a contract for naming rights has not been finalized.
This measure was placed on the ballot by four supervisors shortly before the filing deadline, without public hearings or comment.
Analysis
Proposition H would supercede the authority of the Recreation and Park Commission and name the stadium ? Candlestick Park .? The ordinance reads, in its entirety: ?The City-owned sports stadium located at Candlestick Point, at Jamestown Street and Harney Way , is hereby named and shall be referred to as ? Candlestick Park .' This ordinance shall not apply to any privately owned facility that may be in the future constructed at that location.?
Although the Board of Supervisors has approved a proposed contract to market naming rights that would generate an estimated $3 million for this year's Recreation and Park Department budget, a contract has not been finalized and signed. If a contract is signed with a company before the November election, it is unlikely that this ordinance would override that contract, and the City would receive revenues from naming rights for the duration of the contract. However, this ordinance would preclude selling naming rights in the future once the contract expires.
In 1997, voters approved $100 million in lease revenue bonds to help with financing of a new stadium. The bonds would be repaid using increased tax revenue from a shopping center constructed at Candlestick Point. If these bonds were used in the future, the new stadium would have to be a public facility.
In the past, most stadiums were built substantially with public funds, but in recent years many new stadiums have been financed with larger portions of private investment. The new Giants' baseball park, for example, was funded by private investors. Marketing of stadium naming is often an important source of funds needed to make privately financed stadiums possible.
The second part of the ordinance is intended to exempt from the limitation on its name a new stadium built with private dollars at the same site, presumably allowing a new stadium to take advantage of funds from naming rights to help with construction costs. Because the current stadium is quickly becoming outdated, there has recently been increasing public discussion of the need for a new football stadium in the near future. But even a stadium built entirely with private funds might not qualify as ?privately owned.?
The land underneath Candlestick Park is owned by the Department of Recreation and Parks. The City can lease the land and allow a private facility to be constructed at the site, and the facility would be owned by the 49ers during the term of the lease. However, once the land lease expires the facility would revert to City ownership. As a result, it is questionable whether a facility built on City land would legally be considered privately owned since the facility would ultimately be City property.
If this measure is approved, it could effectively preclude the 49ers from ever building a new stadium at Candlestick Point. Thus, we could be immediately confronted with the problem of either finding the team another location for a new stadium or losing them to another city.
Because of the question over how this measure would affect future stadiums at Candlestick Point, the measure raises the larger issue of the benefits San Francisco derives by being home to a professional sports team. Many economists agree that the economic benefits provided by sports stadiums are not large enough to justify the huge public subsidies that were used to build stadiums in the past. However, the trend today is toward financing stadiums with far less public money.
No stadium is built entirely without public subsidy. For example, the Giants ballpark relies on roads, transit service, and other amenities that make it functional and accessible. However, professional sports teams certainly have some benefits for cities, especially when they are built substantially at private expense. Construction of stadiums and the attendant infrastructure provide jobs for residents. Additional jobs may also be created over the long term by the stadium's operations, although in many cases those jobs are only for a portion of the year while the sports team or other events occupy the stadium. Stadiums and sports teams may also raise a city's national profile, attract tourism, and help other local businesses that benefit from stadium traffic. City residents who rarely or never attend games may derive enjoyment from a team's presence by following them in the news, talking about them with friends, or through the greater sense of civic identity they provide.
Pros
Those who support Proposition H state:
• Publicly owned facilities should not be tagged with corporate names. The outcry over the 3Com naming contract and prior Board of Supervisors opposition to a naming rights contract should have sent a message that, budget crisis or not, corporate naming is unacceptable. Only if a privately owned stadium built without public expense were built would naming be acceptable.
• Candlestick Park is an important part of the City's history and identity. Its name should be retained for this reason.
Cons
Those who oppose Proposition H state:
• The revenue from the naming rights will pay for desperately needed parks programs in the city. The money is already included in the current year's budget.
• Candlestick Park is not a park in the usual sense. The public has no access to the facility, absent purchasing an event ticket. It is rented to a for-profit, commercial entity. This makes it different from other parks, where selling naming rights would be inappropriate. It is a football stadium, which is inherently a commercialized, profit-making enterprise. A main reason professional football can exist in its current form is through the money generated through advertising, so it makes no sense to complain about ?commercializing? an inherently commercial facility.
• The stadium will still be known as Candlestick Park by many people even if it has a sponsor's name.
The exception for a privately owned stadium is meaningless. No privately owned facility can be built on park land. A stadium could be developed by the 49ers under a long-term land lease, but the stadium would ultimately be owned by the City. This means any future stadium would need to be built without naming rights, which would make financing difficult and decrease the likelihood that a new stadium could be built.
Recommendation
SPUR recommends a ?no? vote on Proposition H. Although we should be judicious about allowing corporate naming for City facilities, the present case is an exception. Candlestick Park has always been a business venue and a corporate name at such a facility is not objectionable. The revenue is needed by the Recreation and Park Department, which transfers surplus 49er rents to general operations. Any permanent ban on naming rights contracts could reduce the possibility of a new stadium from being built on that site, which could be a great loss to the City and its residents.
Proposition I
CREATE AN OFFICE OF ECONOMIC ANALYSIS;
ECONOMIC DEVELOPMENT PLAN
This proposed ordinance would create an Office of Economic Analysis under the controller, which would prepare analyses of the potential economic impacts of legislation proposed at the Board of Supervisors. In addition, it would direct the Economic and Workforce Development Department (formerly the Mayor's Office of Economic Development) to periodically prepare and economic development plan for the City. The measure was placed on the ballot with the signatures of four supervisors.
Background
San Francisco does not currently have a provision for economic-impact review of pending legislation. The Board of Supervisors budget analyst conducts reviews of the fiscal implications of some proposals, but generally does not analyze the impacts of legislation for the city's economy.
The City also does not require the preparation of an economic plan focused on employment and industry growth. While the Economic and Workforce Development Department and the Planning Department are responsible for activities related to economic development, they focus primarily on business recruitment retention and land-use issues, respectively.
Several recent legislative proposals, including the prohibition on formula retail (?chain stores?) in some parts of the city prompted opponents of that legislation to call for more economic analysis and planning.
Analysis
This proposed ordinance would create a new office under the controller, headed by two economists. The mayor and Board of Supervisors would make recommendations from a list of eligible candidates to the controller as to who should fill these positions. Once established, the office would be charged with reviewing the impacts of legislative proposals on ?business attraction and retention, job creation, tax and fee revenues to the City, and other matters relating to the overall economic health of the City.? The office would have 30 days to prepare an analysis after legislation is introduced, although the president of the Board of Supervisors could extend that time limit. This office would not review all legislation before the Board of Supervisors, only those pieces that it determines may have a ?material economic impact? on the city.
Proposition I would also require the Economic and Workforce Development Department (formerly the Mayor's Office of Economic Development) to prepare a plan, updated at least every three years and approved by the Board of Supervisors, which would address a range of topics including: the sources of City tax revenue by industry and firm type; industries primed to create jobs in the city; strategies for protecting small businesses; goals for job growth and wage levels; and strategies for increasing employment opportunities for people with disabilities and who are economically disadvantaged. The economic plan would be used to inform the legislative review process discussed above that is established by this measure. The department would also be required to produce a survey of industries and employers that will identify policy barriers to employment attraction and retention.
Ordinances approved by the voters normally cannot be changed without a subsequent ballot measure. However, this measure contains a specific provision allowing the Board of Supervisors to modify the measure with a majority vote in order to better achieve the measure's goals.
Pros
Those who support Proposition I state:
• Legislators need more information to understand the economic implications of their actions.
• The City needs to develop a long-term economic development strategy to improve employment and well-being among city residents, and to grow the City's tax base. This is best done by the Economic and Workforce Development Department, since it will be integrated with its experience and efforts in business attraction and retention.
• The measure allows the Board of Supervisors to make changes if it is not functioning successfully. Too often, ballot ordinances become locked into place, even when they could be easily improved through minor amendments.
• The controller's office is the right location within City government for the legislative review responsibility. The controller is a 10-year appointment, and thus is more insulated from political factors than other departments. This is important in order to have unbiased, analytically based reviews of legislation.
Cons
Those who oppose Proposition I state:
• It is possible that the legislative review proposed by this measure will be used to stall legislation, rather than to inform the Board of Supervisors about its effects as intended.
• This measure gives economic concerns too privileged a role in the policy-making process. It makes sense to consider economic factors, but placing too great a focus on the economic implications of legislation could unintentionally detract attention from other important issues, such as environmental or neighborhood-character concerns.
• Although it makes sense to plan for economic development, the plan created by this measure will not be sufficiently integrated with other City planning efforts. Since it will be developed outside of the Planning Department, which is responsible for much of the planning related to physical development, it will have little impact.
• The measure was placed on the ballot at the last minute, without public hearings. This is not an appropriate or democratic way of creating public policy.
Recommendation
SPUR recommends a ?yes? vote on Proposition I. As we learned after the collapse of the dot-com economy a few years ago, San Francisco cannot continue to take its economic well-being for granted. While some economic issues are beyond the control of City government, many City policies have both short- and long-term implications for job availability, tax revenues needed to provide public services, and our ability to remain at the core of our regional economy. The measure will provide the City with some of the information it needs to make sound decisions about San Francisco 's long-term economic health. Of course, this information must be balanced by other concerns including environmental issues, equity, and quality of life. But having this information available will be a step forward for City government. Despite the fact that this measure was placed on the ballot at the last minute without public review, it takes the commendable step of allowing modifications by a majority vote of the Board of Supervisors. This ?future amendability? clause should be the norm for all legislation on the ballot.
Proposition J
SALES TAX INCREASE
Currently, San Francisco 's Transactions and Use Tax (sales tax) is 8.50 percent. This proposed ordinance would permanently increase the sales tax to 8.75 percent. If adopted, the sales tax increase would raise $8 million during the portion of FY 2004?05 after the tax took effect, and $33.6 million in FY 2005?06. A majority vote is required to adopt this ordinance.
Background
The City has projected a three-year budget shortfall of over $1 billion as a result of declining revenues associated with the recent economic decline and cost increases for City government. The City is required by the Charter to develop a balanced budget every year. To close this projected deficit, the mayor and Board of Supervisors chose to spread the ?pain? through a combination of budget cuts, increased fees, and new tax revenues, including the proposed business and sales tax increases (Propositions J and K on this ballot). The mayor introduced this proposed ordinance as part of that plan, and the supervisors placed it on the ballot.
To balance the City's budget the mayor and Board of Supervisors established a reserve account that could be used to backfill the budget should either the business or sales tax measures be defeated.
Analysis
The controller calculates the per-household annual impact of the sales tax to be $34, based on a median household income of $55,000 and the Bureau of Labor Statistics ?typical? market basket of goods and services subject to the sales tax. An estimated $13,415 of household income for the median household would be taxable under the proposed 0.25 percent increase in the sales tax. The proposed sales tax increase is permanent; there is no sunset provision as found in the four-year business tax increase proposal (Proposition K).
Because sales tax is paid in part by commuters and visitors who purchase goods in San Francisco , not all of the burden will be borne by San Francisco residents. In FY 2004?05, San Francisco residents would pay approximately 36 percent of the revenues raised. Business-to-business transactions, tourists, and daytime workers would pay the remaining 64 percent of the total revenues raised.
As of July 1, 2004 , San Francisco 's sales tax (8.50 percent) is the second highest of the 10 largest cities in the state, exceeded only by Oakland (8.75 percent). The average for these 10 largest cities is 8.08 percent. The sales tax rate is 8.75 percent for cities in Alameda County (including Oakland and Berkeley ) and 8.25 percent Contra Costa and San Mateo counties. The average sales tax for all neighboring Bay Area cities is 8.57 percent. If the proposed sales tax increase is adopted, San Francisco will join the ranks of the highest sales tax cities in the region. The San Francisco sales tax was 8.75 percent for a short period after the 1989 Loma Prieta earthquake, when the tax rate was temporarily raised to fund the unusual needs created in the quake's aftermath.
If San Francisco residents buy certain sales-taxable goods or services in another part of the state, they are supposed to pay San Francisco 's rate. A non?San Francisco merchant usually charges the City's sales tax rate on large value purchases of goods delivered into the city or vehicles registered here.
The sales tax increase is a general tax, meaning all revenues generated will be deposited in the City's General Fund and can be used for any purpose by the City. As a general tax, this measure requires a 50 percent plus one majority to pass, as opposed to a ?special tax? (specific programs are funded by the new tax revenues) which would require a two-thirds vote. Concurrently with this proposed ordinance, a separate companion policy statement (Proposition O) indicating the proposed priorities for the sales tax revenues is on the ballot. For more information on this policy statement, see SPUR's analysis of that measure. San Francisco will contract with the State Board of Equalization to administer and collect the increased sales tax revenue.
Sales taxes are often considered to be somewhat more regressive than other taxes on individuals, meaning that they fall harder on lower-income individuals. This is because low-income individuals tend to spend a larger portion of their incomes on consumption of goods, so the taxes they pay are a higher portion of their income compared with wealthier individuals. The regressive tendencies of the sales tax, however, are offset by other factors. First, some low-income residents may benefit more from government programs funded by the tax, meaning their payments are offset by government services they receive. In addition, many necessary goods are exempt from the sales tax, including groceries, housing, medical care, and some transportation expenditures.
Pros
Those who support Proposition J state:
• The mayor has developed a budget to address the chronic structural budget deficit over three years through a combination of efficiencies, service cuts, and new revenue sources. Although it would be preferable not to raise taxes, this measure is part of a necessary and balanced solution to a difficult budgetary situation.
• Failure to receive voter approval for increases in Sales and Business Taxes could result in further cuts harming the delivery of City services and aggravating future budgets.
• San Franciscans demand a higher level of services than residents in other jurisdictions. They should be willing to pay additional sales taxes to fund these services.
• With a large working population that resides in neighboring counties but commutes to, works, and shops in San Francisco , a portion of the tax increase will be borne by non-city residents, visitors, and commuters.
Cons
Those who oppose Proposition J state:
• San Francisco residents, businesses, tourists, and daytime workers are already highly taxed, frequently at rates substantially higher than other jurisdictions in the state. An increase in the sales tax will add to their burden and decrease San Francisco 's economic and job competitiveness.
• Even if the structural budget deficit is resolved, this is a permanent sales tax increase. The measure should be a temporary tax increase that expires when the economy improves and the City stabilizes its budget.
• The budget deficit should have been resolved by further budget cuts because by some measures the City has, when compared to other jurisdictions, a relatively high level of public spending per resident. The City has to learn to live within its revenue means.
• Sales taxes are regressive compared to other taxes, since they fall hardest on low, moderate, and fixed-income households. Budget problems should not be solved by increases in taxes on those who are already financially struggling.
• Taxing sales of goods will increase their price, and result in fewer purchases by consumers. This is the wrong approach to take at a time when consumer spending is needed to stimulate the local economy.
Recommendation
SPUR recommends a ?yes? vote on Proposition J. Increasing the sales tax is not an ideal solution to our budget problems. However, we believe that this measure is a reasonable part of a balanced solution to a budget deficit of unprecedented proportions. This solution spreads the burden between business, consumers, and those who pay fees for government services, and includes important steps to lower government costs.
SPUR believes it is preferable to raise taxes as a part of a multifaceted solution than to cut essential government services such as public health, fire protection, and services to low-income families.
PROPOSITION K
BUSINESS TAXES
Proposition K is an ordinance introduced by the mayor and placed on the ballot by the Board of Supervisors that would change the way the City taxes businesses. It would add a 0.1 percent tax on gross receipts in addition to the current payroll tax. In addition, it would extend the payroll tax to certain types of partnerships and other entities to which it does not currently apply. The measure is designed to generate $25.2 million during the remainder of fiscal year 2004?05 and $43.1 million in subsequent full years, and is one component of effort to close the City's budget shortfall.
Background
There are approximately 65,000 businesses that currently are registered with the City, less than 10,000 of whom are required to pay business taxes (the remainder of which are small businesses exempt from paying the taxes). In the past, San Francisco businesses paid either the payroll tax (which is calculated as a percentage of compensation to employees) or the gross receipts tax (which is a percent of total revenues to the business). Each business was required to calculate its tax liability under both taxes, and pay the higher of the two. However, in the late 1990s a number of businesses sued the City claiming the dual tax structure was unlawful because different companies were subject to different taxes, and therefore violated the Constitutional interstate commerce provisions. In 2000, the City settled with the companies and the voters approved Proposition I, which eliminated the gross receipts tax and established the payroll tax as the City's sole business tax. Last year, the payroll tax generated approximately $280 million in revenues to the City. Since the shift in the City's tax structure there has been a good deal of public debate regarding what form the City's business tax should take over the long term. Many individuals and groups have urged a shift from the payroll tax to the gross receipts tax, on the grounds that it would be relatively easy to implement and have less harmful effects on the city's economy.
Certain types of business organizations, called ?pass-through entities,? do not pay business taxes in San Francisco . These entities include partnerships, limited-liability corporations, and limited-liability partnerships. They are organizations that have a particular legal status with regard to state and federal tax policy and liability issues. Many of these pass-through entities are law firms, accounting firms, and other professional service providers. Proposition K would subject these firms to a local business tax for the first time.
Analysis
Gross Receipts Tax
Under Proposition K, businesses would pay a 0.1 percent gross receipts tax in addition to the 1.5 percent payroll tax the currently pay (the payroll tax rate remains unchanged). There is an exemption from the proposed gross receipts tax for small businesses that have less than $500,000 per year in gross receipts. The additional tax is targeted to raise roughly $30 million in revenues per year, and the 0.1 percent rate was chosen as a level that is estimated to generate that amount. However, because the City lacks precise information on the total gross receipts of tax-paying businesses, there is a possibility that this estimate is incorrect and the total revenues generated will be more or less than $30 million. If, after the first full year of the new tax, the controller determines that the tax raised more than that amount, the tax rate would be incrementally decreased in subsequent years to a rate that would generate $30 million annually. The measure provides that the new tax will apply until the 2008 tax year, at which point it will expire.
The gross receipts tax and payroll tax also have different economic implications for the City as a whole. Generally speaking, if a behavior is taxed, people will be less inclined to engage in that behavior. Under a payroll tax, if a business adds jobs or increases salaries, its tax burden grows. Thus, many feel that the payroll tax serves to discourage job creation by making adding jobs more expensive relative to other options, such as investing in new technology. Under the payroll tax businesses face at least some disincentive to add jobs and salary. The gross receipts tax, on the other hand, does not have the same dampening effect on job growth. However, because the tax is based only on revenue without regard to expenses, it can be hard on businesses with high revenues and relatively low profit margins. These businesses will pay a large amount in taxes because they have a lot of money coming in, but most of that money is paid back out in expenses. This means the gross receipts tax can cut deeply into their already relatively small profits. In addition, a gross receipts tax reduces the amount of money a business gets to keep out of every dollar coming in, which affects behavior by reducing the overall incentive to do business in the city. So, while both types of taxes affect business incentives, the payroll tax has the additional impact of creating a marginal disincentive to add payroll spending.
From the perspective of individual businesses, whether they prefer a gross receipts tax or a payroll tax depends on a number of factors, but a primary one is how much of their expenses consist of payroll. If a business is very labor-intensive, meaning it spends a large portion of the money it takes in on employee labor, it may have to pay more under the payroll tax, and thus prefer the gross receipts tax. On the other hand, a business that has a smaller payroll relative to its overall revenue would likely pay more under the gross receipts tax, and thus prefer a payroll tax.
Application of Payroll Tax to Partnerships and Other Businesses
Proposition K would extend the payroll tax, at its current 1.5 percent rate, to certain businesses including partnerships, limited-liability partnerships, and limited-liability corporations that are currently not required to pay the tax. The controller estimates that this change will result in about $13.5 million in new revenues in fiscal year 2005?06. Many of these businesses are legally distinct from corporations because they serve to distribute earnings among partners rather than having traditional payroll structures. In the past, these earnings have not been considered payroll, and therefore have not been subject to the payroll tax. The stated rationale for this change is that, despite their distinct legal status under state and federal law, these businesses for all intents and purposes behave much like other businesses, and therefore should be subject to local payroll taxes.
General Implications of Raising Business Taxes
It is often claimed that higher business taxes, whether in the form of payroll or gross receipts, will discourage businesses from locating in San Francisco and force some of those already here to leave. There is clearly some truth to the claim that tax levels affect business-location decisions. However, it is not quite so simple. Businesses also respond to a city's amenities, such as quality of life, schools, and the demographics of its population. Often these factors affect a firm's ability to attract the right kinds of customers and employees. The services provided by local government, including safety, education, parks, transportation, and others have an effect on business-location decisions as well.
Pros
Those who support Proposition K state:
• Although a business tax increase is not desirable, it is a necessary step to help the City close its chronic budget shortfalls.
• We need to raise taxes, and it is preferable to do so with a gross receipts tax, because it does not discourage employment and wage growth like the payroll tax. The addition of the gross receipts tax represents a shift toward a tax that will be better for the city's economic health in the long run.
• The gross receipts tax measure allows for flexibility. It can be reduced by the controller if it brings in more revenue than is needed to close the budget gap. In addition, it ?sunsets? after four years, which means it is not permanent.
• There is no legitimate reason for partnerships, limited liability partnerships, and limited liability corporations to be excluded from the payroll tax. These businesses benefit from the public services provided by City government, and should be asked to pay their share of the costs.
Cons
Those who oppose Proposition K state:
• Increasing business taxes will hurt the economy by driving away or harming businesses that are already having a difficult time in a slow economy.
• While different businesses prefer payroll or gross
