SF’s $16M pivot on homelessness: Portion of business tax to now fund prevention services

San Francisco supervisors have approved an ordinance that will reallocate over $16 million in a city business tax towards shelter and homelessness prevention services.

As part of the yearly budget also passed by supervisors at Tuesday’s board meeting, this ordinance will ensure revenues made from 2018’s Proposition C Homeless Gross Receipts Tax will temporarily shift from affordable housing for transitional aged youth and families to homelessness prevention efforts.

Prop. C added an additional 0.0175 percent up to 0.69 percent to gross receipts tax on businesses earning over $50 million to help the city provide resources to unhoused people.

Funds previously were deposited in the Our City, Our Home Fund, with at least 50 percent going toward permanent housing — 20 percent for homeless youth and 25 percent for homeless families — 10 percent toward shelters and hygiene programs, 15 percent for homelessness prevention and 25 percent toward mental health services.

“Given the current state of the homelessness crisis, it is necessary to reallocate funds to where they are most needed.”

Ordinance passed by Board of Supervisors

The city was previously unable to use funds from the business tax due to a “legal challenge” that went well into 2020 until the California Supreme Court ruled in the city’s favor, reads the ordinance.

“Given the current state of the homelessness crisis, it is necessary to reallocate funds to where they are most needed,” reads the ordinance.

The reallocation comes as a larger spending plan from Mayor London Breed to combat homelessness, reads the ordinance.

The budget move was previously opposed by a multitude of community organizations because it could diminish resources for youth and families facing homelessness. The committee that oversees the tax’s revenue spending approved a motion in June to request the Mayor’s Office to find other ways to fund these services.

Restaurant and business owners voiced support for the reallocation, with many saying that more shelter beds available will boost public safety and help the city’s efforts to revitalize the downtown district.