Housing Affordability and the Soda Tax Discussed

Opposing sides for two major propositions that San Franciscans will consider on Nov. 4 went head-to-head Wednesday night at a community forum held at Bird & Beckett Books.

Proposition G seeks to address the City’s housing affordability crisis through a tax that would discourage new owners of buildings with two to 30 units from evicting long-term tenants and flipping properties for a quick profit. To do this, the ballot measure would impose a tax of up to 24 percent of a building’s value if it is resold within the first five years of the initial sale.

Proposition E, also known as the Soda Tax, would impose a two-cent tax per ounce of every Sugar-Sweetened Beverage (SSB) sold in San Francisco. The tax, to be paid by distributors, would be used to fund City-operated health, nutrition, physical education and active recreation programs.

Claudia DeLarios Moran, liaison for the San Francisco Unified School District, moderated the debates.

Advocating on behalf of Prop E, Brittni Chicuata, American Heart Association (AHA) director of government relations, declared that it is time for the community to “recognize the connection between chronic illness and sugary drinks.”

Chicuata cited the epidemic of Type 2 diabetes in neighborhoods of color and low-income neighborhoods: 1 in 3 children born after the year 2000 will be diagnosed with the disease before reaching adulthood. According to the American Diabetes Association, the outlook is even worse for blacks and Latinos, for whom one child in two will be afflicted.

Heart Association studies have shown that soda companies have a host of tactics to specifically target children, Chicuata said. Grocery stores, for example, will place these drinks on shelves at eye level with small children, inciting them to beg their parents to buy it. “Why would you target a known harmful product to a child?” Chicuata said. “That’s not right.”

Roscoe Mapps, political director for the “No on E” campaign, countered that a tax on sugary drinks may actually penalize the poor. The tax is regressive, levied at the same rate for every individual regardless of his income, so people with the smallest incomes would get hit the hardest. The tax is imposed on every business that initially purchases these products from producers outside of San Francisco with intent to distribute. For example,a  23.5-ounce can of Arizona Iced Tea would cost businesses an extra $0.47 upfront for the privilege of distributing sugar-laden beverages.

Mapps added that the tax would hurt mom-and-pop businesses as well as their customers, with small business owners scrambling to mark up their prices in an attempt to recover lost income. Furthermore, he noted, the pricier Starbucks drinks, many of which are heavily sugared, would be exempt from the proposed tax.

Campos describes a scourge against San Francisco communities

The discussion of Prop G was more one-sided: Its opponent failed to show up due to illness. Instead, proponents of Prop G piled on.

First, District 9 Supervisor David Campos offered some background to the city’s housing crisis.

Campos, who has lived in San Francisco since 1997, lamented that the city has “the fastest-growing inequality of any major city in the United States.” He cited a figure calculated by San Francisco’s Human Services Agency and published in the San Francisco Chronicle: if San Francisco were a country, the United Nations rank it “behind Rwanda” in terms of its degree of income inequality.

Campos charged that many long-term renters are being systematically driven from their homes under the Ellis Act, a state law giving landlords the unconditional right to evict all tenants from the building in order to “go out of business.” Campos asserted that the Ellis Act has been widely abused by landlords seeking to sell their buildings for a substantial profit.

According to an anti-displacement report conducted by the city’s Budget and Legislative Analyst and released by Campos’ office last year, more than 2,000 units of housing were vacated between March 1, 2012, and February 28, 2013, through either Ellis Act evictions or tenants’ financial settlements with their landlords. Some 49.3 percent of the displaced tenants were living below the poverty line. The report found that between 2012 and 2013, the number of Ellis Act evictions nearly doubled, and that 1,667 eviction notices have been served on San Francisco renters since March 1, 2010.

Quintin Mecke, manager for the Yes on G campaign, asserted that City Hall has “gone all-in handing over almost every free public asset” to the wealthy newcomers who are moving into San Francisco—employees of Twitter and Dropbox and AirBNB and the like. Rent-controlled housing is among the assets being surrendered to this “very particular sector,” he said.

When their apartments are renovated and rented out for three times as much to Google employees and startup CEOs, those units have vanished, never to return. “It is a fixed stock of housing,” Mecke said.

Mecke assured his audience that Proposition G specifically targets speculators and opportunist investors by reducing their economic incentives, and exempts individual homeowners, as well as a number of other property owners, from the tax. “Unless you’re planning on buying and selling a multi-unit apartment building, you will never pay a tax,” Mecke said. “99 percent of all San Franciscans in this town right now will never pay the tax.”

While properties sold within a year after purchase are subject to the steep 24 percent tax, by the fourth to fifth year of ownership, that rate drops to 14 percent.

Mecke recounted a conversation he had with a pair of investors he’d met at Sunday Streets who believed they would be hurt by Prop G. He asked them what they would say to the people who got evicted. “And without missing a beat, [the man] said, ‘Move to Oakland.’”