Mayor Lurie blasts Prop. I as a ‘slush fund.’ His office would control the money.

A long time ago, in a school not so far, far away, your humble narrator had a job feeding Scantron multiple-choice tests through the grading machine. 

The device emitted a telltale click every time it marked a wrong answer. When you ran an ace student’s test through the machine, it would make a pop or two. But, for a particular class clown, God help me, that machine sounded like being strafed by an AK-47 — the audible signifier of a barrage of uninterrupted nonsense.

Sometimes, all these years later, I still hear that staccato burst in my head, unbidden, when reading or hearing the words of certain politicians.

It is surprising — and disappointing — that the most recent politician to induce this unwelcome nostalgia is Mayor Daniel Lurie. 

In a joint press release with the police and firefighter unions issued last week, Lurie took aim at Proposition I, an affordable-housing measure. 

Fair enough: There’s nothing wrong with the mayor opposing this measure, which was signature-gathered onto the ballot largely by the Democratic Socialists of America.

That’s especially the case when his office, labor, the Board of Supervisors, affordable housing developers and others have already created Prop. C, their own deeply negotiated, consensus affordable-housing measure, to bolster the Housing Trust Fund. 

Affordable-housing groups wrote the future Prop. I, but dropped it as part of the grand bargain that led to Prop. C. But that deal evidently didn’t apply to every last vestige of the city’s left: Those meddling kids at the DSA picked it up and signature-gathered it onto the ballot, so here we are. Some degree of irritation is understandable.  

The issue, however, isn’t with the mayor’s sentiment but his salesmanship. To wit: Lurie described Prop. I as an “unaccountable slush fund.” 

Well, that’s odd: The entity responsible for administering the funds amassed by Prop. I would be none other than the Mayor’s Office of Housing and Community Development. Yes, the Mayor’s Office of Housing and Community Development. 

Machine-gun noise. 

In the press release, Lurie further warned that, if passed, Prop. I would siphon money out of the general fund — money that could, instead, go to recruit and retain police and firefighters. 

Again, fair enough, but every voter-approved set-aside — be it for libraries, trees, early childhood education or, in fact, the bolstering of the Housing Trust Fund — reduces the size of the general fund. 

But it took particular chutzpah for Lurie to lament the loss of these specific dollars. Because, in February, he also proposed doing away with them.

Rather than sucking them out of the general fund to ostensibly fund affordable housing, he proposed to simply eliminate them altogether as a tax break for sellers of property valued at $10 million or more. This is a group we could, by way of shorthand, refer to as the wealthy. 

Machine gun noise. 

It’s not problematic for Lurie, or anyone, to object to Prop. I. But it is deeply problematic — and irresponsible — for anyone, let alone the mayor, to claim that an “unaccountable slush fund” is being run out of the mayor’s office.

The Mayor’s Office of Housing and Community Development has a longstanding reputation for monomaniacal scrutiny over its monetary distributions. Its present director, Dan Adams, is a highly regarded public servant. 

“Anyone who thinks money controlled by MOHCD is a slush fund never tried to get blood out of a stone or a dollar out of MOHCD,” summed up a longtime affordable housing developer. “The level of scrutiny and oversight and second-guessing of developers is epic before they release any funds.”

Adds another, “They run a tight ship, they are good at what they do, and they do the mayor’s bidding.” 

“There are all kinds of good or bad reasons you might be for or against” Prop. I, notes former longtime city controller Ed Harrington. “But it’s not a slush fund.” 

Slush funds, he continues, require some degree of clandestine secrecy, like the one former Public Works director Mohammed Nuru gleaned from Recology, parked in the Parks Alliance, and tapped to underwrite lavish, liquor-fueled parties.

A ballot measure voted on by the people, administered by the mayor’s office — and subject to mandatory yearly audits — is not quite the same. 

With so much of San Francisco government being both practiced and received at a superficial level, it is deeply unfortunate that the mayor is telling voters there’s a slush fund being run out of his office.

Lurie has a small army of smart political people working for him 24/7/365, but this doesn’t seem like a great way to convince voters to give money to ailing transit agencies — or, for that matter, pass a separate affordable housing measure (which aims to do some of the very same things, is pushed by some of the very same people and would also be administered by the Mayor’s Office of Housing and Community Development).  

Team Lurie is confident that the mayor is so popular and voters are so enthused with the city’s trajectory that they will dutifully enact his specific desires on the forthcoming ballot. Lurie’s strategists have been right before, and they will probably be right again. Regardless, sowing voter nihilism via ludicrous statements only makes the general public dumber and more cynical. 

Why is this happening? In a word: Money. In another word: Control.  

Giving the backstory for how things in San Francisco got to be the way they are always feels a bit like the scene in “Henry V” laying out the king’s convoluted and tenuous claim to the French throne. It’s difficult, even tedious, but know this: It reliably culminates in bloody constraint.

Once more unto the breach, dear friends: In 2020, voters passed Supervisor Dean Preston’s measure, which was, cosmically, also called Prop. I. It doubled the “transfer tax” imposed upon sellers of properties valued at $10 million or more, with the windfall intended to go to affordable housing. 

But, due to the prevailing legal opinion at the time, the money was not mandated to go to affordable housing, and Mayor London Breed subsequently directed the funds as she saw fit. 

In March 2024, voters approved a measure meant to ease the conversion of offices to housing, an intuitive thing to do in San Francisco’s hollowed-out downtown. Within that measure, however, was a clause allowing the Board of Supervisors to adjust the transfer tax rate, not the voters. 

And that’s key. Prop. I raised hundreds of millions of dollars for San Francisco, but the city’s unionized building trades have always loathed it, accusing Prop. I of “freezing the pipeline” and depriving its workforce of the jobs they would’ve had on big buildings after they’d changed hands. 

Earlier this year, Lurie and Supervisor Bilal Mahmood rolled out a proposal to undo Preston’s 2020 measure and roll back the city’s high transfer tax rate, a gift for wealthy real-estate interests, but also a move intended to spur building sales and property tax reassessments, and goose construction work and development. 

Lurie and Mahmood shelved their proposal in June: They didn’t have the votes on the board to pass it. But if Lurie’s desired supervisors win in November, those votes could materialize, and the transfer tax could be reduced. But, here’s the thing: not if Prop. I wins. Prop. I would put the transfer tax rate back under the purview of voters. 

So, in large part, that’s what this is about. Lurie wants the flexibility to lower the city’s highest-in-the-realm transfer tax rate without going to voters. And the proponents of the original Prop. I of 2020 want voters to lock this high tax rate in — and, this time, officially direct the funds into producing, preserving and protecting affordable housing. 

This is why everybody is kung-fu fighting. 

In light of the above, what Prop. I would actually do feels a bit like an afterthought. But the mayor’s people are rankled about that, too.

During the ballot simplification committee process, the mayor’s office unsuccessfully tried to strip the term “affordable housing” off Prop. I (it polls well) and replace it with “alternative housing” or “social housing” (people don’t know what the hell that means). 

Mayoral allies complain that Prop. I isn’t really an affordable-housing measure and is, rather, a Trojan Horse for social housing. But this is a semantic failure. Social housing — not-for-profit residences owned by the government or another organization, permanently off the speculative market and rented or sold to low- or middle-income people — is a form of affordable housing. 

The city’s fervent pro-housing activists, incidentally, are not reflexively turned off by funding social housing: “Social housing is cool,” said Laura Foote, the executive director of YIMBY Action.

“Don’t threaten me with a good time,” added Jane Natoli, the organization’s former Bay Area director. 

But the mayor’s complaint that Prop. I is unwieldy and highly proscriptive is not unwarranted.

Some 30 percent of its funds — likely scores of millions of dollars yearly — are mandated to be directed not just to social housing but social housing in which “residents shall have the right to participate directly and meaningfully in decision-making concerning the operation and management of the project.” 

This is a model that housing professionals warn is extremely difficult to pull off, especially via top-down government initiative. It has been problematic in the past, as low-income tenants, intuitively, are loath to vote against their own economic self-interest to raise rents and take on deferred maintenance and other eventualities; even rich people don’t want to do that. 

The Mayor’s Office of Housing and Community Development would be pressed to foster a type of housing that has often proved infeasible. But, because MOHCD isn’t a slush fund and because the mayor’s office unilaterally controls disbursements — Prop. I, praise the Lord, does not call for a committee — what might happen instead? 

That’s difficult to foresee, but, if Prop. I passes, a good deal of money may end up directed to keeping low-income people in their homes and improving the woeful conditions at city co-ops. It’s hard to say either of these things are bad per se, but they aren’t necessarily affordable housing production. 

We’ll write more about this as November approaches. Until then, we’re sure that the political discourse will be nuanced, truthful and respectful. 

Machine gun noise.