Mayor London N. Breed's Prop C Waiver Legislation Passes Board of Supervisors
Mayor Breed's legislation will allow companies to voluntarily agree to waive their rights to a refund should Prop C be found invalid by the courts, in return for a 10% deduction on their tax liability
San Francisco, CA — The Board of Supervisors today passed Mayor London N. Breed’s legislation that will allow companies subject to November 2018’s Proposition C gross receipts tax to voluntarily agree to waive their right to a refund should that legislation be found invalid by the courts. In return for this agreement, the company would receive a 10% deduction on their tax liability and the City would be available to spend the funding immediately instead of waiting for any legal uncertainty to be resolved. Supervisor Vallie Brown co-sponsored the legislation.
Proposition C, a tax to support homelessness and housing services, passed with roughly 61% of the vote and is currently held up due to legal uncertainty. The funding from the legislation is being collected, but the Controller is not authorizing the City to spend the funding due to the litigation risk. Should the courts rule that Prop C was required to meet a 2/3 vote threshold, the money being held by the Controller will have to be refunded.
With Mayor Breed’s legislation, companies can choose to waive their right to have a portion or the total of their taxes refunded if the courts ultimately require the 2/3 threshold to be met. In return for waiving these recovery rights, the companies would receive a 10% tax liability deduction. This would potentially free up funding that the City would otherwise be unable to spend until the matter is settled in court.
“While we expected that this funding would likely be tied up in litigation due to the legal uncertainty, this is one way to make some of the funding available sooner rather than later,” said Mayor Breed. “In the meantime, we are moving forward with my shelter crisis legislation and my plan to open 1,000 new shelter beds by the end of next year, in addition to increasing resources for behavioral health and substance use treatment and more permanent supportive housing for our homeless.”
In October 2018, Mayor Breed announced a plan to add 1,000 new shelter beds by 2020, with 500 of them being built by this summer. In order to achieve this goal, she today signed into law her legislation to streamline the creation of new shelters and Navigations Centers. Since taking office, Mayor Breed has opened a total of 338 new Navigation Center beds.
“San Franciscans are in dire need on our streets right now. We need San Francisco businesses to step up, make use of the waiver, and help us meet the need,” said Supervisor Vallie Brown. “The courts can be slow, and this legislation frees up funds to move more quickly. We’re in crisis – let’s act like it.”
The legislation passed today on the first reading. The second reading is scheduled for Tuesday, April 16.