Earlier this year, San Francisco Supervisor Mark Farrell proposed an ordinance aimed at affordable housing developers. The idea, as simply summed up in a February agenda, was to “require that all cash-out proceeds received by an owner of an affordable housing development supported in whole or in part by taxpayer funds shall be used only for the creation, development, and preservation of affordable housing.”
It sounds like a common sense enough piece of legislation (from a supervisor with a history of championing government transparency), but according to the San Francisco Chronicle, it may have been something of a “political miscalculation,” on Farrell’s part, because he introduced the bill as exposing “dark money” in local campaigns but “underestimated the resistance he would encounter from virtually every major affordable housing developer in the city.”
Affordable housing developers in San Francisco have historically donated money to campaigns around specific ballot measures, the Chronicle reports, adding that because many of them are nonprofits, the IRS prohibits their spending money on specific candidates, and places other limits on what they can lobby for. But Farrell’s legislation gets deeper into the weeds, prohibiting “developers from refinancing the buildings they developed with the help of public funds and then using the proceeds to contribute to political campaigns,” according to the Chronicle.
Farrell has pointed to donations from the nonprofit developer Todco as an example of what he’s after.
“A couple of years ago, Todco refinanced its federally subsidized apartments for millions of dollars, the group’s executive director, John Elberling, previously told The Chronicle,” the paper reports. “It spent $270,000 of that money in the November election on campaigns backed by progressives.”
Builders of affordable housing, however, believe they should be able to advocate for policies that affect them.
“This proposed legislation would regulate the limited funds we do earn as a nonprofit [business] to ensure we don’t speak out against policies we disagree with,” Gail Gilman, director of Community Housing Partnership, wrote in a letter to Farrell (which was reported on by the Chronicle). She added that the legislation would “negatively impact nonprofit developers only” because for-profit developers could still continue to spend freely.
Whatever happens with Farrell’s San Francisco legislation, it echoes a similar effort in Los Angeles and across the U.S., where “campaign finance reform” became a buzzword on par with “economic populism” in the 2016 election.
In January, a number of city councilors in Los Angeles swore off donations from real estate developers. While one such effort seemed to be a long-shot bid to unseat the incumbent, Mayor Eric Garcetti (which didn’t even remotely work out), the Los Angeles Times has noted that swearing off developer funds is a tried-and-true strategy in L.A.
But those councilors weren’t specifically targeting nonprofit developers of affordable housing. With San Francisco’s sky-high rents, rate of displacement and limited supply of housing in general, that strategy could, indeed, be something of a political non-starter.
Rachel Dovey is an award-winning freelance writer and former USC Annenberg fellow living at the northern tip of California’s Bay Area. She writes about infrastructure, water and climate change and has been published by Bust, Wired, Paste, SF Weekly, the East Bay Express and the North Bay Bohemian.