The California controller identifies dozens of sources from which Bay Area counties and cities obtain billions of dollars in revenue each year. These city and county taxes, special benefit assessments, licenses, permits, franchises, fines, forfeitures, penalties, revenue from use of money, revenue from the use of property, aid from other governmental agencies, charges for current services, miscellaneous revenue, and other financing sources are listed in Appendix D.

Which of the myriad of possible revenue sources is most likely to provide long-term funding to continue and expand homeless programs in the BARI region? How might Bay Area homeless stakeholders be organized to govern regional and cross-jurisdictional homeless programs?

Basic Considerations Regarding Long-term Regional Homeless Funding Alternatives

It is easy to identify a laundry list of potential revenue sources that might fund regional homeless programs. The problem is to prioritize among possible sources and to devise a realistic strategy to secure funding from the most promising source(s). Competition for funding is fierce. It is not realistic to expect to find a source of funding which the funding entity will give to regional homeless activities without the expenditure of considerable time and energy convincing the source to provide the funding. The more desirable the source the more intense the competition is likely to be.

The pursuit of funding will require homeless service providers including the governing bodies of BARI The Regional Task Force (RTF) and the Regional Steering Committee (RSC) to make strategic decisions on how best to deploy the limited amount of time and money they have to pursue the most promising potential funding source(s). Obtaining funding will require hard, sustained staff work of a kind that cannot be done only by volunteers or committees.

Following are some basic considerations that may help BARI and other service providers decide which potential sources to pursue and dead-ends to avoid. These considerations help frame the discussion of individual revenue sources that follows.

Is there a logic to using the funding source for homelessness? Is there some nexus between the source and homelessness? Some revenue sources bear a clearer relationship to homelessness than others. Decision makers might be willing to approve use of property transfer tax revenue to fund homeless housing because they perceive a relationship between enormous real estate appreciation on the one hand and growing lack of affordable housing and homelessness on the other. They might devote tobacco settlement funds to homeless health programs because of a perceived connection between tobacco use and health problems. They may be less willing to devote revenue from dog licenses or parking meter violations to homeless activities because they do not see a logical connection between the revenue sources and homelessness.

What are the legal requirements (and barriers) to securing the funding? Constitutional and statutory law circumscribe government’s power to raise revenue. The U.S. Supreme Court has held that the U.S. constitution requires governments to prove that there is a nexus between negative development impacts and the use of funding to mitigate the negative impacts. California’s Propositions 13 (1978) and 218 (1996) impose onerous super majority voting requirements to secure passage of many local taxes and prohibit others altogether. An important starting point in analyzing potential revenue sources for homeless funding is the formal legal basis for the source.

Who controls the revenue source? Some revenue strategies require the approval of many jurisdictions; others fewer or just one. One-stop revenue strategies such as obtaining a single federal or foundation grant for the region or getting one legislative change at the State level that applies to the entire region may be less time consuming and provide more uniform results than strategies that require approval from the governing bodies of each of the BARI region’s 11 counties. Strategies that require city-by-city approval in each of the region’s 117 cities pose a particular challenge. Table 1 below identifies who controls key revenue sources which might be used for regional homeless programs that are discussed in this report.
 

Source: See discussion of each source in this report

How likely is it that the decision-makers who must approve use of the funds will dedicate them to homeless programs? If the approval of county boards of supervisors, city councils, redevelopment commissions, Business Improvement District governing boards, the State legislature, or some combination of the above is required, how realistic is it that such approval really will be forthcoming?

What is the competition for the revenue source? There is competition for every potential revenue source for homeless funding. Depending on the source, competition may come from contenders who want to use the funding for something other than homelessness. It may also come from local homeless organizations that prefer to see the money go to local, rather than regional, homeless programs. Well-organized anti-tax groups are likely to opposed any new tax. Before pursuing an identified revenue source it is important to identify who else is competing for it and make a judgement about how likely it is that regional homeless advocates will prevail in competition with others. It may be advantageous to pursue sources where the identifiable competition is weak rather those where it is strong.

How much revenue will the source generate? Some potential revenue sources could produce major funding; others much less. Homeless organizations may decide to engage in a long and costly campaign to obtain funding from a single source that will produce a large amount of revenue, pursue several sources that will generate less funding, or pursue both strategies simultaneously.

How will the revenue stream change over time? The revenue stream from long-term revenue sources will change over time. For example, tax increment financing which is based on the increment in property tax revenue generated by a project will grow if the project is successful. A commercial development linkage fee based on the amount of new commercial square footage built may decline or even cease if new office construction slows or stops due to economic or political changes.

What concrete operational next steps are required to move forward and actually secure the funding? Some funding strategies may require additional studies or the involvement of technical experts. At the county level homeless organizations need to be sensitive to each othe and to other political actors. A thoughtful process of design and consensus building among BARI members and consultation with county and city level groups is essential before BARI moves ahead with any campaign to secure funding for regional homeless programs. Different strategies may require selection of a lead agency with particular expertise to pursue the funding opportunity, structuring of a new regional collaborative, collective design of a regional campaign, or some other approach.

Principal Long-term Bay Area Regional Homeless Funding Alternatives Investigated Presently the principal source of funds for BARI is a 1995 $7,000,000 HUD Innovative Initiatives grant. This source has been supplemented by grants from private foundations (the Fannie Mae, Hewlett, and San Francisco Foundations) and local government (the City of San Jose).

From the many revenue sources the California controller identifies ten were selected based upon prior work of the RSC Task Force On Sustainability and meetings with the RTF and RSC,^[5] and discussions with individual RSC and RTF members. Five sources appeared to be most worthy of detailed investigation. These are discussed below in some detail. Five other sources deemed next most promising are identified and discussed briefly. Mainstreaming is discussed separately.