Happy Tuesday, and welcome to another edition of Rent Free.
This week’s newsletter includes stories on:
- The anticlimactic end of the wild legal fight over Charlottesville, Virginia’s new zoning code.
- Federal housing reform miraculously passed out of the Senate on a bipartisan basis during the shutdown.
- Democrats’ bad idea of letting furloughed government workers skip paying rent during the shutdown.
But first! Our lead item is on how Marc Benioff continues to pingpong between equally bad ideas on how to clean up San Francisco’s streets.
Marc Benioff Continues To Be Wrong About Homelessness
This past week, Benioff, the billionaire founder and CEO of Salesforce, courted endless controversy when he told The New York Times that President Donald Trump should send in the National Guard to assist San Francisco’s understaffed police department in cleaning up the streets.
The remarks did not go over well in liberal San Francisco, where Benioff is from and his company is headquartered.
In the wake of the Times interview, liberal donor Ron Conway resigned from the Salesforce Foundation’s board in protest, comedians have canceled their scheduled performances at the company’s upcoming conference, and Benioff walked back his comments in a post on X.
(San Francisco Mayor Daniel Lurie has since put out a video saying he is ready and willing to work with federal law enforcement on enforcing drug laws, but is opposed to National Guard deployments.)
In addition to being controversial, Benioff’s support for sending in the troops is unusual and more than a little ironic, given his last major foray into San Francisco city politics.
In 2018, Benioff was the primary funder and a fierce public advocate for Proposition C—the ultimately successful ballot initiative that hiked the city’s gross receipts tax by $300 million a year on large tech companies to pay for homeless housing and services.
The proposed tax attracted a lot of opposition from the business community and the city’s political establishment, including then-Mayor London Breed and state Sen. Scott Wiener (D–San Francisco).
All warned that such a steep tax increase (the largest in San Francisco history) on such a narrow base of businesses would drive companies out of town. Moreover, there was a lot of concern that dumping a lot of money into San Francisco’s notoriously opaque homelessness bureaucracy without a clear spending plan was a recipe for waste.
Benioff shrugged off these objections, saying that the new revenue was necessary to deal with the crises of “cleanliness” and “inequality” in the city. In a very public social media spat with Jack Dorsey, he accused billionaire opponents of Prop C of benefiting from city tax breaks while doing nothing to support the homeless.
Seven years on from Prop C’s passage, it seems like the measure’s critics had a point that even Benioff is tacitly conceding.
A number of large companies did leave town in response to the tax hike, including Stripe and Block, and the homeless population continued to increase.
More notably, the city’s last biennial homeless census in 2024 counted 8,323 homeless people in San Francisco—a 7 percent increase from the 2022 count.
Despite a cumulative $821 million in Prop C–funded spending—including half a billion on permanent supportive housing and homeless prevention—the number of people sleeping on the streets or in shelters has only grown.
The tax has spent a cumulative $164 million on mental health services, and yet surveys show that mental illness rates among the homeless population have “skyrocketed.”
The situation is bad enough that Benioff, who championed the left-coded Prop C as a way of getting San Francisco’s homelessness and public order crises under control, is now demanding a very right-coded federal military intervention to address the same problem.
One could posit a number of reasons why Prop C–funded programs haven’t arrested the rise of San Francisco’s homeless population.
Inefficient spending is a plausible one. Past controversies include a Prop C–funded program running a “safe camping” site for the cost of $61,000 per tent, per year.
One could argue that the initiative put too much priority on providing permanent supportive housing over emergency shelter. Lurie’s latest budget redirected some Prop C funds from housing to shelter programs.
I think the bigger reason is that any approach to homelessness is going to fail so long as San Francisco’s housing costs remain as high as they are.
It’s no coincidence that San Francisco has some of the nation’s highest housing costs, lowest rates of new housing construction, and highest rates of homelessness. City regulations have stifled new housing construction for decades, which has spiked the price of housing and resulted in more and more people ending up on the streets.
Unless something changes about that basic set of facts, enough people will continue to be homeless, and become homeless, in San Francisco to overwhelm whatever services the city provides—be that shelter beds, rental assistance, permanent supportive housing, mental health services, or whatever else.
More efficient spending or even higher taxes might increase the city’s capacity to handle the homeless population for a time, but it won’t end the basic dynamic of high housing costs begetting more and more people sleeping on the streets.
The upshot for the present moment is that the National Guard can’t fix this basic dynamic either. Unless Trump wants to direct them to build new apartment buildings, there’s not a lot they’ll be able to do to address San Francisco’s homelessness crisis.
Benioff, fresh from supporting one failed big intervention, is now demanding another that will also certainly fail.
The Wild Legal Fight Over Charlottesville’s Zoning Reforms Comes to an Anticlimactic End
The nearly two-year whirlwind, occasionally comical legal fight over Charlottesville, Virginia’s zoning reforms—during which time the city has gone from saying it has no zoning code to stopping consideration of new construction—appears to be at an end.
On Monday, the Charlottesville City Council voted to accept a settlement agreement that would end a lawsuit challenging the legality of zoning amendments it adopted in December 2023, which broadly allowed smaller multifamily projects (“middle housing”) in single-family areas and larger apartments in new areas of town.
Under the settlement agreement, Charlottesville will send a traffic analysis of the new zoning code to state transportation officials in exchange for plaintiff property owners agreeing to drop their legal challenge against the new code.
It’s a rather anticlimactic result, considering some of the twists and turns of the lawsuit.
Back in January 2024, a collection of Charlottesville property owners sued the city, alleging that the zoning reforms passed the previous month had failed to follow various state laws about the need to consider various environmental and infrastructure impacts when passing zoning.
The case wound through the courts for the next year and a half until last summer. That’s when an attorney representing the city missed a major filing deadline. That led the judge hearing the case to issue a default judgment invalidating the new zoning code.
In a brief, highly ironic twist, city officials said that the default judgment left the city with no zoning code whatsoever.
“The old [zoning] ordinance had to be repealed in order for the new one to be adopted. The void of the new one leaves us without one temporarily,” said City Manager Sam Sanders to the local press, adding that without the zoning code, the city couldn’t enforce use restrictions.
The idea of a lawsuit challenging a zoning code that allows a little more housing leading to complete zoning abolition was a fun development. But it wasn’t to last.
In a follow-up statement to Reason, the city said that Sanders’ comments about the city having no zoning code were “mistakenly conveyed” and that the city’s new zoning code was still in effect until the judge overseeing the case issued a written order.
Rather than a development free-for-all, the city said that it would actually be pausing consideration of “zoning-related applications,” including “new construction, additions, site modifications, and changes in use” until more legal clarity about the status of the zoning code was reached.
Eventually, this past September, the city was able to overturn the default judgment against its new zoning code.
The case was set to go to trial in September 2026. A city staff report says that while they’re confident the city would prevail at trial, the settlement is a cheaper means of ending the lawsuit.
The city says that the plaintiffs have agreed to accept the settlement as well. Provided that happens, after all the legal back-and-forth, Charlottesville’s new zoning code allowing a little more housing will be in effect, and plaintiffs will get a little more information about what the traffic impacts of that new housing will be.
ROAD to Housing Act Passes Senate; Criticism Mounts
The ROAD to Housing Act, the big, bipartisan amalgam of housing policy tweaks and changes, has miraculously managed to pass through the U.S. Senate during the ongoing government shutdown.
The bill was folded into this year’s National Defense Authorization Act (NDAA), which is now being taken up by the House of Representatives.
As Rent Free has previously covered, the bill included a long list of relatively modest changes to federal grant and loan programs, mostly aimed at increasing housing production and diversifying the types of housing being produced.
It managed to pass unanimously out of the Senate Banking Committee, where it was first introduced. Its attachment to the NDAA eased its passage through the full Senate.
Santi Ruiz’s Statecraft podcast from last week contains good background on the political machinations that have seen the bill move as fast as it has on a bipartisan basis.
There have been a number of conservative criticisms of the bill. The American Enterprise Institute’s Tobias Peter has argued the bill needlessly expands the federal government’s role in housing policy.
More recently, Lyman Stone, writing at the Institute for Family Studies, argues the bill is “anti-family” by focusing its supply-side interventions on boosting the supply of smaller multifamily housing.
That point got a lot of pushback on X from other housing wonks who argue that more one-bedroom apartments lower demand for family-sized units, and thus lower costs for everyone.
Senate Democrats Propose Eviction Moratorium for Federal Workers During Shutdown
Last week, I covered a bill authored by Sen. Brian Schatz (D–Hawaii) and supported by 17 of his fellow Democrats that would relieve federal workers and contractors from a long list of civil obligations during the shutdown, including the need to make rent and mortgage payments.
As I argue in my post, the eviction protections in the bill are mostly performative and unnecessary. Few landlords would see any upside to evicting an otherwise good tenant because they fall behind on their bills during a shutdown.
Nevertheless, I do find Schatz’s bill concerning, given the mentality it represents; whenever there’s some sort of economic shock, normal property rights governing the landlord-tenant relationship must be suspended.
That attitude led to the pandemic’s disastrous eviction moratoriums. One would hate to see that thinking become policy come the next national calamity.
Quick Links
- A U.S. district court judge has blocked the Trump administration’s effort to lay off thousands of federal workers during the government shutdown, including several hundred employees at the Department of Housing and Urban Development. The administration has vowed to comply with the order.
- The New York Times covers Portland’s efforts to fight Immigration and Customs Enforcement by dinging the privately owned facility it’s operating out of in the city with a bunch of zoning violations.
- Pittsburgh City Council members spar over whether to adopt a citywide “inclusionary zoning” ordinance. Read Reason‘s past coverage here.
- New York’s mayoral candidates sparred over housing policy during their debate last week.
