John Elberling’s face is unshaven. His hair: unshorn. And his heart: unrepentant.
The longtime boss of TODCO—the South of Market affordable housing organization that’s morphed into a power player in city politics—is leaning over a beer at the 5th and Mission lounge Executive Order as he defends Proposition K, his half-million-dollar election blunder.
“So what?” Elberling said. “Because you might make a mistake, you shouldn't do anything? That’s their argument? Yeah, well, fuck that.”
On Friday, a judge will decide whether Prop. K—designed to tax Amazon and channel roughly $60 million a year into a guaranteed income program for the city’s most vulnerable residents—should go before voters in November.
In true San Francisco fashion, Prop. K might have been crafted with noble intentions, but it has since blown up in the face of its backers. It was intended to tax Amazon and perhaps some other large e-commerce companies. But because the authors apparently misunderstood both Amazon’s business and the nature of many local enterprises, Prop. K would instead ding hundreds of bars, restaurants and small brick-and-mortar retailers while draining millions from the general fund.
“I never imagined that their cloud services or Prime video are more revenue than all the stuff I buy from them,” Elberling said. “I never imagined that to be true.”
He added, “The bill was written thinking: ‘How do we tax Jeff Bezos’ ass?’”
Elberling and others now realize their error and are hoping the court will remove the measure from the ballot. But if the decision doesn’t go that way, the result could be a new tax that no one supports.
“At this point, we all have a shared concern that it might pass,” said Sharky Laguana, president of the city’s Small Business Commission. “If it stays on the ballot, we all have to run a campaign against it.”
That is, everyone except Elberling.
While he may have spent $360,000 in TODCO funds on the ballot measure and racked up $90,000 in bills before legal fees to remove the monster that is Prop. K, the 75-year-old in a Grateful Dead hat and Warriors T-shirt seems to take a certain glee in the criticism. Elberling rejects the idea that he should fund a counter-effort to kill it. Instead, TODCO—short for Tenants and Owners Development Corporation—and its political partners will simply channel their efforts into repealing and replacing the measure in next year’s election if it passes.
“Running a ‘no’ campaign? I mean, seriously, that I would be uncomfortable with—that's just too fucking cute by half,” Elberling said. “You just say, ‘You know what, we fucked up. It didn't come out the way we wanted to.’ Now we know that. Now we're going to fix it. Now we're going to get it right.”
Nightmare on Stevenson Street
The Prop. K fiasco is the latest political controversy embroiling TODCO, an organization that solidified its reputation as a menace to many in local housing circles when it played a pivotal role in the Board of Supervisors’ decision to kill a 495-unit housing project on Stevenson Street.
Supervisors raised numerous arguments against the 27-story apartment tower, some clearly specious, but it was Elberling and TODCO who prodded the board to reject it for a laundry list of concerns that ranged from gentrification to earthquake risks. The vote was widely seen as highly politicized and a form of payback to Elberling.
For two decades, TODCO, rather than invest in more affordable housing, has used three of its eight properties—totaling almost 1,000 housing units—as a financing mechanism for lawsuits and political campaigns that promote a progressive political agenda and often block the creation of more housing. A 2016 investigation into the organization by the state’s Fair Political Practices Commission appears to have gone nowhere.
TODCO’s most recent IRS filings for the year 2019 noted it had $49 million in assets, and Elberling told The Standard that he annually budgets $490,000—roughly 1% of that amount—for ballot measures and other political work, which includes his and his staff’s time.
Elberling, who said he receives a salary of about $200,000 and a rent-free studio in one of TODCO’s buildings, ceded the throne as president to Anna Yee sometime in the last year to become vice president. Attempts to reach Yee were unsuccessful.
According to the many sources contacted for this story, from City Hall insiders and political consultants to the city’s array of housing advocates, the passing of the torch appears to be a change in title only. Elberling—now in his 45th year with TODCO—remains firmly in charge.
The influence TODCO’s money has over the city’s Democratic Party, especially the progressive wing of elected officials, is considerable, insiders say. The organization routinely shares political polling on issues with elected officials as they formulate their own ballot measures, and the organization’s slate mailers help raise the profile of candidates. That brings TODCO very close to the line on what political work 501c3 nonprofits are legally allowed to do, as they are permitted to advocate on issues and support or oppose ballot measures but are barred from taking sides on individual candidates.
‘You Punched Your Mother’
TODCO’s clout was clearly on display Aug. 13 as members of the city’s Democratic County Central Committee (DCCC) gathered for a six-and-a-half-hour Zoom call to vote on endorsements for the November election. When it came time to discuss Prop. K, just one person spoke out against the ballot measure: District 6 supervisor candidate and DCCC President Honey Mahogany.
Over the course of a five-minute presentation, Mahogany laid out in detail why the ballot measure was so poorly written and how it would negatively impact almost 700 small businesses in the city. She spoke not only as a party leader but also as a business owner of The Stud, one of the city’s oldest gay bars.
The party was unmoved.
A vote was held and almost all of San Francisco’s elected officials fell into lockstep with TODCO’s ballot measure, endorsing it by a 17-5 vote with eight abstentions. Even state Treasurer Fiona Ma, an official one would expect to understand tax law, cast a “yes” vote for Prop. K. Ma did not respond to a request for comment.
“Too often in San Francisco politics, we end up simply taking sides where we think something is progressive or it’s not, and we made a decision based on that,” Mahogany told The Standard. “We have to do a better job looking at the facts.”
One fact that might have been helpful in the DCCC’s vote: Elberling and Prop. K backers already knew their measure would harm the city’s general fund and small businesses, but they said nothing.
On Aug. 12, a day prior to the DCCC vote, the city Controller’s Office sent a letter to Elberling laying out the financial ramifications, but he and his staff decided not to share this information with party officials.
“We got the thing late Friday and we were digesting it, you know, and we couldn't do a one-day turnaround,” Elberling said. “You just can’t round everybody up on a Saturday on short notice.”
It wasn’t until four days later, after Laguana went on a tweetstorm and the Controller’s Office issued its final letter reiterating the consequences of the ballot measure, that Elberling and Prop. K organizers announced they were backing off.
“I have a degree of sympathy for the position TODCO has put itself in,” Laguana said. “You tried to punch the bad guy and instead you punched your mother. From the outside, it looks terrible.”
Mahogany said the DCCC has been working to schedule a meeting to rescind its endorsement, assuming a judge doesn’t remove the measure from the ballot.
Who Picks Up the Tab?
Sam Moss, executive director of the Mission Housing Development Corporation (MHDC), an affordable housing nonprofit that is similar to TODCO on paper but very different in practice, told The Standard that Elberling’s words and actions miss the point.
MHDC and most affordable housing nonprofits in the city refinance their properties and invest those funds back into renovations and community services, Moss said, while TODCO uses its housing properties as leverage to create a political piggy bank to the detriment of its residents.
“In this case, unfortunately, a half-million dollars was burned in the backyard,” Moss said. “That’s a lot of community services for residents that’s not going to happen.”
The money wasted on Prop. K also included the recruitment of former Stockton Mayor Michael Tubbs, a champion for universal basic income, to act as the face of the campaign. Elberling said he paid Tubbs “maybe $10,000” to visit San Francisco and take part in meetings, including an “inconclusive” pitch to Mayor London Breed in mid-February. Tubbs declined to comment for this story.
A fuller accounting of the Prop. K campaign is due to be disclosed Sept. 29, but TODCO’s brazen political spending, in general, is seen by many in the city’s affordable housing realm as ethically questionable.
“We choose to reinvest our funds back into our portfolio while TODCO chooses to take those funds and spend it on politics,” Moss said. “I think it’s gross.”
Elberling chalked up criticism on Prop. K and TODCO’s larger operations as “trash talk” from political opponents.
“You know,” he said, “whenever they throw that shit at me, that's on them.”