The Potential Legal Issues With Proposed Slavery Reparations Plan in San Francisco

A Review of the Multitude of Potential Constitutional Violations

Earlier this week, I posted on the potential constitutional issues facing California in the potential implementation of a slavery reparations program.¹ Namely, it could violate Section 6 of Article XIV of the California Constitution,² which prohibits the State from making gifts to private individuals without a public purpose.³

This week, the San Francisco Board of Supervisors voted unanimously to approve proceeding with its own proposed full slavery reparations plan.⁴

The plan includes, among other things:

• $5,000,000 individual lump sum payments to eligible African Americans

• $97,000 guaranteed annual income to eligible African Americans for 250 years

• $1 private homes for eligible African Americans

• Creation of a black bank in order to “Allocate Community Reinvestment Act funds from banks that are specifically earmarked to meet the credit needs of low- and moderate-income communities and invest them in the communities they are intended to benefit” and “Increase lending in Black business owners and homeowners in Black communities”⁵

• “Finance a comprehensive debt forgiveness program that clears all educational, personal, credit card, payday loans, etc.”⁶

• Underwriting the costs of refinancing home mortgages to eligible African American homeowners

• “Guarantee continued funding for the Dream Keeper Down Payment Assistance Loan Program (DK-DALP) and convert the program from a loan to a forgivable grant over the course of 10 years, which shall be offered to eligible Reparations recipients, regardless of income”⁷

• “The Mayor’s Office of Housing and Community Development (MOHCD) should remove barriers to qualification for subsidized and Below Market Rate (BMR) rental units; MOHCD should offer first choice for rental units to those who qualify for Reparations, and the City should cover any cost differentials that may serve as a barrier to qualification.”⁸

• “The City and County of San Francisco should underwrite costs associated with refinancing existing mortgage loans” and “The City and County of San Francisco and MOHCD should offer grants for home maintenance and repair costs.”⁹

In order to be eligible to receive benefits, one must be (1) eighteen years old, (2) have identified as ‘Black/African American’ on public documents for at least 10 years, and (3) prove two of the eight following criteria:

1. Born in San Francisco between 1940 and 1996 and has proof of residency in San Francisco for at least 13 years.

2. Migrated to San Francisco between 1940 and 1996 and has proof of residency in San Francisco for at least 13 years.

3. Personally, or the direct descendant of someone, incarcerated by the failed War on Drugs.

4. Record of attendance in San Francisco public schools during the time of the consent decree to complete desegregation within the school system.

5. Descendant of someone enslaved through US chattel slavery before 1865.

6. Displaced, or the direct descendant of someone displaced, from San Francisco by Urban Renewal between 1954 and 1973.

7. Listed, or the direct descendant of, a Certificate of Preference holder.

8. Member of an historically marginalized group that experienced lending discrimination in San Francisco between 1937 and 1968 or, subsequently, experienced lending discrimination in formerly redlined San Francisco communities between 1968 and 2008.

Now what are the potential legal issues that need to be considered with this full Slavery Reparations plan?

“By its terms, article XVI, section 6 of the state Constitution prevents the Legislature from making or authorizing any gift of public funds for private purposes. This prohibition applies to counties and general law cities.”¹⁰ However, “The constitutional ban on gifts of public funds does not apply to charter cities.”¹¹ As a charter city and charter county, the California Supreme Court long ago held that the public gift ban did not apply to San Francisco.¹² Thus, the constitutional provisions prohibiting gifts would not prevent San Francisco from implementing its Slavery Reparations plan.¹³

Nevertheless, there are still numerous legal issues arising out of the proposed reparations. There are equal protection clause issues to be considered both under the U.S. and California Constitutions, the Eminent Domain Clause of the California Constitution, and the Public Waste Doctrine. Although there are also federal statutory concerns and perhaps San Francisco Charter issues, I will focus on California law specific matters.

A quick rundown.

I. Basic Equal Protection Principles

The Fourteenth Amendment Equal Protection Clause provides that “No State shall . . . deny to any person within its jurisdiction the equal protection of the laws.”¹⁴ The California Constitution provides that “A person may not be . . . denied equal protection of the laws”).¹⁵ Both these clauses strictly prohibit racial discrimination by the government.¹⁶ Racial discrimination by the government is inherently suspect and presumptively unconstitutional.¹⁷

This is true even when a law purports to treat all races the same but still acts in a racially discriminatory manner.¹⁸ Furthermore, these clauses prohibit the state from being used as a tool of private individuals to enforce their racist preferences.¹⁹ “At the heart of the Constitution's guarantee of equal protection lies the simple command that the Government must treat citizens ‘as individuals, not 'as simply components of a racial, religious, sexual or national class.’”²⁰

By its own terms, San Francisco’s Slavery Reparations program would discriminate on the basis of race, making only African Americans eligible to receive slavery reparations.²¹ In order to survive constitutional challenge, San Francisco would have to prove that its Slavery Reparations program (1) serves a compelling governmental interest, (2) is directly and narrowly tailored to accomplish that governmental interest, and (3) and that San Francisco has absolutely no other less restrictive means to accomplish its compelling governmental interest.²² This extremely high standard of review applies equally regardless of the race of the person discriminated against.²³

Some may argue that it could be difficult to bring a lawsuit on the grounds of an equal protection violation and so therefore, there is no need to evaluate whether San Francisco's Slavery Reparations program violates equal protection. However, those concerns ignore California law which allow for both citizen suits and taxpayer suits to be brought by those who wish to challenge unconstitutional actions by the government.²⁴ The Slavery Reparations program in its entirety will have to be evaluated for equal protection concerns. Specific proposals of the Slavery Reparations though raise additional constitutional and legal concerns.

II. Article I, Section 31 of the California Constitution²⁵

The Slavery Reparations Panel has proposed favorable business loan lending, preferential rental and sale agreements for affordable housing, as well as guaranteeing all home mortgages of eligible recipients. It is possible that this part of the program could be permissible under the Fourteenth Amendment if San Francisco could prove its high burden.²⁶

Under the California Constitution, “The State shall not discriminate against, or grant preferential treatment to, any individual or group on the basis of race, sex, color, ethnicity, or national origin in the operation of . . . public contracting.”²⁷ Under this constitutional provision, there is no strict scrutiny given to any governmental racial discrimination; it is automatically unconstitutional, no exceptions.²⁸

This provision applies with full force to San Francisco.²⁹ While there is no definition of "public contracting" under Article I, Section 31, the California Supreme Court has explained that “[a] constitutional amendment should be construed in accordance with the natural and ordinary meaning of its words.”³⁰ The term “in the operation of
is broadly construed and prohibits discrimination in all aspects of a contract with the government.³¹

Rental agreements, home mortgages, grants for home improvements, and business loans are all contracts.³² The government's involvement in pre-existing private contracts will make them public contracts, subject to the requirements of the Constitution.³³ And if they are, these provisions of the Slavery Reparations plan could not be implemented.³⁴

III. Eminent Domain Concerns

The Slavery Reparations Program proposes $1 homes for eligible African American San Franciscans. But this is problematic because San Francisco already faces a severe housing shortage. It seems highly unlikely that vacant government owned housing units exist to give away. And it’s not clear where new housing would be built.

“The public use of public property cannot, under any provisions of charter or statute . . . coexist with private management and control of such property.”³⁵ The San Francisco City Charter also has provisions requiring the sale of public property to private individuals to be at a sales price of at least 90% of estimation value.³⁶

San Francisco would almost certainly have to purchase existing housing or purchase existing land in order to build new housing to convey to individual homeowners for $1. Given the built-out nature of San Francisco and seeming lack of government owned land, this would certainly require the city to use the power of eminent domain to purchase pre-existing housing. Eminent domain is where the government seizes private property from its owner for a governmental purpose and pays just compensation to the private property owner.³⁷

While seemingly expensive, San Francisco could presumably purchase privately occupied homes to give $1 houses away to private individuals eligible for Slavery Reparations under the Fifth Amendment Takings Clause of the United States Constitution, San Francisco could eminent domain private property and give it to private individuals.³⁸

However, there’s a wrinkle. The California Constitution specifically prohibits this action even though it is allowed by the United States Constitution.³⁹

“The State and local governments are prohibited from acquiring by eminent domain an owner-occupied residence for the purpose of conveying it to a private person.”⁴⁰ The term “conveyance” is defined as “a transfer of real property whether by sale, lease, gift, franchise, or otherwise.”⁴¹

A “person” is defined as “any individual or association, or any business entity, including, but not limited to, a partnership, corporation, or limited liability company.”⁴² The prohibition against local governments eminent domaining property to give to private individuals applies to the City and County of San Francisco.⁴³

There are some exceptions.

First, San Francisco may exercise “the power of eminent domain" and convey the property to a private party "for the purpose of protecting public health and safety; preventing serious, repeated criminal activity; responding to an emergency; or remedying environmental contamination that poses a threat to public health and safety.”⁴⁴ Second, San Francisco may exercise “the power of eminent domain" and convey the property to a private party for the purpose of acquiring private property for a public work or improvement."⁴⁵

Here, San Francisco is not responding to an emergency. Additionally, San Francisco would eminent domain homes to private individuals, not for any public work or improvement.

Thus, the prohibition on eminent domain with conveyance of land to private individuals would restrict the ability of San Francisco to purchase private homes or purchase private property and build homes only to then convey private homes to eligible recipients of the Slavery Reparations program. It should also be noted that the California Constitution, unlike the federal constitution, contains a jury requirement for determining damages for the taking of private property.⁴⁶ This could create additional costs for taking property and building housing for private conveyance.

IV. Section 10 of Article XI of the California Constitution

“A local government body may not grant extra compensation or extra allowance to a public officer, public employee, or contractor after service has been rendered or a contract has been entered into and performed in whole or in part, or pay a claim under an agreement made without authority of law.”⁴⁷ This provision prohibits local governments from paying extra compensation to employees outside of the agreements.⁴⁸

Here, Slavery Reparations doesn’t necessarily deal with public employees or contractors. However, its order of compensation arguably has the same effect as the type of compensation prohibited by this constitutional provision. It pays additional compensation outside a legal agreement for goods and services provided to a city, and in exchange for services not rendered. It seems unlikely that this provision would prevent reparations payments. However, it should be addressed as a potential constitutional issue.

V. Public Waste Doctrine

California Civil Procedure Code § 526a allows taxpayers to bring lawsuits against government for the waste of public funds.⁴⁹ The action for a public waste of funds is its own independent cause of action against government.⁵⁰

What is a waste of public funds though?

“The term 'waste' as used in section 526a means more than an alleged mistake by public officials in matters involving the exercise of judgment or discretion; although the court must not close its eyes to wasteful, improvident and completely unnecessary spending, it should not attempt to enjoin every expenditure which does not meet with a taxpayer's approval; but a taxpayer complaining of government waste may state a cause of action under section 526a by alleging that funds are being expended for a project with no public benefit and no useful purpose.”⁵¹

Waste of public funds “has been described as “a useless expenditure … of public funds” that is incapable of achieving the ostensible goal.”⁵² “Even when “ ‘done in the exercise of a lawful power,’ ” public spending may qualify as waste if it is “ ‘completely unnecessary,’ ” or “ ‘useless,’ ” or “provides no public benefit.””⁵³ “To constitute waste, the public spending must be completely unnecessary or provide no public benefit.”⁵⁴

The California Supreme Court has held that:

[T]he term 'waste' as used in section 526a means something more than an alleged mistake by public officials in matters involving the exercise of judgment or wide discretion. To hold otherwise would invite constant harassment of city and county officers by disgruntled citizens and could seriously hamper our representative form of government at the local level. Thus, the courts should not take judicial cognizance of disputes which are primarily political in nature, nor should they attempt to enjoin every expenditure which does not meet with a taxpayer's approval. On the other hand, a court must not close its eyes to wasteful, improvident and completely unnecessary public spending, merely because it is done in the exercise of a lawful power.⁵⁵

The public waste doctrine is a very rarely used doctrine and it is difficult to prove.⁵⁶ However, it has been employed by the courts.⁵⁷ And the doctrine should be considered in evaluating what kinds of slavery reparations are paid.

The fact-specific nature here is crucial. San Francisco’s Slavery Reparations include $5,000,000 individual payments to all eligible recipients, which just for current residents could cost $175 billion alone.⁵⁸ Since there are possibly more than double that number of potentially eligible for payments, the cost could soar to more than $350 billion. San Francisco currently faces a 728 million dollar budgetary shortfall.⁵⁹

The structural budget shortfall may actually come to exceed 1.2 billion dollars.⁶⁰ It is unclear how San Francisco could afford to make these payments even if normally lawful. The city might vote itself into bankruptcy and be forced to suspend its basic governmental functions and services should it implement the Slavery Reparations program. If no other less expensive alternatives are explored, there is a possibility that a court could hold that the program is a waste of public funds.

A Final Word

Whether slavery reparations, at the state or local level, are constitutional and legal are open questions. These articles merely raise potential legal issues that need to be considered. They should not be interpreted as definitive statements. However, it would seem that in crafting these proposals, the feasibility of these plans is not considered, nor are the legal constraints. If anything, the mere questions about feasibility are dismissed as irrelevant to the goal of these slavery reparations committees, especially in the case of San Francisco.⁶¹

But that's an abdication of duty, even at the lowest levels of government. When it comes to proposing that which one believes that government should make the law or policy (as the Slavery Reparations Panels surely do), evaluating the constitutional and legal restraints is a fundamental duty. Policies that violate laws or the Constitution are absolutely worthless. All they do is waste political capital and organizing energy for something that is ultimately fruitless.

“Every constitutional provision is self-executing to this extent, that everything done in violation of it is void.”⁶² “The provisions of this Constitution are mandatory and prohibitory, unless by express words they are declared to be otherwise.”⁶³ “Under this constitutional provision, all branches of government are required to comply with constitutional directives . . .  or prohibitions.”⁶⁴

“Thus, in the absence of express language to the contrary, every constitutional provision is self-executing in the sense that agencies of government are prohibited from taking official actions that contravene constitutional provisions.”⁶⁵ Even volunteer panelists on San Francisco’s Slavery Reparations Panel, who were appointed by the San Francisco Board of Supervisors, should take care to evaluate the lawfulness (and practical feasibility) of what they are formally proposing.⁶⁶ It is a basic governmental duty.

Whether any part of these proposals could violate (1) the Fourteenth Amendment, (2) Article I Section 7 of the California Constitution, (3) Article I Section 31 of the California Constitution, (4) Article XI Section 10 of the California Constitution, or (5) the waste of public funds doctrine are a key part of the discussion for San Francisco paying slavery reparations. All must be taken into account when crafting San Francisco’s Slavery Reparations program.

1. Why the California Constitution may Limit the Ability to Enact Individual Slavery Reparations

2. The author of this article is an attorney licensed to practice in the State of California and the District of Columbia. This article and all of the works on this Substack page are statements of the opinions of the author, only, and do not constitute legal advice; they are not intended to be relied upon by any individual or entity in any transaction or other legal matter, past, pending, or future. A paid subscription to this Substack page supports the author's scholarship and provides access to research that the author has compiled, but does not establish an attorney-client relationship. The author does not accept unsolicited requests for legal advice or representation, and this Substack page is not intended as legal advertising. The opinions expressed on this Substack page reflect the personal views of the author only.

3. Cal. Const. Art. XVI, § 6 (“The Legislature shall have no power . . . to make any gift or authorize the making of any gift, of any public money or thing of value to any individual, municipal or other corporation whatever.”); Conlin v. Board of Supervisors, 114 Cal. 404, 409-410 (Cal. 1896)(holding that the state cannot constitutionally make payments or gifts to private individuals “for which there is no enforceable claim, or upon a claim which exists merely by reason of some moral or equitable obligation, which, in the mind of a generous or even a just individual, dealing with his own moneys, might prompt him to recognize as worthy of some reward.”); Jordan v. Department of Motor Vehicles, 100 Cal. App. 4th 431, 450 (Cal. Ct. App. 2002)(“The compromise of a wholly invalid claim, however, is inadequate consideration and the expenditure of public funds for such a claim serves no public purpose and violates the gift clause.”).

4. https://www.dailymail.co.uk/news/article-11860861/San-Franciscans-line-board-meeting-sing-shout-support-reparations-plan.html

5. https://sf.gov/sites/default/files/2023-01/HRC%20Reparations%202022%20Report%20Final_0.pdf (At Page 32)

6. https://sf.gov/sites/default/files/2023-01/HRC%20Reparations%202022%20Report%20Final_0.pdf (At Page 33)

7. https://sf.gov/sites/default/files/2023-01/HRC%20Reparations%202022%20Report%20Final_0.pdf (At Page 34)

8. https://sf.gov/sites/default/files/2023-01/HRC%20Reparations%202022%20Report%20Final_0.pdf (At Page 34)

9. https://sf.gov/sites/default/files/2023-01/HRC%20Reparations%202022%20Report%20Final_0.pdf (At Page 34)