The Worst-Run Big City in the U.S.

Spend more. Get less. We're the city that knows how.

Despite its good intentions, San Francisco is not leading the country in gay marriage. Despite its good intentions, it is not stopping wars. Despite its spending more money per capita on homelessness than any comparable city, its homeless problem is worse than any comparable city's. Despite its spending more money per capita, period, than almost any city in the nation, San Francisco has poorly managed, budget-busting capital projects, overlapping social programs no one is certain are working, and a transportation system where the only thing running ahead of schedule is the size of its deficit.

It's time to face facts: San Francisco is spectacularly mismanaged and arguably the worst-run big city in America. This year's city budget is an astonishing $6.6 billion — more than twice the budget for the entire state of Idaho — for roughly 800,000 residents. Yet despite that stratospheric amount, San Francisco can't point to progress on many of the social issues it spends liberally to tackle — and no one is made to answer when the city comes up short.

The city's ineptitude is no secret. "I have never heard anyone, even among liberals, say, 'If only [our city] could be run like San Francisco,'" says urbanologist Joel Kotkin. "Even other liberal places wouldn't put up with the degree of dysfunction they have in San Francisco. In Houston, the exact opposite of San Francisco, I assume you'd get shot."

Yomi Agunbiade’s time atop the Recreation and Park Department was marred by mismanagement.
Yomi Agunbiade’s time atop the Recreation and Park Department was marred by mismanagement.
Sources: City budget documents, interviews with city controllers’ offices, and 2008 Census data (the latest available).
Sources: City budget documents, interviews with city controllers’ offices, and 2008 Census data (the latest available).
A broad coalition of city governmental bodies joined to ruin Muni reform.
Jim Herd
A broad coalition of city governmental bodies joined to ruin Muni reform.
Mayor Gavin Newsom ponders the differences among the Accountability Matrix,
Accountability Index, and Accountability Report.
Mayor Gavin Newsom ponders the differences among the Accountability Matrix, Accountability Index, and Accountability Report.

Who is to blame for this city's wretched state of affairs? Yomi Agunbiade, that's who. Metaphorically, that is.

An engineer by trade, Agunbiade was appointed by Mayor Gavin Newsom to head the San Francisco Recreation and Park Department in 2004. Even before Agunbiade's tenure, Rec and Park was the department other city departments pointed and laughed at — but under Agunbiade, it became Amy Poehler funny.

During his reign, an audit revealed, rec centers frequently didn't open, because staff simply didn't show up — and the department had no process to do anything about it. Good news: New rec centers were slated to open. Bad news: Agunbiade's department had no plan for how to staff them. But that wasn't enough to cost Agunbiade his job.

When the city controller's office made the common-sense recommendation that groundskeepers ought to be where they were assigned to be when they're supposed to be there, Agunbiade fought them on it for three years. Running a department where no one knows where anyone is — and no one even wants to know? Not a problem.

Then a report by the city's budget analyst found massive fiscal mismanagement at the Marina Yacht Harbor, which is run by Rec and Park. Perhaps so much money wouldn't have gone unaccounted for, the audit suggested, if the department had installed a cash register. Still, not a problem for Agunbiade. Other reports exposed one organizational or fiscal snafu after another, but his position was secure. In San Francisco, running a city department like a Franz Kafka nightmare doesn't cost a decisionmaker his job.

Then, in July 2008, we apparently discovered what does. Rec and Park spokeswoman Rose Dennis claimed that Agunbiade had been sexually and religiously harassing her for years, and produced letters he'd sent to her home as evidence. She confirmed to SF Weekly that Agunbiade's letters urged her to stop wearing revealing clothes so that she could get right with Jesus. Though she didn't release the letters publicly, Dennis did bring them to the city attorney's office — which determined that this could turn into a messy lawsuit.

Agunbiade was subsequently called in to chat with Newsom. The conversation between the mayor-who-slept-with-his-appointments-secretary and the department-head-accused-of-sexually-and-religiously-harassing-his-spokeswoman (in writing!) must have been one for the ages. Whatever was said, the outcome was this: Agunbiade resigned not long after, and Dennis this year received a $91,000 settlement from the city.

Minus the alleged harassment, city government is filled with Yomi Agunbiades — and they're hardly ever disciplined, let alone fired. When asked, former Board of Supervisors President Aaron Peskin couldn't remember the last time a higher-up in city government was removed for incompetence. "There must have been somebody," he said at last, vainly searching for a name.

Accordingly, millions of taxpayer dollars are wasted on good ideas that fail for stupid reasons, and stupid ideas that fail for good reasons, and hardly anyone is taken to task.

The intrusion of politics into government pushes the city to enter long-term labor contracts it obviously can't afford, and no one is held accountable. A belief that good intentions matter more than results leads to inordinate amounts of government responsibility being shunted to nonprofits whose only documented achievement is to lobby the city for money. Meanwhile, piles of reports on how to remedy these problems go unread. There's no outrage, and nobody is disciplined, so things don't get fixed.

San Francisco is the city that simply will not hold itself accountable.


Here are a few examples of the best of San Francisco at its worst.

Finding books in the library is easy: There are logical, organized systems in place. Finding where the money to build libraries went — that's hard. Last year, the Civil Grand Jury could not find — we reiterate, could not find — up-to-date budget numbers for the city's Branch Library Improvement Program. The numbers that were available aren't pretty: Voters approved a $106 million bond in 2000 to rebuild 19 libraries, and $28 million more was ponied up by the state and private donors. That money was spent without a coherent building plan being formulated between the Library Commission and Department of Public Works — leading to such large cost overruns and long delays that the commission abandoned five of the projects. In 2007, the city went back to the voters, asking for another $50 million for libraries — without publicizing that this would fund the five unfinished projects voters had already paid for. Voters approved it. After all, who doesn't like libraries?

In 2002, the San Francisco Chronicle revealed that the city had, for decades, been siphoning nearly $700 million from its Hetch Hetchy water system into the San Francisco General Fund instead of maintaining the aging aqueduct. Several mayors and boards of supervisors used that money to fund pet causes, and the Public Utilities Commission didn't say no. Unfortunately, spending maintenance money elsewhere doesn't diminish the need for maintenance. By 2002, the water system was in such desperate condition that voters were asked to pass a $3.6 billion bond measure to make overdue fixes. Obligingly, they did — who doesn't like water? Since then, the projected costs have swelled by $1 billion. So far.

Back in 1999, San Francisco voters were pitched a $299 million bond to "save" Laguna Honda Hospital as a 1,200-bed facility for the city's frail, elderly population. Who doesn't want to help the frail and elderly? A decade later, the Department of Public Works project is still incomplete, its price tag has swelled by nearly $200 million, and the hospital is slated to hold only 780 beds — so the city is going massively overbudget to construct a hospital only 65 percent as large as promised, which is four years behind schedule.

Amazingly, this gets worse. After securing the bond funding to save Laguna Honda as a hospital for the elderly, the Department of Public Health began transferring younger, often dangerous and mentally ill patients there and mixing them among the old people. This went about as well as you'd think: A 2006 state and federal licensing survey noted numerous instances of elder abuse, staff abuse, and patients toting drugs, alcohol, and even loaded weapons. One patient was assaulted four times in four months; to address this problem, staff erected signs reading "No Hitting." (That didn't work.) To cap it off, elder activists now worry that a 2009 Department of Public Health–commissioned report will pave the way for even more relatively young, mentally ill patients heading to Laguna Honda. The massively overbudget, behind-schedule hospital may not even end up primarily serving the elderly population that voters were promised it would.

These are dramatic examples of how the city wasted time and money and made people's lives miserable — with no apparent repercussions for those responsible. But these are far from isolated incidents (see the "Annals of Incompetence" sidebar on page 12). And in each case, it comes back to the same basic problem of accountability: Plenty of public figures make promises, but no one is responsible for keeping them.


This city is a mecca for people in search of a government handout that they can hand out. According to a 2009 analysis, San Francisco spends around 41 percent of its discretionary budget — about half a billion dollars — on nonprofits, mostly to provide social services for the poor, homeless, elderly, and others.

Many cities contract with nonprofits because it's cheaper than using city workers. Government is now paying the tab for services that used to be undertaken by families, churches — or, frankly, no one. But a 2009 University of San Francisco study notes that this city is to nonprofits what New York is to big musicals: "Per capita expenditures by operating nonprofits in San Francisco are almost double that of the rest of the Bay Area, and more than twice that found in Los Angeles or [the whole of] California."

We want the services. We're willing to pay for them, if they lead to good results. Yet whether our gargantuan investment is paying off is a question no one has an answer to. Hardly anyone even bothers to check. As far as much of the city is concerned, ignorance is bliss.

In 2007, the Department of Children, Youth, and Families (DCYF) held a seminar for the nonprofits vying for a piece of $78 million in funding. Grant seekers were told that in the next funding cycle, they would be required — for the first time — to provide quantifiable proof their programs were accomplishing something.

The room exploded with outrage. This wasn't fair. "What if we can bring in a family we've helped?" one nonprofit asked. Another offered: "We can tell you stories about the good work we do!" Not every organization is capable of demonstrating results, a nonprofit CEO complained. He suggested the city's funding process should actually penalize nonprofits able to measure results, so as to put everyone on an even footing. Heads nodded: This was a popular idea.

There are two lessons here. First, many San Francisco nonprofits believe they're entitled to money without having to prove that their programs work. Second, until 2007, the city agreed. Actually, most of the city still agrees. DCYF is the only city department that even attempts to track results. It's the model other departments are told to aspire to.

But Maria Su, DCYF's director, admitted that accountability is something her department still struggles with. It can track "output" — what a nonprofit does, how often, and with how many people — but it can't track "outcomes." It can't demonstrate that these outputs — the very things it pays nonprofits to do — are actually helping anyone.

"Believe me, there is still hostility to the idea that outcomes should be tracked," Su says. "I think we absolutely need to be able to provide that level of information. But it's still a work in progress." In the meantime, the city is spending about $500 million a year on programs that might or might not work.

This includes San Francisco's signature initiatives. Is Newsom's pet project, Care Not Cash, "meeting its goals" as his office claims? Hard to say: "We neither investigated the number or percentage of clients participating in support services by individual service, nor attempted to assess the outcomes of clients participating in services," the controller's 2008 audit reads. This means the city paid for support services for more than 2,200 homeless people, but never tracked how many were actually using the services. It also never checked whether those who were using the services were helped by them. While Care Not Cash has undoubtedly found housing for some people, it has no evidence to suggest that their lives are better because of it, or that they're not still spending time on the streets getting into the same trouble they got into before.

According to Elizabeth Boris, director of the Washington, D.C.–based Urban Institute's Center on Nonprofits and Philanthropy, effectively managed nonprofits must demonstrate "financial integrity, transparency, and some indication of what the nonprofit has accomplished over time." Right now, it's hard to conceive of most San Francisco agencies meeting those criteria.

The city continues to toss millions annually into programs that don't quantifiably help people. But the city is effectively taking cash from one program that does demonstrably help people. That would be Muni.


People don't usually yell at the Rules Committee. There are rules against it. At a July 2007 committee meeting, however, people were yelling. Mostly at Aaron Peskin.

The then-president of the Board of Supervisors had proposed sweeping Muni reforms to get the transit system running on time and on budget. National transit experts said Peskin's proposal was solid; it was later approved by the voters in 2007 as Proposition A. Since then, Muni has slashed services and raised fares, and is facing a bigger budget crisis. That shouldn't have been a surprise — Muni reform started unraveling on that June day, when dozens of transit union workers "testified" in front of the Rules Committee.

Job protection for even the most obviously unfit Muni workers is among the strongest in the city. Peskin had proposed increasing the percentage of employees who could be fired for incompetence from 1.5 to 10 percent. But if that provision were included in the measure, union reps said, they would flood the "No on A" campaign with money and volunteers. "This is a union town," one transit worker warned. "And we expect it to stay that way."

Peskin caved. He had to. This is a union town. You can't reform the city charter without winning an election; winning an election requires union support; and unions — almost by definition — don't want major reform. It would be a paradox — but that would contravene a number of union bylaws.

You can't get San Francisco running efficiently, because that would require large numbers of unionized city workers to willingly admit their redundancy and wastefulness. Inefficiency pays their salaries. "It's been going on for decades," Peskin says.

This problem comes up almost every time the city negotiates labor contracts, which is part of the reason San Francisco is constantly on the brink of fiscal ruin. Politically powerful unions — the progressives are beholden to the service unions; moderates cater to police, firefighters, and building trades; and Republicans ... what's a Republican? — negotiate contracts the city knows it can't afford. Politicians approve them, despite needing to balance the budget every year, because the budget impact of proposed contracts is examined by the Board of Supervisors only for the following year, no matter how long contracts run. According to former city controller Ed Harrington, it has become common practice not to schedule any raises for the first year of a contract, but to provide extensive raises in later years.

The result is a contract that looks affordable one year out, then blows up in the city's face. City employees receive up to 90 percent of their already generous salaries in pensions and many also receive lifetime health care — meaning that as they retire, labor costs soar.

The unions worked their magic on Peskin's Muni reform, gutting the ability of management to fire workers and getting a higher base salary out of the deal. But they did keep their word, and helped the revised Prop. A win at the ballot box. Some good should have come out of that. But it hasn't. That's because unions were only part of the toxic combination that rendered Muni reform impossible, no matter what the voters said.

Prop. A gave Muni tens of millions of dollars in parking meter money that had previously been spread around the city. But even though voters decided that money should go to Muni, city departments found novel ways to keep it for themselves — and then some. Denied funds by Prop. A after 2007, departments began charging Muni for "services" they were legally required to provide anyway. Police charged Muni whenever they went onto transit vehicles; ambulances charged Muni for picking up people off the buses. Newsom, meanwhile, paid his green advisers' hefty salaries from Muni's coffers. By 2009, this was costing Muni about $63 million — more than double what the agency was making in new revenue from Prop. A. Muni is the city's slush fund — even though that money was supposed to go to help your commute. You voted for it.

This is why it's so hard to "reform" anything in San Francisco: Pass a bill giving Muni a dedicated revenue stream, and you end up eviscerating its finances; try to hold Muni workers more accountable for their jobs, and you end up giving them a raise. Muni isn't getting fixed anytime soon, because these are the fixes.


San Francisco wasn't always this way. Take this quintessential story of old-style city politics that involves a shady land deal and copious quantities of booze.

San Francisco historian Charles Fracchia recalls Mayor George Christopher's ploy after his plan to lure the New York Giants to San Francisco hit a snag in the late 1950s. It all hinged on building Candlestick Park, and doing that hinged on buying land in Hunters Point from real estate magnate Charlie Harney for $65,000 an acre. The trouble was, the city had sold that same land to Harney only five years previously for a fraction of the price.

"There was opposition to this from high-minded people in San Francisco," Fracchia says. "So Christopher got his opponents as well as his proponents together, and had 10 cases of scotch delivered up to this meeting at the Pacific Union Club. The scotch was drunk, and everyone came to the conclusion — yes, keep Candlestick Park."

When it comes to mismanaging a city, San Francisco has pulled a 180 — in half a century, we've gone from "city fathers" (if you liked them) or "oligarchs" (if you didn't) operating with limited input from the people to a hyperdemocracy. Overpaying for a Candlesticklike bad land deal today wouldn't be settled during a drunken soirée, but via years of high-decibel public meetings, developers being made to bleed funds to nonprofits of city supervisors' choosing, and any number of bond measures or other trips to the ballot box — all of which, when put together, could conceivably cost as much as the bad land deal itself. Maybe more.

For all its scotch-soaked flaws, the city of yore did not suffer from these problems. While archaic and stridently antidemocratic by today's standards, the system of government cobbled together by a citizens' commission in 1931 largely did what our forebears wanted it to do — mind the store and eliminate rampant corruption.

From 1932 until 1996, much of city government was handled by a powerful chief administrative officer (CAO), appointed to a 10-year term and tasked with overseeing the city's largest departments. The job was to take politics out of city management. (Today's San Francisco is so intensely saturated with politics down to the minutiae that the supervisors' recent appointment of a transit expert to a transit board — and not a union plumber — was seen as a deeply political move and an affront to organized labor.) The CAO was charged with making the city's largest decisions in an apolitical manner; the major portion of the job was keeping the books on the most vital departments and making sure they were running smoothly. In a manner of speaking, the CAO was a living, breathing accountability measure. The city certainly made its share of lousy calls, but the sloth, waste, and dysfunction emblematic of today's city government would have been shocking.

Over time, however, the CAO's purview was replaced by that hyperdemocracy. The reasonable notion that the people of San Francisco should have input into how things are run has turned into the democratic equivalent of death by a thousand cuts; as everybody gets a voice, democracy votes accountability down. When everyone's in charge, no one is. "In the old days, they ran roughshod over opposing views," Fracchia says. "Today, all ya got is opposing views. Pick your poison."

San Franciscans' appetite for voting is voracious; ours may be the only city that has had to ponder what to name ballot propositions after all the letters of the alphabet have been used up. "It is extraordinary, the number of things we ask our voters to vote on," Harrington confirms. "And somebody must like it, because we keep doing it."

Voters have demonstrated a jarring mixture of selflessness and selfishness. We greenlight billions of dollars in bonds, even when the city's inability to deliver projects on time or within budget has been rendered painfully clear. Yet we also repeatedly enshrine the wishes of single-issue activists and labor unions into law, and that carries ominous long-term consequences. There's a reason in times like the present that organizations such as the Department of Public Health are always targeted for deep cuts, while the notion of downsizing librarians, cops, or firefighters is inconceivable. The latter have gone to the voters to enshrine their standing in the city charter. No one has done so for the DPH — yet.

Special interests "go to the voters and say, 'Do you like libraries? Do you like children?' Well, of course they do," Harrington says. And if voters don't care to think through the fiscal ramifications — well, neither do their elected representatives. "The board likes children, too — so does the mayor. Next year in the budget they'll say, 'Oh, shit! Children get $30 million more — what doesn't?'" If the city ran its finances this way 30 years ago, the former controller notes, the money to respond to the AIDS crisis would have been locked up and unavailable. If such a need arises in the future — well, what then? Today's city can't even pay for the things it wants to pay for.

An apolitical CAO, incidentally, probably wouldn't have pandered to public safety unions with exorbitant raises in an election year, as Newsom did in 2007.

The mayor also talks a good game on accountability. He has an Accountability Matrix and an Accountability Index, and even an Accountability Report. But, sadly, a recent audit noted that these lists were largely redundant and overlapping, and were tabulated independently of one another, a clear waste of effort. Actually reading Newsom's Matrix/Index/Report is like a trip through the looking glass (only pathologically dull): Where is this city the mayor reports upon, where everything seems to be getting done with such marvelous efficiency? Sadly, it appears to exist only within the Matrix/Index/Report.

There are many words to read here, but they say very little. What does the Matrix/Index/Report convey regarding debacles like the Branch Library Improvement Plan or Laguna Honda Hospital rebuild? Well, the former is listed as "Done/Ongoing," while the latter is "In Progress." There's no mention of vast cost overruns, service cutbacks, or years of delays. But it's not just that the Matrix/Index/Report leaves out critical information; it often doesn't say anything worth knowing. In many cases, Newsom notes that he has "called for a report" on an issue, or will "lobby" about it — and presents that as solving a problem. Perhaps fittingly, messages regarding the mayor's accountability left with his press office were not returned.

Even when Newsom actually does something, there's no way of telling whether it was a good use of time and money. For example, the Matrix notes that the mayor promised to improve security at homeless shelters, which is listed as "Done," because metal detectors were installed. Super — but did that actually improve security? Did violent incidents drop? Do staff and residents feel safer? Information that proves the problem was actually solved or the situation improved is almost never included across thousands of entries and hundreds of pages. The mayor's Accountability Matrix is completely unaccountable for the information you most want to know.

Gavin Newsom truly is the mayor San Francisco was destined to have.


There are ways San Francisco can maintain its rampant democracy while establishing a system that abhors waste and incompetence:

Return much of the day-to-day control of city operations to an unelected, long-term city manager — who would also be responsible for negotiating union contracts.

Institute detailed citywide planning to avoid waste and duplication of services, while ensuring essential city functions are provided for.

Emphasize best practices in each individual city department, and let go of workers who aren't needed because of productivity gains.

Eliminate all budget set-asides and mandatory staffing levels, and let the city develop budgets that meet the needs of today and tomorrow, not yesterday.

Fire people who are incompetent — and that includes those at the top-heavy manage-ment level.

Instead of telling us how much money has been spent on a problem, focus on whether the problems are getting solved.

Yet it would take a seismic event to spur the city to shake off caked-on layers of status quo — a literal earthquake, or a figurative one. (Perhaps a meteor vaporizing City Hall in 2012.)

The far more likely scenario is that nothing will happen. The city will continue its orgy of waste and incompetence. San Francisco can afford plenty of both: We're rich — and getting richer all the time. According to the controller's office, San Franciscans' per-capita income jumped from an already-generous $58,244 in 2004 to $74,515 last year.

Of course, for many San Franciscans, those numbers represent another failure. They point to an exodus. The city's middle class is melting away faster than polar ice. With them, economists and demographers say, goes any realistic hope that voters will demand serious change in search of long-term reform.

Research by professor Bill Watkins of California Lutheran University over the past decade reveals that San Francisco is shedding its middle-class population at double the state rate. The city, however, is not losing low-income people at nearly the state's pace — and is gaining wealthy residents at far more than California's overall rate. In short, we are replacing our middle class with a rich elite and a burgeoning underclass. Watkins' research also reveals that San Francisco is going gray. The number of city residents between ages 45 and 64 has climbed, while the count of those aged 20 to 44 has dropped. The city, it seems, has become a target destination for the wealthy and retirees. These are not the people who want to make sacrifices now to shore up the city's future.

"Wealthier people are consuming," Watkins says. "They don't want to build a future. They don't have a reason to invest in the community." For that matter, neither do young people — because their futures likely involve moving out of San Francisco. According to Joel Kotkin, "San Francisco is Disneyland for adults, or a place people go until they grow up."

The stage is set for San Francisco to run on inertia. The city's poor are unable to effect a sea change; the young, nomadic population is uninterested; and the wealthy and older are unwilling.

As long as San Francisco is an alluring destination where residents will tolerate lunacy as a tradeoff for living the city lifestyle, and tourists flood the downtown, the city will lumber along, inefficiently and without accountability. "San Francisco is like the really good-looking coed who can get away with being a jerk, while a less good-looking one couldn't," Kotkin says.

When everybody is politicking but nobody is accountable for the results, waste happens; unevaluated programs happen; Yomi Agunbiade happens — and nothing is done about it. After he resigned in disgrace, the Board of Supervisors, astonishingly, passed a resolution commending him for his years of service. He was offered the job of manager of San Francisco's wastewater improvement program. San Francisco tried to keep Agunbiade on the payroll, even after years of mismanagement, damning allegations of sexual and religious harassment, and potentially exposing the city to a massive lawsuit. The only reason he isn't working for the city today is that he apparently chose not to. He works at a private engineering firm, and did not return messages regarding this story.

Rose Dennis, the target of Agunbiade's years of alleged torment, put the situation — and, when you think about it, many of San Francisco's problems — into perspective.

"The only thing I ever wanted was for this to stop and for me to be left alone to do my job," she says. "This all could have been avoided. This was all . avoidable."

Read San Francisco’s Annals of Incompetence

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3 comments
axelham
axelham

Great article. But where's the reader's call to action? If only the author had enunciated what to do as clearly as the problems at hand.. It's certainly good to be informed, but this does little to empower - I still feel helpless.

 
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