A century after President Abraham Lincoln signed the Emancipation Proclamation, civil rights icon Martin Luther King Jr. stood on the steps of the Lincoln Memorial in Washington, D.C., and lamented how “the Negro still is not free.”

“One hundred years later, the Negro lives on a lonely island of poverty in the midst of a vast ocean of material prosperity,” he said during his 1963 “I Have a Dream” speech from the March on Washington for Jobs and Freedom.

King could have been describing today’s San Francisco, a 47-square-mile city that’s home to more than 60 billionaires and at least 7,000 homeless people, around 40% of whom are Black, despite Black people representing only 5% of the population.

Right up until he was assassinated in 1968, King argued that economic justice was integral to racial justice. The idea is at the core of a draft proposal the San Francisco African American Reparations Advisory Committee presented to city leaders last month.

The Board of Supervisors created the committee, also called AARAC, in December 2020, amid a national racial reckoning. The board’s legislation, while innovative, was also narrow, allowing city leaders to reject or outright ignore the committee’s work.

What happens next will show whether San Francisco politicians are serious about confronting the city’s checkered past, or are simply pretending to be.

While California was never officially a slave state, slaveholders were protected here, and the committee’s research reveals that segregation, systemic oppression and racial prejudice born from the institution of slavery had a profound impact on the city’s evolution.

In the 20th century alone, San Francisco was a Ku Klux Klan stronghold, barred Black people from settling in certain areas, kept them out of city jobs and demolished the Fillmore, a Black neighborhood and commercial district, leaving it vacant for decades.

“Centuries of harm and destruction of Black lives, Black bodies and Black communities should be met with centuries of repair,” AARAC chair Eric McDonnell told me. “If you look at San Francisco, it’s very much a tale of two cities.”

AARAC’s draft proposal includes a number of financial recommendations. There’s one that will especially get folks talking.

AARAC calls for one-time, lump-sum reparations payments of $5 million to each eligible recipient. The amount could cover the “the economic and opportunity losses that Black San Franciscans have endured, collectively, as the result of both intentional decisions and unintended harms perpetuated by City policy,” the draft states.

To qualify for the payments, residents must be 18 at the time the committee’s proposal is enacted, and have identified as Black or African American on public documents for at least 10 years. They may also have to prove they were born in the city between 1940 and 1996, have resided in San Francisco for at least 13 years, and be someone, or the direct descendant of someone, incarcerated during the war on drugs.

To put that in perspective, the state reparations task force, which will issue its own proposal is June, believes that Black Californians may be due $569 billion for housing discrimination alone between 1933 and 1977.

The wealth disparity is not the result of bad fortune. The period of urban renewal that began in the 1950s remains one of the most damning examples of how local government stole wealth from Black communities by razing them, and then ensured they never recovered. As AARAC’s report highlights, most of San Francisco’s formerly redlined neighborhoods — where residents were deemed ineligible for federal housing loans between 1933 and 1954 — are low-income neighborhoods undergoing gentrification now.

While San Francisco isn’t unique in having systematically distributed its riches along racial lines, the city’s status as a liberal bastion makes it a powerful testing ground for undoing these damages, AARAC vice chair Tinisch Hollins told me.

“This reparations process gives us a chance to look at the many ways, not just economically, that harm can and should be repaired,” Hollins said. “And even though San Francisco has passed policies that touch on the legacy of slavery, we have needed something that goes toward quantifying that harm.”

As for next steps, the committee will submit its final proposal to city leaders in June. Board of Supervisors President Aaron Peskin told me he hopes his colleagues will approve AARAC’s recommendations.

“There are so many efforts that result in incredible reports that just end up gathering dust on a shelf,” Peskin said. “We cannot let this be one of them.”

As King described in his “I Have a Dream” speech, America was founded by white men who wrote a fraudulent “check” that promised that all men would enjoy the “unalienable rights of life, liberty and the pursuit of happiness.”

King was demanding “the riches of freedom” and justice for Black America. Almost 60 years later, AARAC is doing the same in San Francisco.

San Francisco Chronicle columnist Justin Phillips appears Sundays. Email: jphillips@sfchronicle.com Twitter: @JustMrPhillips