Taxing speculators

Rival housing measures debated in City Hall, previewing high-stakes battles at the ballot

|
(18)
The proposed anti-speculation tax would create a disincentive to flip properties and evict tenants.

steve@sfbg.com

Political tensions over evictions, displacement, real estate speculation, and rapidly rising housing costs in San Francisco are likely to heat up through the summer and autumn as a trio of November ballot measures are debated and combated by what's expected to be a flood of campaign cash from developers and other real estate interests.

Topping the list is a tax measure to discourage the flipping of properties by real estate speculators. Known generally as the anti-speculation tax — something then-Sup. Harvey Milk was working on at the time of his assassination in 1978 — it was the leading goal to come out of a citywide series of tenant conventions at the beginning of this year (see "Staying power," 2/11/14).

"To be in a position to pass the last thing Harvey Milk worked on is a profound opportunity," AIDS Housing Alliance head Brian Basinger told us, arguing the measure is more important now then ever.

The measure has been placed on the ballot by Sups. John Avalos, David Campos, Jane Kim, and Eric Mar and is scheduled for a public hearing before the Board of Supervisors Rules Committee on July 10 at 2pm.

"It's an absolutely key issue for San Francisco right now. Passing this measure will create a seismic shift in what we're seeing with evictions and displacement in the city," Sara Shortt, director of the Housing Rights Committee, told the Guardian.

The measure creates a supplemental surcharge on top of the city's existing real estate transfer tax, a progressive rate ranging from a 24 percent tax on the sale of a property within one year of its purchase to 14 percent if sold between four and five years later.

In addition to levying the tax, the measure would also give the Board of Supervisors the power to waive that tax "subject to certain affordability-based restrictions on the occupancy of the real property," giving the city leverage to expand and preserve deed-restricted affordable housing.

Meanwhile, there's been a flurry of backroom negotiations surrounding the City Housing Balance Requirement measure sponsored by Sup. Jane Kim, which would require market rate housing projects to get a conditional use permit and be subjected to greater scrutiny when affordable housing falls below 30 percent of total housing construction (with a number exemptions, including projects with fewer than 24 units).

That measure is scheduled for a hearing by the Rules Committee on July 24 and, as an amendment to the City Charter, it needs six votes by the Board of Supervisors to make the ballot (the anti-speculation tax is an initiative that requires only the four supervisorial signatures that it now has).

Mayor Ed Lee and his allies in the development community responded to Kim's measure by quickly cobbling together a rival initiative, Build Housing Now, which restates existing housing goals Lee announced during his State of the City speech in January and includes a poison pill that would invalidate Kim's housing balance measure.

Together, the measures will draw key battle lines in what has become the defining political question in San Francisco these days: Who gets to live here?

 

COMBATING SPECULATORS

In February, Mayor Lee and his allies in the tech world, most notably venture capitalist Ron Conway, finally joined housing and other progressive activists in decrying the role that real estate speculators have played in the city's current eviction and displacement crisis.

"We have some of the best tenant protections in the country, but unchecked real estate speculation threatens too many of our residents," Lee said in a Feb. 24 press release announcing his support for Sen. Mark Leno's Ellis Act reform measure SB 1439. "These speculators are turning a quick profit at the expense of long time tenants and do nothing to add needed housing in our City."

Comments

The proposal for applying a transfer tax on short term holdings of multi-unit property is horribly misguided. We're not talking about a tax on profits, but instead this is a tax on the value of the property at sale. Using an all too common scenario in SF, a multi-unit property can be purchased with significant deferred maintenance. Then if the owner invests money in the property to take care of this maintenance this will be deemed to be "profit" on any sale thereby resulting in the imposition of the punitive transfer tax. For example,

Building Purchased for $1.5m

Repairs (including required Seismic) $500k

Sale Price $2m

In this scenario, there was no profit on the sale yet the owner would be subject to a transfer tax of $480k if the sale took place in the first year. And this hypothetical owner may not have evicted anyone!

Further, the exclusion of owners of 30+ unit buildings just illustrates the corrupt nature of politicians as they are hoping to continue to receive campaign contributions from these larger entities.

Posted by Guest on Jul. 09, 2014 @ 7:55 am

rates of transfer tax at all. Sounds discriminatory and, if so, the courts will bounce it.

Posted by Guest on Jul. 09, 2014 @ 8:05 am

Thank goodness I own my home and don't have to depend on the Progressive's harebrained schemes to secure my housing.

Posted by Guest on Jul. 09, 2014 @ 10:12 am

good for you, because they entail a permanent shortage of housing in SF, inflating the value of your property.

Posted by Guest on Jul. 09, 2014 @ 10:44 am

I'd rather see more of my friends and neighbors have the opportunity to own their homes than to further increase my property's value. It's already more than doubled.

Posted by Guest on Jul. 09, 2014 @ 11:06 am

friend or neighbor who is under-housed

Posted by Guest on Jul. 10, 2014 @ 2:14 am

Most would rather have the opportunity to buy a home themselves rather than taking handouts or relying on rent control.

Posted by Guest on Jul. 10, 2014 @ 12:23 pm

Oh yeah, another waste of tax payers money on this latest 'idea' - it will get crushed by the courts as a complete taking.

Just why do we want to make it more expensive for people to live here?

I agree w/ the poster above - I want to see more friends & neighbors be able to buy here, but these Progressives really just want to make it harder for you to buy - so they can keep you in misery and profit from it. The more owners we have in this town the better.

IF YOU EVER EVER HOPE TO BUY - Get rid of KIM, AVALOS, CAMPOST & MAR in the next election!

Posted by Guest on Jul. 09, 2014 @ 12:51 pm

More like..........if you ever, ever hope to keep San Francisco a healthy, vibrant, economically thriving and diverse city then shut the real estate speculatoing dirt bags down. Shut Gooberdoober Mayor embarrassment Ed Lee down. Or we can always continue on this creepy trajectory--A BEYOND THUNDERDOME SCENARIO where old is pitted against young, rich against poor. Wake up! This is our city. We all belong here. This isn't Rome. It's San Francisco, the city by the bay.

Posted by GuestHOPE on Jul. 09, 2014 @ 10:29 pm

more affluent whites buying property because, as SFBG reported recently, the white population in SF has been declining in a process that one might not unreasonably call reverse gentrification.

Walking around most parts of SF, there should as fuck is no shortage of poor people.

Posted by Guest on Jul. 10, 2014 @ 6:31 am

Stayed up all night drinking again, Probal? What would the partners at your firm think about this?

Posted by Guest on Jul. 10, 2014 @ 9:16 am
Posted by Guest on Jul. 10, 2014 @ 11:15 am

Why not single family homes and condos too? If you remove any incentive to sell at a profit you could protect these tenant-occupied properties as well. This would function as a form of rent control!

Posted by Guest on Jul. 10, 2014 @ 12:31 pm

After all the progressive income tax has worked WONDERS in erasing equality in our egalitarian society.

Posted by Guest on Jul. 10, 2014 @ 5:49 pm

"In addition to levying the tax, the measure would also give the Board of Supervisors the power to waive that tax"

Time to suck up to the Board of Supervisors, real estate developers!

All taxes in San Francisco should be waivable by the Board of Supervisors on a case-by-case basis!

We can finally achieve the nirvana where only white heterosexual males who are not politically well-connected pay taxes!

Posted by Guest on Jul. 11, 2014 @ 7:59 am

And a gay card. And a gender card.

But tax breaks are not unusual. Unions and non-profits get them up the wazoo.

Posted by Guest on Jul. 11, 2014 @ 8:27 am

Obviously white male hets are evil, and should therefore be paying all the taxes.

It clearly will be a far superior society when David Campos gets to decide who does and who doesn't have to pay taxes.

Posted by Guest on Jul. 11, 2014 @ 8:41 am

Yes, we need Walnut Creek litigation real estate attorneys with mediocre Avvo ratings to make those decisions for us.

Posted by Guest on Jul. 11, 2014 @ 9:04 am

Post new comment

The content of this field is kept private and will not be shown publicly.