This morning, a group of affordable housing advocates dropped off just north of 13,000 signatures at the Department of Elections and hosted a rally. Barring significant irregularities, voters in November will decide if landlords should pay a price for leaving San Francisco homes vacant.
“Investors buy up old buildings and let them sit empty. We need to say no more,” said Fred Sherburn-Zimmer, the executive director of the Housing Rights Committee San Francisco at the rally. “A home is a home, and we are going to tax the shit out of it until you rent it out to San Franciscans.”
The measure, titled the Empty Homes Tax, hopes to chip away at San Francisco’s housing shortage by motivating landlords to fill empty units expediently. Funds collected from landlords keeping properties off the market would be put toward public housing.
Approximately 40,000 San Francisco housing units were vacant in 2019, according to a Budget and Legislative Analyst report, a figure cited frequently by advocates in support of the tax measure. Residences were vacant for a number of reasons, including repairs, units serving as second or vacation homes, and natural turnover, according to the report. Most of the vacancies are in the city’s Southeast, where the majority of new construction and multifamily buildings are. That includes South of Market and the Mission.
The tax voters are being asked to approve would ding landlords more if a unit has been vacant for longer periods of time or if the unit is a larger size. This model is a “variable-tax” model, similar to the vacancy tax in Vancouver, British Columbia. One year after adopting the policy in 2016, Vancouver saw its vacancy rate fall by 21 percent. Generally, the tax raises some $23 million in Canadian dollars per year ($19.4 million in U.S. dollars).
Though “40,000 vacant homes” is a catchy campaign tag, even the measure’s backers acknowledge that not all the empty units would be subject to the tax. The measure applies exclusively to buildings with three or more units that have had an empty unit for six months or more.
San Francisco has 407,000 residences, according to the 2021 Planning Department Housing Inventory report. Of those, about 49 percent are in buildings with five or more units, meaning all units in those buildings that have been vacant for half a year would be subject to the tax. Roughly 20 percent of San Francisco buildings have two to four units, meaning the tax could apply to a portion of those.
The January Budget and Legislative Analyst report offers limited insight on policy impact. Since the report predates the ballot measure, there’s no specific analysis on how many vacant units would be immediately taxed. However, the report projected that if a fraction of the 40,000 vacant homes were taxed — 4,600 to 7,300 homes — the city would raise between $12.2 and $61.2 million per year. San Francisco’s tax will likely earn closer to the higher end of that estimate, the report said.
Certainly, a tax won’t stop some landlords from keeping a unit vacant, especially if they are waiting to charge more when the rental market booms, or to flip an Ellis Act building (which can have been converted into condominiums or be re-rented after five years), said District 5 Supervisor Dean Preston at Thursday’s rally. But if a tax is passed, San Franciscans could ensure that money gets put to better use, he said.
“The reason we are here turning in signatures is to finally tax the real estate speculators that are profiting by treating housing in San Francisco like its shares in a stock market,” Preston said. “Something they buy and hold, until the prices go up and they sell to another speculator.”
Half the revenue raised from the tax would subsidize senior housing. According to a statement by Maria Mijares, a District 9 resident, she won the lottery for the Mission’s Casa Adelante or La Fenix projects but didn’t earn enough income to move in. She said the measure’s revenue for senior subsidies would be a “ray of hope” for Black and Latinx folk who can’t afford the city and risk displacement or eviction.
The remaining funds raised by the tax would go into a “pot” earmarked to buy and convert vacant properties into social housing. Preston has frequently pushed the Mayor’s Office of Housing and Community Development to increase money for that cause.
If the tax works as intended to fill homes, “the number of vacant units and revenues generated would likely decrease in the future, as has been the experience in Vancouver,” the Budget Analyst Report said. Vancouver saw a 3.5 percent reduction in vacancies the policy’s second year following 21 percent in its first.
Preston told Mission Local he feels confident voters will approve this measure in November. Still, at Thursday’s rally, Tenants Together legislative director and Democratic Socialist of America member Shanti Singh expressed more wariness, predicting that real estate groups would pour money into anti-tax campaigns.
“This is just the beginning,” Singh said. “We got the signatures. Now we have to campaign.”
Why does rent control in SF still apply only to buildings built before June of 1979? Every big apartment building built in the past 43 years is exempt from rent control.
This means that the entire burden of providing below-market-cost housing is borne by mostly individuals who bought buildings with 2 or 3 units often decades ago, in order to have some income while they lived in one unit, and have a more valuable asset when it came time to retire.
This burden is borne entirely by the iconic Victorian and Marina-style flats that provide the iconic visual character of our beautiful city.
DO SOMETHING FAIR and extent rent control to all units, including the profitable, corporate-owned ones built since mid-1979.
It’s flat-out ridiculous that only small property-owners, mom and pops, families who saved and invested for their futures, have to support lower income housing.
LET THE RICHER CORPORATE LANDLORDS PAY THEIR FAIR SHARE.
I would be happy to have the City and County subsidize rent control by reimbursing the small landlords rather than saddling them with largely unrecoverable costs.
Or it might just fill those 40,000 vacant units in this city.
Wait a second!
There’s a headline right in this story:
“100s of affordable units stand vacant in SF mixed-income buildings”
Housing shortage?
Explanations/excuses for this fiasco range from “can’t explain” to “missing documents” and everything in between. The stupidity is overwhelming and infuriating.
Would it not be rational to fix this problem immediately – like RIGHT NOW – before considering even more red tape bureaucracy to “fix” the issue?
If this passes, what next? How about unused or vacant rooms in your home. Government will help fill those unused rooms with a homeless person. Otherwise, “tax the shit out of them” as one tax-payer supported employee of a “non-profit” said. At the start, the tax may seem “reasonable” but the small print will allow the Government to truly “tax the shit” out of those undesirable property owners such that no one can afford to pay the taxes. Government will institute tax liens then tax payment foreclosures then the Government can give the property to “more deserving people” like their own Oligarchs, such as the Tenderloin Housing, Inc., largest property owner is SF. Problems solved, “housing for all”, except those undesirable property owners.
Condo owners (not even renting) are being told what they must do with their property after they’ve bought it. This will lead to even less construction, less property tax revenue and will not create vacancies addicts and those with mental issues can afford.
This will be passed by the voters regardless of any fine print on how this would be implemented. Just “Vacancy Tax” is enough to push it thru.
Unintended consequences will follow.
Workarounds will be implemented by property owners.
Nothing will change except a new City sub-department with a big crew of managers, city employees and a hefty slice of the budget to support it – forever and ever.
San Francisco is one of the very worst run cities (only Washinton DC is worse) in the entire nation and performative ideologues like Preston are the reason. Everything he does just makes San Francisco a more toxic place.
I like the policy, but has this crowd, Sherburn-Zimmer and Singh, ever run and won a 2/3 supermajority requiring special tax measure that is contested by moneyed RE interests, ever done the grassroots organizing of residents to build sufficient power to overcome money?
I had 2 persons stay in one of my flats for several months, using my utilities and not paying rent for more than a year. The pandemic was used as the excuse even though both were able bodied. In addition to paying a lawyer for assistance with evicting these persons, I had to pay them many thousands to leave. I am never going to rent my units again in SF. I will pay the vacancy tax.
If rent control were abolished and landlord tenant laws were not skewed in favor of tenants, damn near 100% of housing would be occupied. Forcing landlords to participate in a market designed against them is like forcing heathens to become catholic.
I know, it’s tough being a millionaire. I shed a tear for you.
So, Land Tycon, Jr., won’t rent any of his units because of rent control.
Regardless of what you think about rent control, you need to think about this. An empty unit is earning this guy zero dollars per year. It’s a two-bedroom place in the Mission and he could get $4200 a month for it, roughly $50k a year. Annual rent increase would bump that up by a grand or so each year.
You want me to believe that “rational self-interest” leads this guy to forgo a quarter million dollars over five years because he thinks rent control is hurting his bottom line? That’s funny.
There are two buildings on Pine Street between Franklin and Gough that were vacant and boarded up for years – possibly decades (twin four-story Edwardian flats). They have now been “fixed up” and appear to be occupied. No doubt the repairs/upgrades were expensive, but they were more expensive when they were done (last couple of years or so) than they would have been twenty years ago. Some of that work might have been to make the place habitable but surely some of it was to create luxury units. The landlord could have taken either approach, whether 20 years ago or more recently. But he lost 20 years of rent on eight units. Really?
How many years have you been a landlord? I assume you know that a loooot of expenses are going into renting your unit. Here is an example: Your tenant reports an issue, you investigate your issue, the tenant escalates, you now need a lawyer and to fix the issue. Oopppps – you have to pay now $50K to deal with it, not to mention the hassle, etc. That is a scenario I am dealing with right now. Not a millionaire or anything, just had to move out of the state for a time and was not ready to sell our house. Not a house flipper or whatever they blame in this article. Just a normal person owning a house in SF (and now slowly regretting it). What about tenants that refuse to leave and do not pay rent? Have you ever dealt with such tenants? You will be out of tens if not thousands of dollars before you get them out. So I get why people do not want to be landlords in SF, it is dangerous.
Sean, being a landlord is a choice – no one is “forced” to participate.
Owning a vacant property means you are not a …. LANDLORD. Forcing you to rent it, by penalizing you for not renting, is FORCING YOU TO BE A LANDLORD.
How the heck is this going to be monitored and enforced fairly? (I have a sneaking suspicion that doing so competently will cost as much or more then the revenue it may generate in the first place.)
Classic SFcity overreach stupidity…
Any idea what the tax will actually be per unit? Or by square feet? If they tax, “4,600 to 7,300 homes — the city would raise between $12.2 and $61.2 million per year” . This comes out to between $2650 and $8380 per unit. The article states that San Francisco will likely be on the higher end of this estimate. So, the assumption is the tax will be closer to the $8380 per unit vs. the $2650 figure.
When we vote on this bill, will it be a blind vote without knowing how much they will tax these units? Or will they provide a percentage or number so the voters understand what they are voting on? Where do we find the language of the bill to see the actual tax they are proposing?
I’d appreciate some reporting on the landlord’s perspective beyond regurgitating the tax proponent’s ‘speculator’ narrative.
As with most of our ‘fixes’ (Peskin’s restrictions on group housing, sham upzoning to blunt SB9), I feel like this is a distraction from actually building units. We have one renter on the BoS IIRC. They’re not incentivized to deal with the problem. What kinds of unintended consequences will we see with this one?
If the City is going to implement such a policy it must also include single-family homes.