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.”