Prop. G would slow down quick property turnover

sfexaminer.com
Joshua Sabatini
Sunday, October 12, 2014

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As rents and evictions have increased in San Francisco, housing has become the top political issue of the year. And voters have a chance to weigh in on measures to address the challenges with a proposal intended to curb real restate speculation and another to encourage below-market-rate construction.

To try to prevent the displacement of longtime residents, San Francisco has pursued a number of legislative measures and attempted, though unsuccessfully, to lobby Sacramento to change the Ellis Act, a state law that allows building owners to evict tenants if they want to get out of the rental market.

Another effort is the anti-speculation tax, Proposition G, which would tax the sale of multiunit properties bought and then sold within five years. The hope by supporters is that it would curb the practice of developers buying buildings, clearing out tenants and reselling at a profit, or flipping them.

If bought and sold within one year, a 24 percent tax on the sale would have to be paid, decreasing each year to 22 percent, 20 percent, 18 percent and 14 percent. The tax wouldn’t impact buildings with more than 30 units, single-family homes — unless they have in-law units — and condos.

Realtors have raised about $1.5 million as of Sept. 30 to fight the measure, including a $900,000 contribution from the National Association of Realtors based in Chicago. Supporters, which include state Sen. Mark Leno and Assemblyman Tom Ammiano, have raised $128,230 as of Sept. 30. The measure was placed on the ballot by supervisors John Avalos, David Campos, Jane Kim and Eric Mar.

The effort comes as evictions are on the rise. Between March 2013 and February, there were 1,977 evictions reported to the Rent Board, a 13 percent increase from the previous year’s 1,757. That includes 216 Ellis Act evictions, up from last year’s 116.

Opponents of the measure argue that the focus should be on creating more housing, not imposing a tax that, according to their argument in campaign material, “makes housing more expensive.”

“While current owners will absorb some of these costs, much of it will be passed on to new renters and new owners,” opponents argue.

Analysis by the City Controller’s Office estimated that in a typical year, using data from the past eight years, “approximately 60 properties would have been subject to the tax had it been in effect, and been subject to an average surtax amount of approximately $413,000.”

Also on the ballot is Proposition K, which addresses below-market-rate housing. It’s on the ballot as a result of a dispute over whether to mandate that at least 30 percent of all new construction of housing units hit the market as below market rate.

Kim initially proposed the mandate. But then in discussions with Mayor Ed Lee, she opted instead to place on the ballot Prop. K, which is a policy statement establishing below-market-rate housing goals.

It comes as the mayor has established a goal of rehabilitating and constructing 30,000 housing units by 2020. The policy goal is to have more than 50 percent of the units affordable for middle-income households and at least 33 percent affordable for low- and moderate-income households.

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