Supervisor Eric Mar and tenant activists unveiled a ballot measure Tuesday that would impose a steep tax on investors who sell an apartment building within five years of buying it, a proposal they said is aimed at reining in real estate speculators who are helping to drive up housing prices by flipping rental properties.
The “antispeculation” tax, which would apply solely to smaller, rent-controlled, multiunit buildings, will join several other housing measures on an already crowded November ballot. It asks voters to approve a graduated tax that decreases the longer an owner holds onto a property – starting at 24 percent of the selling price if a building is sold within a year of purchase, falling to 14 percent at five years and disappearing in the sixth year.
The measure exempts single-family homes, condos, owner-occupied tenancies in common, properties not being sold at a profit, new construction, properties being turned into affordable housing and buildings with more than 30 units.
The support of four supervisors is needed to place a measure on the ballot. Mar is joined by Supervisors John Avalos, David Campos and Jane Kim.
Costs ‘out of whack’
“This is a serious situation we are in – the unstable housing costs in the city, even the average cost of a rental unit is so out of whack right now and it’s driven … by wealthy, powerful interests who are flipping apartment buildings and making a lot of money quickly,” said Mar. “This will slow down or stop the flipping by greedy speculators, help ensure more of a balance of housing in the city, and hopefully address the out-of-whack, super increase in apartment rental prices right now.”
Mar said the measure will also help protect neighborhood character by allowing longtime tenants to stay in their homes. Proceeds raised by the tax would go into the city’s general fund, but Mar said he would push for that money to be used for affordable housing.
The idea was first raised in the city in 1978 by Supervisor Harvey Milk, shortly before his assassination, said Sara Shortt, executive director of the Housing Rights Committee of San Francisco. This time, it grew out of a tenants convention in February, said Gen Fujioka, a member of the San Francisco Anti-Displacement Coalition and longtime affordable housing activist.
Fuijoka said the proposal is aimed at “hit-and-run investors” who swoop into the city to make a huge profit. The measure is not directed at small landlords, he said, but he acknowledged it is unlikely that property owners who stand to profit from an increase in housing prices will support it.
Realtors have serious concerns about the proposal, said Jay Cheng, deputy director of government and community relations for the San Francisco Association of Realtors. Cheng said it should at least exempt people selling their property to family members. It could end up driving housing prices even higher by reducing the number of properties on the market, he said.
“All this is really going to do is slow down the pace of the housing market – but prices will still increase,” Cheng said.
He said he was baffled as to why the proposal exempts larger apartment buildings, saying it will just hurt “mom and pop” landlords who tend to own smaller properties. It could also have negative impacts on younger, first-time buyers who have to sell because their careers take them elsewhere, he said.
“It’s really unfortunate that Eric Mar’s office never reached out to us,” he said. “As Realtors, we could have helped mitigate some of the unintended consequences.”
Still, Cheng said, the association will review the proposal more closely before deciding whether to campaign against the measure.
Noni Richen, president of the Small Property Owners of San Francisco, said rent control is really to blame for the hot real estate market. She said the rents at her four-unit San Francisco building, for example, “are about what a family member receives by renting out a one-bedroom condo.”
“The tenant activists are reacting to a situation that they themselves have caused by creating a business environment where small operators are forced to operate at a loss by subsidizing people at below-market rents that don’t keep up with inflation,” she said.
It leads to people, in some cases, having to sell their buildings, “sometimes to ‘flippers,’ ” she said.
The proposed ballot measure would impose a graduated tax on investors who sell a multiunit building within five years of purchase. The tax would be based on a percentage of the resale price. It would decrease every year, and disappear after the fifth year. It would range from:
– 24 percent in year one
– 22 percent in year two
– 20 percent in year three
– 18 percent in year four
– 14 percent in year five
Source: Anti-Displacement Coalition
Marisa Lagos is a San Francisco Chronicle staff writer. E-mail: firstname.lastname@example.org Twitter @mlagos