The issue is the latest test for local politicians who acknowledge that San Francisco needs more affordable housing but can’t agree on a political path to make it happen.
“It’s a part of the housing policy discussion in the city that just never really gets addressed,” said District Five Supervisor Dean Preston, who commissioned the new report and has expressed concern about vacancies fueled by real estate speculators, but has yet to formally propose a new tax measure. “It’s a high number, and it’s a growing number.”
Supporters of a San Francisco vacancy tax frame it as a quick way to force more homes onto the rental market and generate money for the city. Opponents say the strategy is a distraction from broader efforts to build new housing, and that the city’s vacancy rate is normal for cities where people are often on the move.
“A vacancy tax makes no sense,” said Randy Shaw, executive director of homeless housing provider Tenderloin Housing Clinic. “It creates this false sense that we don’t need to build more housing.”
Preston argues that “we have to be working on all fronts” to create more affordable housing, but the vacancy debate follows a series of clashes over where to go from here on the city’s housing crisis.
On one side are pro-development groups and Mayor London Breed, who say the city has no choice but to build its way out of a stark mismatch between jobs and housing. On the other are tenant advocates, some nonprofit housing developers and San Francisco supervisors who often oppose new market-rate housing proposals due to concerns about everything from gentrification to negative impacts on existing homeowners, many of whom have benefited from increasing property values.
In late January, a legal arm of pro-housing lobbying group YIMBY Action sued the city after supervisors including Preston rejected a 495-unit housing project initially approved for a SoMa parking lot. Last week, Breed was rebuffed by supervisors for a third time on an effort to streamline housing approvals through a charter amendment.
Taken together, Shaw said the housing controversies point to “a pattern” of the mayor’s proposals failing to attract in-person support at city meetings, followed by a hardening of the stalemate between the board and the mayor. Ultimately, he said, it may make sense for advocates of more housing to take an alternate route and ask voters to break the political gridlock.
“With all these things, we have a November ballot,” Shaw said. “San Francisco is not being held hostage by the Board of Supervisors. The voters can speak.”
The new report on vacancy rates and the potential for a version of an empty home tax in San Francisco come as affordability advocates in other California cities, including L.A. and Santa Cruz, mount their own ballot campaigns for similar measures. Preston declined to specify when or how he may bring such a measure to the Board of Supervisors in San Francisco, but he noted that all tax measures ultimately require voter sign-off.
As it stands, San Francisco is on track to permit the 28,869 new homes that state regulators directed it to plan for between 2015 and 2022. That’s largely because the city has exceeded its goals for market-rate housing by 6,000 units, the new report notes, while falling more than 10,600 units short of low- and moderate-income housing targets.
Using federal data from 2019, the most recent year that census estimates include details on the reasons homes are vacant, there were 40,458 empty homes in San Francisco, the report found. That represents about 10% of the city’s 406,399 housing units, which is comparable to vacancy rates in Philadelphia and Boston, below New York’s 14% rate and above L.A.’s estimated 7% empty homes.
The reason homes are reported vacant varies, and it can be difficult to track in real time. While the new report notes that it’s normal for some homes to be vacant during the time between occupants, census estimates show a 420% jump from 2015 to 2019 in the number of units sold in San Francisco that remain unoccupied.
Some analysts question how many buyers are purchasing homes still under construction, or why property owners would pass up the chance to earn rental income in expensive cities like San Francisco. Preston frames the increase as an example of investors buying up units and holding onto them with the intent to sell as prices rise.
“These are units that are intentionally held vacant for long periods of time,” he said. “They’re playing the market but aren’t interested in providing housing.”
Another complexity is how the economic shock of the pandemic may have scrambled vacancy numbers. According to numbers from the latest decennial census in 2020, which have not yet been released in full, there were more like 34,777 vacant housing units in San Francisco County as of April 1, representing a lower 8.6% vacancy rate.
Since then, Realtors and tenants report a scramble to find roomier rentals in outlying neighborhoods like Bernal Heights and the Richmond District, in contrast with reduced rents and empty units in once-busy downtown office corridors like SoMa and the Financial District.
Research about the impact of vacancy taxes on other cities is also mixed. In Vancouver, the city did see an initial influx of new rental properties and generated the U.S. equivalent of around $21 million in new taxes in 2019, but vacancy rates have since leveled off as rents continue to climb. Oakland collected $7 million in new vacancy tax revenue in 2020, but rents also continue to surge and many properties are exempt from the $3,000-to-$6,000-a-year flat fee on vacant units approved by voters in 2018 — a tax structure that the new report notes also “appears to be the most feasible for San Francisco.”
Preston acknowledges that taxing empty units wouldn’t be “a silver bullet” to a housing crisis decades in the making. But it’s one more avenue that he says the city can’t afford not to pursue as tents in some areas dot the street below empty homes.
“I don’t think I can think of a more stark example of the failure of our housing system,” he said, “than that this exists side by side.”
Lauren Hepler is a San Francisco Chronicle staff writer. Email: firstname.lastname@example.org Twitter: @LAHepler