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San Francisco’s tax also applies to the value of liens held on a property, personal property and other assets connected to the real estate holding. In addition, the city defines transactions broadly to include changes in ownership of corporations and other entities that possess the property.

The owner of two San Francisco office buildings that face nearly $12 million in taxes, interest and penalties contended San Francisco was bound to follow the lower state tax rate. A state appeals court disagreed in March, saying transfer taxes were subject to local regulation and noting that San Francisco is the state’s sole “city and county.” The ruling became final Wednesday when the state’s high court unanimously denied review of the owner’s appeal.

The buildings cover 17 stories at 211 Main St., a few blocks from the Embarcadero, and 11 stories at 260 Townsend St., south of Market Street. San Francisco assessed transfer taxes on the owner, CIM Urban REIT, after a merger in 2014 changed the ownership of CIM’s parent company.

In a 2020 decision upholding the taxes, Superior Court Judge Ethan Schulman said a local real estate transfer tax “is a municipal affair that does not implicate significant state interests.” The First District Court of Appeal agreed in its March 3 ruling and also rejected CIM’s argument that ownership of the two buildings had not actually changed, so they should not be subject to a transfer tax.

Although the titles to the buildings had not changed hands, the court said, a 2008 ballot measure, Proposition N, approved by more than 68% of San Francisco voters, allowed the city to levy a transfer tax after a change to the corporate ownership of real estate.

Prop. N was “intended to avoid evasion of transfer taxes by entities transferring ownership interests in lieu of transferring real property,” Justice Henry Needham said in the 3-0 ruling.

Needham quoted ballot arguments by sponsors of Prop. N who said multinational companies were costing San Francisco millions of dollars by using shell companies to hide ownership transfers. He noted that the measure, which also increased transfer tax rates, applied only to property worth more than $5 million.

City Attorney David Chiu, whose office defended the law in court, said Wednesday, “We have consistently maintained that San Francisco voters have the authority to choose how the city taxes real estate transactions within its borders, and today’s decision by the California Supreme Court confirms that. This ensures that large corporate entities cannot use complicated ownership schemes to avoid paying their fair share of taxes.”

Lawyers for the property owners were not immediately available for comment.

The case is CIM Urban REIT v. San Francisco, S274032.

Suppose that all those pious but earnest urgings by local and state officials over the past few years proclaiming that we need much more housing in this state, particularly affordable housing, were based on false data?

What if all those mandates from the Association of Bay Area Governments (ABAG) and other government agencies that set a specific number of new housing units cities must provide were based on dated and unsound information? And what if these agencies have not taken into consideration current data — such as the number of people now moving out of this state or the decline in new births or that the escalating population growth would no longer continue, or corporations leaving this state — were discounted, and certainly not included in their predictions of how many housing units are needed?

I never thought to question if the state officials were correct in their assessments, but one recent report has, and its conclusions made me anxious about these projections– a lot.

At the outset, I want to state that I don’t know whether the state auditor’s findings are right or wrong, but I do think we should pay attention to them because if they are true, then we may be needlessly requiring overbuilding in this state. And even worse, if we are creating too many housing and apartment units, they may sit empty for months or years, and we will have created ghost towns or slums in portions of our cities, which is certainly something to think about.

The scathing report was prepared by acting state auditor Michael S. Tilden, and released March 17. It found the state’s Department of Housing and Community Development (HCD) predictions on housing needs are not only inaccurate, but overestimated the number of new housing units needed in this state by at least 900,000 units, in its stated need of 2.1 million new units. That’s like a 43 percent overcount!

Evidently HCD did not adjust their numbers the previous years, even though the demography of this state was changing – an increase in the number leaving the state, the drop in birth levels, etc.

“The (state) Department of Housing and Community Development (HCD) has made errors when completing its needs assessments because it does not sufficiently review and verify data it sees,” the report bluntly states. In other words, there are screw-ups.

To put this in local terms, each year ABAG tells local cities how much new housing they need to provide. For Palo Alto, the city has ben tasked with 6,086 new units between 2023 and 2031. Originally ABAG demanded a 10,000-unit increase, but did not explain why the decrease.

But I look around me and see San Antonio Road near El Camino crammed with massive housing and commercial buildings; Menlo Park along El Camino has two blocks of high-rise under construction – a massive amount, visually. Is there enough demand now to fill them, since the construction started years ago and based on older growth estimates?

At-large Columnist Tom Elias also wrote a column about this auditor’s report and noted that even Gov. Gavin Newsom has reduced his housing-needs figures, perhaps based on similar findings about overblown numbers. In 2018, he said California would need 3.5 million new units, but now says we need 1.8 million by 2030. Newsom never explained the drop in his projections. Plus, evidently HCD did not adjust their numbers, nor has it, according to the report.

Now I am not dismissing at all the escalating housing needs in many parts of our nation; they are there. But in California, where the needs still exist, it looks to me like we may be overbuilding based on false predictions and unreliable information. At least, let’s all think about it, especially our city officials and some legislators in this state who are still coming up with ways to make our communities a lot denser (e.g. SB 9 and SB 10).

It’s a shame to have all our communities adjust its housing because of false numbers.

Article source: https://www.paloaltoonline.com/blogs/p/2022/05/03/do-we-really-need-all-that-new-housing

SAN FRANCISCO (KRON) – Housing prices in the Bay Area are far from “affordable,” as many know. But new data suggests prices in the Bay may even be “undervalued.”

An article by Fortune Magazine says two-thirds of the nation’s housing markets are “overvalued,” particularly in places like Austin or Charlotte. But the Bay Area is considered undervalued.

Alexandra Stein, a realtor with Corcoran Global Living, says the high-paying tech industry keeps boosting real estate prices.

“Companies like Apple are now offering bonuses because they don’t have enough engineers, so when you see that type of money that’s being thrown around it makes sense the housing market is still ticking up,” she said.

Despite rising mortgage rates, as the federal government tries to put the damper on inflation, Stein says there are still bidding wars for houses selling for 2 or 3 million dollars in the Bay Area.

“For people that are still trying to get into that million and under market it doesn’t really exist,” she said.

Stein says as long as the area has good weather and a thriving tech industry, there will most likely be an increase in prices, because the demand is there.

Article source: https://www.kron4.com/news/bay-area/bay-area-homes-are-undervalued-fortune-magazine/

The Deal Sheet is a weekly compilation of the San Francisco Bay Area’s biggest leases, sales, financing deals, construction updates and personnel moves. Have news you’d like to submit? Email joseph.gordon@bisnow.com.

The Sobrato Organization purchased a 40K SF property at 180 Townsend St. in San Francisco’s SoMa District for $71M.

The office building was renovated recently with $20M in investment capital. DivcoWest sold the property, represented by CBRE Capital Markets’ Alec Haley, Kyle Kovac, Giancarlo Sangiacomo and Michael Taquino. The property is fully leased by Andreessen Horowitz through January 2031.

SALES

Terreno Realty Corp. acquired a 135K SF industrial property in Santa Clara for $54.6M, according to GlobeSt. The property is fully leased to four tenants with leases running through 2027.

LEASES

Longfellow Real Estate Partners leased 45K SF in speculative lab space in its Palo Alto Labs campus, according to a press release from the company. The space was leased to three companies: Delfi Diagnostics, Gator Bio and Rarebase. Longfellow acquired the property in 2019.

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The former Sutter Health Hospital site in Presidio Heights is back on the market, following the dissolution of a deal between TMG Partners and Sutter Health to redevelop the property into a 250-unit multifamily community.

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Ripple, a cryptocurrency company based in the Bay Area, is relocating its headquarters from 315 Montgomery St. to 600 Battery St. The 315 Montgomery St. address is owned by Vornado Realty Trust. 600 Battery St. is owned by TMG Partners and Invesco.

CONSTRUCTION AND DEVELOPMENT

LBA Realty has filed new plans to bring more than 200K SF of manufacturing to North San Jose, The Real Deal reported. The company pitched the development on a site at the southwest corner of West Trimble Road and Orchard Parkway where it previously received approval to build a new hotel and 100K SF of commercial property.

THIS AND THAT

Real Estate Avenue has announced a partnership with Side, according to a press release. Side will support Real Estate Avenue with a brokerage platform while Real Estate Avenue will join the group of Side partners.

Article source: https://www.bisnow.com/san-francisco/news/deal-sheet/this-weeks-san-francisco-deal-sheet-112946

The axiomatic idea behind the inception of Brownstone Shared Housing — an eight-month-old startup that bills itself as a “short-term solution for students or people working on temporary jobs” — is nothing novel or awe-inspiring. “Pod-living” and dormitory-style room rentals have grown into financial fodder across the Bay Area over the past decade.

In 2015, it wasn’t uncommon to see spaces that measured no bigger than a walk-in closet renting for over $1,100 a month on craigslist. Comparatively, this was also the time when cramped community living corridors (that read more like incarceration units than actual spaces to comfortably exist) began popping up across the Bay Area.

To this day, the notion of $1,200-plus bunk beds being rented out to people desperate for realistically affordable housing remains a pressing truth.

(Mind you: Most financial experts still agree to allocate no more than 30% of your net income on housing, which allows for a healthy buffer zone to pay for miscellaneous bills, various debts, food, retirement, and occasionally frivolous spending. As of 2022, the average San Francisco earner makes about $72,000 a year, before taxes. After those wagers are deducted from federal, state, and local levels, it leaves roughly $4,100 left on the table a month — with a little over $1,300 of that being able to responsibly go toward housing, per the previously mentioned financial model.)

Brownstone Shared Housing’s South Bay home, which can accommodate 14 people in a domicile with just two bathrooms and a single kitchen, isn’t innovative. It’s a dangerous normalization of the housing crisis at hand.

Article source: https://thebolditalic.com/these-800-a-month-bay-area-pods-area-just-glorified-coffin-homes-2056a4dd2c43