San Francisco Votes Down Speculation Tax

San Francisco voters on Nov. 4 rejected a ballot initiative intended to curb real-estate speculation. Proposition G, which would have levied a substantial surtax on landlords who sell apartment buildings they’ve owned for less than five years, received 46 percent of the vote, losing by 12,000 votes out of 154,000 cast.

Quintin Mecke, who ran the Proposition G campaign, told KCBS-TV that the support the initiative received proved that “there is a desire for change in the city…. Until we see evictions and affordability addressed positively, we’re going to continue to keep going.” 

The tax would have applied to buildings with two to 30 apartments. Owners who flipped buildings within a year would have had to pay 24 percent of the sales price, on top of the city’s current transfer tax of 0.5 to 2.5 percent. If they held the property  longer, the surtax would go down, to 14 percent after four years.

Real-estate interests raised nearly $2 million to defeat the measure, Mecke added, outspending the coalition of tenant and community groups that supported it by 12 to 1. The No on G campaign argued that the measure would hurt homeowners—although single-family homes were exempt—and that the cost of the tax would be passed on to new tenants.

Proposition G supporters said it would help stop speculators from buying buildings, evicting the tenants, and reselling them for a profit. California law allows owners to evict tenants if they’re going out of the rental business—a provision “mostly used by speculators to evict rent-controlled tenants,” Andrew Szeto of the San Francisco Tenants Union told Tenant/Inquilino in August. Speculators buy a building with one shell company and then sell it to another, claiming that the first one has gone out of business, he explained.

In the Mission District, where tech-industry money is gentrifying out Latinos and artists, the tax would have applied to 159 buildings if retroactive to 2009, a San Francisco Chronicle reporter calculated based on data from a real-estate Web site. City Controller Ben Rosenfield estimated that it would apply to about 60 properties a year in the whole city.