Several San Francisco supervisors are pushing for Proposition J in the November election, a measure that would get rid of a transfer tax exemption for large properties that change hands through foreclosure.
When a property in San Francisco is transferred from one person or entity to another, the city charges a property transfer tax ranging from 0.5% to 6% of the property’s value. But properties that are taken by a lender through foreclosure are exempt from the tax.
Prop J, which was crafted by Supervisor Bilal Mahmood and Mayor Daniel Lurie, aims to close a loophole in the rule that allows corporate lenders to avoid paying the transfer tax.
“Right now, the city is going through an affordability crisis, and during the last several years, we’ve seen a rise in foreclosures,” Mahmood said in a social media video. “Corporate capital, institutional lenders, and hedge funds have been profiting off of those foreclosures because they’ve been given a tax break for decades and paying $0 in taxes on transfers of those properties.”
Revenue to close budget deficit
The transfer tax would only apply to commercial, industrial and large residential properties. Single-family homes and residential buildings with fewer than five units that are transferred through foreclosure would still be exempt from the tax.
If passed, the City Controller’s Office estimates that the city could bring in an average of $100 million to $150 million per year, revenue that Prop J supporters say could help the city close its budget deficit.
“This is important because right now, in our affordability crisis, we have to make sure that everyone is paying their fair share to make sure that our city bounces back,” Mahmood said.
Other supporters include Board President Rafael Mandelman and supervisors Myrna Melgar, Danny Sauter, Alan Wong, Matt Dorsey and Chyanne Chen. State leaders in favor of Prop J include state Sen. Scott Wiener, D-San Francisco, state Assemblymember Matt Haney, D-San Francisco, and state Assemblymember Catherine Stefani, D-San Francisco.
Opposition warns of ‘misguided tax hike’
Quentin Kopp, the president of the San Francisco Taxpayers Association, submitted an opposing argument to the Department of Elections. The association advocates against tax measures that it deems unnecessary.
In his opposing argument, he wrote that Prop J “is a misguided tax hike that will worsen San Francisco’s economic crisis and housing shortage.”
He argues that Prop J would impose burdensome taxes on institutions taking over distressed properties, costs that may deter lenders away from investing in San Francisco’s property market.
In a rebuttal to Kopp’s argument, Mahmood wrote that the “modest transfer tax” only applies to a “handful of major transactions” and won’t result in lending freezes in the city.
Registered voters in San Francisco can expect their official ballot packets to arrive in the mail in early October. Residents can check their voter registration status through the San Francisco Elections website.
Voter pamphlets have already started arriving in the mail, which are packets that include a sample ballot, information about local candidates and ballot measures, an explanation of ranked-choice voting, and instructions for voting by mail or in person.
