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Prop M in SF Aimed at Taxing Property Owners Who Leave Rental Units Vacant

Prop M in San Francisco is a proposed tax aimed at property owners who leave available rental units vacant for more than six months.

The backers of the measure say it will help make more housing available, while opponents are concerned about some of the consequences if it passes.

The measure is a proposal conceived and backed by San Francisco District 5 Supervisor Dean Preston. It’s modeled after a similar tax that was passed in Vancouver.  

“What this measure targets is folks who have a business practice of just keeping these units open year after year after year,” said Preston. “That’s who’s going to pay this tax, unless they rent it out.”

According to Preston, there are an estimated 40,000 vacant apartments or unoccupied condos in San Francisco.

This measure would affect any property owner in a building that has more than two units.

The tax would be levied if an apartment is left vacant for more than six months.

The tax is based on square footage and ranges from $2,500 to $5,000 the first two years of vacancy and up to $10,000 in the third and any following years.

According to the city controller, San Francisco could bring in about $20 million in its first year, if vacancies stay at about the same average as they are now. If they drop, the city will bring in less tax revenue.

The tax revenue raised from Measure M would be split between paying rent subsidies for elderly or needy families and a new fund to buy unused buildings for housing.

But Preston said the hope is not to bring in more tax revenue.

If Measure M works in San Francisco the way it did in Vancouver, he said the city should see a drop in vacancy rates.

“The folks behind this tax will be 100% happy if what happens is the city doesn’t collect a dime, because what it does instead is activates tens of thousands of homes for people who need homes,” said Preston.

There are a few exceptions to the tax, including long grace periods for buildings that may need to be vacant for a while because of repairs, like water damage at 33 Tehama or fire damage at 901 Divisadero.

But opponents of Measure M say it’s a poorly written proposal that could have unintended consequences for some property owners.

“The owner of a small TIC, the affordable housing opportunity for property owners, could be subject to the tax if they live in the unit full time, if one of the other occupants doesn’t. It’s a major problem,” said Charley Gross of the San Francisco Apartment Association.

TIC stands for tenancy in common, an arrangement allowing for multiple owners of a shared building.

But the major concern for San Francisco Apartment Association members is the possibility of a new tax at a time when they’re still unsure about the city rebounding from the pandemic.


Source: NBC Bay Area

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