Saturday, April 17, 2021
Uncategorized The big national landlord money aimed at Prop. G

The big national landlord money aimed at Prop. G

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48hillsbiglandlordmoney

By Tim Redmond

NOVEMBER 3, 2014 – I’ve seen a lot of political campaigns around landlord and tenant issues. I’ve seen both sides lobby the Board of Supervisors and the mayor. I’ve seen successful and unsuccessful rent-control and tenant-protection ballot measures. I’ve seen battles in Sacramento. I’ve seen lawsuits.

But I can’t remember when I’ve seen so much corporate and out-of-town money pouring in to defeat a local proposition.

Prop. G is the result of almost a year of tenant organizing, discussion, and activism. It came out of the tenant conventions and is an attempt to slow down the speculation in the housing market that has led to so many evictions.

But it’s apparently terrified not only the local landlords but statewide and national groups, who have poured way more than $1 million into stopping the anti-speculation tax.

The National Association of Realtors, based in Chicago, has contributed $800,000, Ethics Commission filings show. (Why would a national real-estate group care that much about a San Francisco ballot measure? Maybe because it might set a national standard for fighting speculation.)

The California Association of  Realtors has poured in $425,000. The San Francisco Association of Realtors has added $170,000.

And then there’s Pacific Gas and Electric Company.

PG&E – the utility company that as far as I know owns no residential rental property — cares enough about tenant issue in San Francisco to pour $105,000 into an independent-expenditure committee that is opposing Prop. G? I’ve never seen that before.

It turns out that there’s a group called – I kid you not – “The Committee for a Brighter San Francisco – that has raised $180,000 for this election. The biggest donor, at $105,000, is PG&E. (Others: The Committee on JOBS — $40, 000 and the Chamber of Commerce — $10,000.)

That committee is in support of pretty much everything Mayor Ed Lee is supporting – Props. A (Muni bond), C (Children’s Fund), I (artificial turf in Golden Gate Park) K (the consensus affordable-housing measure) — and No on G.

It reads a bit as a mayoral slush fund, underwritten by a corporate criminal that Mayor Lee seems to love.

Now: Most of the PG&E money is going into polling and work on other initiatives. But still –the utility has joined with the landlords to defeat a tenant measure.

Sterling Bank, which offers fractional loans for people who want to buy tenancies-in-common, has held several GOTV events for seniors, and the No on G forces showed up and hijacked one of them. According to reports in Sing Tao Daily, Sterling has offered shuttle-bus rides to the early polling places. A summary translation provided to me goes like this:

Sterling Bank and Trust yesterday 10:30am at their 2501 Irving site organized a no on proposition G voter education and early voting activity and provided shuttle buses to and from City Hall for early voting.

Afterward, some voters took shuttle buses to early voting at City Hall. Sterling Bank and Trust also plans similar event on November 4, at10:30am at 2555 San Bruno Avenue in Portola branch; refreshment will be provided at 10:30am, and then shuttle bus to voting locations. Buses will be waiting from 10:30 to 11am at the bank with buses to and from voting locations.

But Sterling Bank CEO Steve Adams told me that the bank never promoted the turnout programs as No on G events (which would have had to be reported as an in-kind or independent expenditure contribution). They were, he said, completely neutral efforts to get seniors and people with mobility problems to the polls. “A lot of seniors can’t make it to the polls, so we offer this as a community service,” he said.

Josephine Zhao, a leader in the No on G effort, showed up and made a speech, Adams said, and that’s where the No on G story came from. “She did her thing, but I just told people to vote for David Campos. He and I don’t agree on everything, but he has integrity and I am a big supporter.”

Campos, of course, is also a big supporter of Prop. G.

And to make things even tougher for the Yes on G campaign, the Democratic Party slate card – which represents a party that voted to endorse Prop. G – contains the exactly type of misleading language that the realtors have been using.

Randy Shaw has an account here. Most of the positions the Democrats took are reflected in the language on the card:

No on L – Stop the Gridlock

Yes on J – Let’s Give San Francisco a Raise

Yes on F – Revitalize Pier 70

But not Prop G. The campaign manager, Quintin Mecke, told me by email that he had informed the contractor doing the card (50+1 Strategies, which also is doing the Chiu campaign) that the tagline should read:

Stop the evictions!

Instead, it says:

Additional Transfer Tax on Residential Property

That’s wrong: Prop. G doesn’t apply to all residential property; the taxes only go up on rental housing that is bought and sold quickly. It’s aimed at speculators, not homeowners. The distinction has played a huge role in the No on G campaign, which describes this as a huge new tax on homebuyers.

What happened? Well, Mary Jung, who is chair of the DCCC and also happens to be a full-time lobbyist for the Board of Realtors, didn’t call me back. But the committee that designed the card was dominated by people who are against Prop. G.

That’s today’s San Francisco Democratic Party. And that’s what Prop. G is up against.

 

 

Tim Redmond
Tim Redmond has been a political and investigative reporter in San Francisco for more than 30 years. He spent much of that time as executive editor of the Bay Guardian. He is the founder of 48hills.

99 COMMENTS

  1. Y, I would draw a very clear distinction between profiteering in an emergency, a natural disaster or in a war, and just normal supply and demand.

    Price controls have often been introduced during war-time to stop exploitation. Or after hurricanes , earthquakes etc. I have no problem with that.

    And I am gratified that you do not consider normal landlording to be profiteering. I would agree with that sentiment. In fact, ultimately it is tenants who set rents and not landlords, by offering more and/or out-bidding the other applicants.

    But when it comes to converting a building from rental use to, say, owner-occupation, I’m still not sure that is equivalent to wartime price-gouging. Rather it is usually an acknowledgement that the business entity is no longer viable as a rental. And if I don’t Ellis it, somebody else will, because the numbers just do not crunch.

    Also note that a new buyer typically has a much higher cost base, so rents that were adequate to the previous owner no longer are.

    SF’s rent laws made being a landlord much less profitable, but have made TIC conversion much more profitable. You can hardly blame owners for making the obvious decision. It’s the policy that is the problem.

  2. Barry, in other words, you have no refutation of my arguments and so you duck and/or make it a personal attack.

  3. Note that my definition is milder than others’. Here’s an account of the1906 quake in San Jose: “In San Francisco bread sold for 80 cents a loaf. But C. Doerr, San Jose’s largest baker, refused to be a profiteer. He baked 10,000 loaves and sold them for five cents each.” (these prices translate to perhaps $3/$50 in today’s prices.) This is not quite the same, since bread can’t be hoarded, but evidently the SF bakers had plenty of customers for the 80¢ bread, even if others went hungry. The SJ baker apparently trusted people not to resell his bread at inflated prices, and perhaps his trust was justified.

  4. Profiteering in the sense I am using is taking advantage of a shortage, especially exacerbating it, to make a profit, in other words, to gain from people’s misery.
    Right now there’s a housing emergency in town, for the non-rich. Consider a few cases:

    —A tenant moved out of a unit you own. You put up the place for rent at market rate. That’s fair enough. Lowering the price significantly will cause problems, which are hard to solve (how much? how to deal with extra applicants? Who should benefit from the lower rent?) Offering the unit at market rate will exclude many, but will not directly hurt anyone. This is not profiteering.

    —You buy a building with tenants. You can continue earning rent and own an appreciating building, but instead you evict anyone by Ellis or otherwise and condo the building. This is profiteering. You are doing something which directly hurts people, which is unnecessary for your self-preservation and therefore avoidable, and all for an extra profit.

  5. So your big point is that someone involved in politics might not be telling 100% of the truth?

    You really are new here. Welcome to SF.

  6. Hardly new here. You keep missing my point. They pretended it was non-partisan while it wasn’t. GOTV is fine. Doing it under false pretenses and then additionally lying about it to the press, that’s not so ok.Got it now?

  7. Tim, PG&E does own residential properties associated with its hydroelectric facilities. It is also apparent from their job listings (both internal and external listings) that they are looking to expand their real estate holdings.

  8. You’re right, Sam. A white techie who buys a former rent-controlled apartment in the Mission, just as the gentrification process was beginning in full swing, is the perfect person to tell us about about local housing issues. Cluelessness doesn’t even begin to describe the cognitive dissonance. Hopefully he owns a bike since seeing whites and Asians cycling around in the Mission, Bayview and OMI is the best advertisement ever for even faster gentrification. “Buy here people, the neighborhood is improving (gentrifying)! Better buy now, before it’s too late!”

    As a fan of realtors and speculators everywhere, more bike lanes and more transit investments are the perfect kick-starters that get the gentrification process moving ahead at full-steam. They’re almost as effective as building a bunch of million dollar condos in these poorer neighborhoods, which signal that the gentrification process is in full swing. I’ve been very impressed with the number of whites and Asian folks moving to the Mission and Bayview over the past 20 years, helping to cleanse these neighborhoods of poorer tenants.

    So many rental properties to fix up and sell to college-educated upscalers in Brooklyn, DC, Boston, west LA, Portland, Seattle and of course the shining beacon of them all, San Francisco, yet so little time. I’m hoping to make at least $10 million before the complete gentrification process is over in probably the next 15 years. What’s so beautiful about the whole process is that we don’t even have to build anything. We just wait for the city to add bike lanes, add a few more buses, ramp up the police activities to kick out the small-time drug dealers and petty thieves, and then wait for the young techies to take over. Easy money, and tax-free if you know the tricks.

  9. Nothing Garry stated indicates that he would be personally liable for the tax. He merely opposes it on principle.

    The tax may impact some sales prices downward if some buyers are deterred. But if so, the seller would be well advised to first Ellis and then sell.

    So paradoxically, Prop G will lead to more evictions and quicker evictions.

    None of which really matters because G will probably not pass and, even if it does, the courts will bounce it.

  10. You will find several refutation of G by me and others on this thread alone.

    All you post is “yay for my side”.

    Debate over.

  11. Bullcrap. These folks are able make it from their homes and onto a bus and then are able to enter the basement of City Hall to vote, but you claim it’s too hard for them to make it unaided to a local polling place? We’re talking elderly Asian-Americans for the most part here and I don’t think too many live up on Corona Heights with it’s hard to access polling place, so that’s a phony argument, Sam.
    It was a campaign gimmick to bank the votes of this identity group, which tends to vote conservative. The Bank guy claimed a nonpartisan desire to up the vote and he’s full of it.

  12. Sam, I will not bother to debate you as it’s election day now, buddy and I and many others have already made the strong case for G. I think it’s pretty much all been said. Besides, your posts all seem to make you out to be a regressive blowhard. YES ON G

  13. Y, you’ll need to do a better job of defining that distinction.

    Anyone who sells a product or service tries to get the best price they can for it. Every employee tries to get more pay. I really do not see why real estate is any different.

    If anything, SF has more “mom and pop” RE investors than other cities where rental properties are controlled by large corporations.

    Unless you are a dyed-in-the-wool socialist who thinks that all profit is bas because you hate capitalism, then I really do not see the difference you are seeking to impose.

  14. Some seniors and disabled folks have difficulty physically getting to the voting station. For example, one of the voting stations today is at the Randall Museum on top of Corona Heights, and a fair climb even for young fit healthy voters.

    It’s reasonable for any entity to offer rides for voters for any reason.

  15. What does that tell anyone other than that you personally will vote for G?

    At least try and mount an argument. If you did, and got refuted, you might even learn something.

    Anyway, my NO on G vote will cancel out yours, so others will decide.

  16. Yes, and another idea would be to set up a corporate structure that owns the building, and then sell the corporate entity. The title to the building would not change and so no transfer tax would be triggered/

    The owner would remain the same – the entity. But the owners of that entity would change.

    A similar structure happens to mitigate property tax increases.

  17. No, Greg, you overlook an obvious and compelling point.

    If I am going to sell my property, I will usually sell to the highest bidder. There are two possibilities:

    1) I sell to a genuine buyer who plans to live there or run a rental business there

    2) I sell to a short-term “speculator”. He then sells it on to a buyer who wants to live there or run a rental business there.

    So either way the long-term new owner ends up there and, either way, the value of the property reamins the same (assuming no remodel).

    So the net effect on housing costs will be zero.

    In fact, G isn’t trying to reduce housing costs. It is really aimed at deterring Ellis evictions. In fact G would probably be more popular if it was positioned as mitigating Ellis evictions rather than punishing property owners and taxing homes.

    As I argued above, Prop G will actually increase and accelerate Ellis evictions, especially now the relo expenses has been quashed. But it will also drive up costs, as any tax will do.

  18. Of course it’s going to make SF more affordable. Part of the reason SF housing prices is so high, is because people are speculating on properties. Discourage that aspect of it, and you put a damper on price increases, because at least some people (some hard core speculators) might look elsewhere to make a buck.

    The part about not building housing -irrelevant. It’s not a housing building initiative. It’s a tax on speculation on existing housing. Building housing is controversial anyway in a city like this -it does little to dampen demand, because demand here is effectively inelastic at the levels of building that are humanly possible. And it creates more traffic and destroys neighborhood character. We need to focus more on preservation of affordability for existing housing, and this does that.

  19. Sammy, my near namesake, I support the right of marcos, or any other white male tech worker, to buy a condo in the Mission district.

    Gentrification like that is a positive transition, even if it results in some displacement of poorer colored people of color, who are probably more suited to be elsewhere long-term anyway. It helps uplift property values for all us, while reducing blight and crime, and creating a more liveable environment.

    marcos has my full support for his lifestyle choice to convert a rent-controlled affordable housing unit for white male tech worker usage.

  20. G passing will in fact be bad for tenants, as almost all supposedly pro-tenant legislation has proven to be.

    As an example, if I was intending to sell my building but did not want to Ellis, right now I would just go ahead and sell. The buyer may in fact want to run the building as a rental, and so my tenants are not affected.

    But with G, any buyer who wishes to Ellis will not buy because they have to wait five years. That reduces the marketability of my home, and reduces its sale value.

    So instead I Ellis now, and then sell, because the new buyer can then take five years to remodel the building, live in it as necessary, and then sell.

    So G has made an Ellis more probable and it will happen sooner.

    Moreover, G will deter some owners from re-renting a unit when it becomes vacant because it will be harder to exit the business.

    That pesky law of unintended consequences.

  21. Homeowners like Garry won’t pay this tax, either because they are owner-occupiers or because they will own property for more than five years.

    What you are missing is that once a new tax is invented, its scope and its rates tends to get increased over time, whenever the city thinks it needs more money.

    So the overwhelming majority of home-owners will vote NO on G because it is an attack on property rights.

  22. Greg, that is a bogus argument because the family of a recently deceased property owner may be forced to sell the property to pay the estate taxes.

    Probate sales are very common.

  23. Greg, speculation is not the main source of profits in real estate. The main sources of profit are in construction, rents, capital appreciation and transaction fees.

    Speculation, as meant here, is simply the short-term trading of property. There is nothing wrong with that per se because it provides for liquidity in the market, making it more efficient.

    The problem with Prop G is that it targets any short-term sale including those does for non-speculative reasons. What G should be targeting is evictions but the language of Prop G contains no reference to evictions that I can see. Nor do the taxes collected go towards housing.

    Prop G is a con trick.

  24. It’s simple supply/demand, Russo. If there are 100 tenants applying for each rental, it is the successful tenant who is grateful. The landlord doesn’t need to be.

    In a place like Phoenix or Dallas, where the vacancy rate is 20% and landlords compete with each other to offer tenants the best deal, it is the landlord who is grateful.

  25. Y, if we shot anyone who makes a profit out of providing a product or service in this nation, we would have to shoot almost everyone.

  26. “…you should kiss the ground your landlord walks on.”

    There, in a nutshell, is Sam-John’s tenant philosophy. Not once in his endless, boring tirades has he expressed gratitude for tenants, who fork over hard-earned money to their landlords for years on end. Unbelievable!

  27. Just follow Marc Solomon’s strategy. Buy a former rent-controlled apartment since that’s where you can make the most money. As a bonus, buying former rent-controlled apartments rids the city of over-entitled, lower income tenants. Buying former rent-controlled apartments is the same technique used by Sheriff Ross Mirkarimi and Public Housing Czar Bevan Dufty, all solid out-of-state liberals who are more worthy of living in SF than the loser tenants who can’t afford to buy a house.

    “Democratically controlled” land trusts are just another paternalistic tool in the liberal’s handbook. Of course latte liberals like marcos and others would be pushing them since they like nothing more than telling other people how to live.

  28. This funny thing is that if G actually passes, it won’t make SF any more affordable or facilitate the creation of any housing. In all likelihood it will have the opposite effect. Nice work. It seems to me to be a very poorly written bill created out of spite.

  29. Nonprofit absentee landlords such as Randy Shaw are often worse than for-profit landlords as many tenant laws exempt nonprofit landlords. Democratically controlled community land trusts are the way to go, allocate public dollars to purchase up all at Ellis risk rent controlled housing and sequester them into the community as permanent affordability as democratically controlled housing.

  30. I believe that tar and feathers were once the approved punishment for royalists of all stripes on this continent, including economic.

  31. The proposal specifically says that it applies to properties that are *sold* twice within 5 years, not merely transferred. Inheritance does not count as a sale.

    Also, any property with an owner-occupied unit is exempt. This absolutely includes a house with an in-law unit if an owner if the property is living in one of the units.

    Therefore, a house with an in-law unit would ONLY be subject to the tax IF the owner is renting out both of the units AND it is sold a second time in 5 years. Both conditions must be met. Don’t want to pay the tax? Simple. Move into the place before the sale and stay there for twelve months. It’s actually a big loophole for a “mom-and-pop” speculator, to say nothing about a mom-and-pop landlord just renting out his in-law. But if you’ve got multiple properties (that is, a bigger speculator), it becomes harder to use it.

    Again, lot’s of loopholes as many people are saying. It won’t do away with speculation, but anything that discourages it is good.

  32. WRT to tim’s original article- cry me a river! Wow, so some groups are against prop G and are doing what is legally permitted- supporting campaigns against it.

    So when other groups fund leftie anti housing crap, that’s of corse ok. But when it’s the other way, let’s write a slanted article that questions the legitimacy of their efforts.

  33. Love it! I can see a new cottage industry forming (SF specific, of course) that kinda works like a 1031 exchange to facilitate this.

    Arbitrage via loopholes 🙂

  34. Hey, Tim. Fuck your insulting assumption that “big money” and “corporate interests” are what steered my “no on prop G” vote. I and many other property owners did it all by our lonesome. Imagine that! We actually READ the full text and made up our own minds! Whoa! Head explode!

    Bottom line: it’s a well-intentioned but poorly-written proposal. Try again. This time, write in explicit protections for non-corporate property investors and we’ll talk. The fact that you’re a property owner yourself and don’t see the dangers in allowing this precedent to get through is mind-boggling to me. Unless you plan on, you know, running for office or something. Rumors fly.

  35. Can you explain how? When I read the ballot, I didn’t see any special exemptions for death in the family or handling an estate. Even if it is a house with an in-law, and not an apartment building, this law impacts that property as I understand it. I’d love to hear differently.

  36. Chris, there are loopholes in every law. This one is no exception. Way too few people are covered. There are exemptions up the wazoo. Still, it’ll discourage speculation. Don’t let the perfect be the enemy of the good.

    The real problem for you, Chris, is that you’re in real estate, IIRC, and you don’t *want* to discourage speculation. Speculation is how you make money.

    Don’t worry. I don’t think this will pass. Yes on G has been woefully underfunded, and they haven’t been able to effectively counter the barrage of propaganda that your real estate friends have unleashed. I hope it passes, but I’d be surprised.

  37. Profiteers in essentials were to be shot by soldiers during martial law after the 1906 quake. In WW2 hoarders for profit were subject to jail terms, IIRC. Nowadays we just insult profiteers on comment boards. You’re getting off lightly.

  38. Excellent point, Barbara, and moreover such a sale is necessary to pay the estate tax, so it is really a tax on a tax.

  39. I know of several cases where adults inherited their parents’ property upon a death and want to get out immediately. Sometimes the child lives in another state. Sometimes the child has his own financial/career set up and is uninterested in land lording. Why should a person in such a situation be penalized for “speculating”?

  40. Please keep your remarks civil as Tim has repeatedly requested. If you own RE I am a little surprised that you did not know some RE investing basics.

    It is not greedy to provide housing services to people in a scarce market like this and, in return, hope to gain a reasonable return to compensate you for the risk and effort of providing housing services.

  41. I own my own home so I have lifetime security but I also have empathy maybe because I earned the money to buy my own home. Greedy creeps like you disgust me.

  42. If housing is such a precious and valuable commodity in SF then you should kiss the ground your landlord walks on for agreeing to continually provide you with a home when he could easily Ellis and sell/convert to TIC, in which case you’d be out on your tuchus.

    But no, instead, you piss on the person that gives you a home and for no reason other than that he charges you a legal rent that YOU AGREED TO. Moreover the subsequent rent increases are trivial so you make out like a bandit on his dime.

    This is a civil website so I won’t call you an ungrateful wretch but, if someone did, would you understand why?

  43. That Sterling Bank person explaining organizing a bus to cart seniors from Irving St down to City Hall to vote early is either ignorant or full of p.r. baloney. He’s going on about a non-partisan public service to increase turnout when a person can simply walk into any polling place in SF on Election Day and vote, irregardless of where they reside as long as they are a registered voter.

  44. Forget laws trying to make the landlord – tenant relationship “more fair.” It’s not possible when a landlord’s job is to squeeze as much rent from a family as possible, regardless of any hardship to the family. Private landlords are an abomination, akin to slave owners who earn their wealth off working people. We’ve outlawed or mitigated the unfair property relationship in marriages – no longer is a spouse treated as one’s property – and society needs to do the same for another basic human right, housing. Completely outlawing private landlords from the housing market and using non-profits to own and control rental property is the only solution to fair and lasting economic justice when it comes to housing.

    Alas, almost all politicians are property speculators, either directly as landlords or REIT investors, or through their retirement holdings (Calpers and Calstrs are major landlords in the US). This makes the struggle more challenging, but not impossible.

  45. Regardless of how Prop G does tomorrow, hopefully the campaign will be a catalyst for organizing at the state and federal level where property anti-speculation measures would have the best impact. There is an ongoing war in the US against tenants and first-time home buyers. These groups represent a significant number of voters who could be organized and mobilized into a broad coalition at the state level to put pressure on legislators to start passing laws that promote stable and secure housing for both tenants and home buyers. They could start with a measure that emulates Prop G, but calculates a very high excise tax based on any property gains rather than gross sales price like SF’s, which would be more palatable to the legislators. If legislators refuse to change the current laws that grossly favor wealthy speculators and absentee landlords over tenants and first time home buyers, the broad coalition could exert pressure across the state and country to target those legislators for removal from office. A real and lasting economic justice movement might coalesce over basic fairness in connection with housing issues.

    The extreme inequality of wealth and the concentration of high incomes flowing to the families at the top of the pyramid are among the most important issues raised by voters from all sides of the political spectrum. Humans dislike extreme unfairness and it’s become clearer over the past 10 years that the political system has become sharply tilted against middle and lower income families in favor of the wealthiest families. I think Ralph Nader’s latest book says it best – there’s a growing consensus that if lower and middle-income groups on both sides of the political aisle work together there could be significant economic changes in the coming years. Laws promoting both first-time home buyers and tenant rights that also disfavor out-of-town speculators and wealthy Wall Street bankers is just the issue to get both the left and right activated and working together.

  46. So many errors there, Don, I’ll take them sequentially.

    1) A property tax is a tax on wealth. I do not like wealth taxes but if we are going to have them, then limit the annual increase, as we do. Prop G is not a wealth tax – it’s a transaction tax and an arbitrary one at that.

    2) If you Ellis a building then you cannot re-rent it for five years anyway, so leaving it empty for five years makes more sense than selling and paying the tax. Of course you can always live in it and have friends/family live in it.

    3) Depreciation is not a giveaway. It is reclaimed as ordinary income when you sell.

    4) It is in the tenants’ interests that the owner does not notify the city that their unit is an illegal in-law.

    5) Your glib statement at the end that LL’s can “just sell” misses the point. The only people who would buy a rental building with low-rent royalty in it are folks who will Ellis. So either I Ellis or the new guy Ellis’s.

    And if this 5-year rule happens, then I will Ellis and then sell, to make the building more attractive, meaning that my tenants will have to move SOONER. That pesky law of unintended consequences again.

    You want lifetime residential security? Buy a place.

  47. Oh, and another loophole. A sells a building to B who Ellis’es and then sells to C at a pre-agreed price that is no more than what B paid, ensuring that no tax is paid.

    After five years, C then sells on and splits his tax-free profit with B.

  48. This is simply over-reaching, bad legislation. The creators of G want to stop evictions. They think that speculators are evictors. Therefore, if they stop speculation; they stop evictions. Good idea; bad legislation.

    Can you tell me why the legislation has NO mention of EVICTIONS? Why doesn’t the legislation simply apply to buildings bought & sold within five years where no-fault evictions happened?

    I don’t think G passes. And, even if it does, it will be over turned ala relo payments. Poor Herrera; another pile to devote resources too.

  49. Well let’s see, property taxes are based on gross value rather than profit. Granted the 2% allowed to counties for inflation hardly matches the appreciation over the life of the ownership but I don’t hear property owners complaining about that. Maybe we should revisit Prop 13 and exempt landlords as well as commercial property owners and leave homeowners as the only protected class. Finally you’ll pay your fair share for city services.

    I cannot imagine anyone owning a building and then leaving it vacant for 5 years because they think they’ll be taxed on some perceived increase in tax. Even if there is a tax it hardly will be 100% of the rents earned. Capitalism is based on individuals making decisions in their own best, self-interest and owning vacant property is hardly in one’s best interest.

    How about the landlords sharing the tax advantages they receive with their tenants, like depreciation even when they charge for capital improvements? How about the ability to pass on base year property tax assessments to family members? Maybe the landlords should start by coming clean with some of the illegal units they have or coming into compliance with their soft story buildings.

    Spare me the crocodile tears. Landlords don’t care about tenants or affordable housing. They care about squeezing every last dime they can out of tenants and when they’re caught trying to strong arm someone or when a law comes along trying to level the playing field they scream bloody murder.

    You don’t like it? Get out of the market. Someone will buy your building, providing you with a nice, fat profit no doubt and be happy to provide housing.

  50. Here is the link to the original prop G legislation. http://sfgov2.org/ftp/uploadedfiles/elections/candidates/Nov2014/Nov2014_BusinessandTaxCode.pdf

    You can see that the title is “Surtax on Transfers of Residential Real Property within 5 years of a prior transfer”. The title does not mention speculation or evictions… NOTE: The BOS did this intentionally as to not get sued and have it overturned. That is why Prop G does not state evictions or speculation.

  51. Yes, Chris, I made the same argument when Leno’s bill was threatening to not allow an Ellis eviction in the first five years of ownership.

    What would have then happened, and may happen if G passes, is that instead of an owner selling to a buyer who then Ellis evicts, the buyer would put in an offer “subject to Ellis”

    In other words, I will buy your building when all the tenants have left, having been Ellis’ed by the long-standing owner. I would further reimburse the seller for those costs and/or adjust the purchase price accordingly.

    So “sell and Ellis” will be replaced by “Ellis and sell” just like it would have done had the abortive Leno bill not been shot down in flames.

    A buyer could also move into the building for a year and then get the tax exemption for owner occupiers.

    There’s always a loophole.

  52. If this measure passes, what is to stop a speculator asking the current owner to Ellis the building, and the speculator to pay the legal costs and lost interest on the sales price until the Ellis is complete?

  53. I’m voting yes on G and wished that more folks followed their Twitter feed, and push their followers’ number way above 100. If you’re pissed off, #VotePetrelis!

  54. You cannot make housing cheaper by taxing it more.

    You cannot persuade owners to rent out long-term if you make the only decent exit strategy financially punitive like this.

    You cannot reasonably tax the gross value rather than the profit.

    You should not be taxing forced sales.

    I doubt that G will survive a legal challenge since, if anything, it is even more of a taking than the Ellis relo deal that the courts squashed. But it’s still terrible law and will hurt tenants.

    But if you want to see a bunch of buildings being left vacant for 5 years just to avoid this tax then I guess you should vote for G. I know I won’t be because I want to see more rental homes in SF, not less.

    As always, the law of unintended consequences means that yet another tenant initiative will lead to less tenants in SF, and higher rents.

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