A San Francisco ballot measure that would raise the real estate transfer tax on sales over $10 million was leading late Tuesday evening, which included a large number of mail-in ballots.
The Transamerica Pyramid, seen behind construction on nearby housing developments in February, was sold this year. San Francisco collects transfer tax on such deals.
Proposition I was ahead 59% to 41% in early returns, though an unknown number of ballots remained to be tallied. The measure requires a simple majority to pass.
Supervisor Dean Preston sponsored the measure, which would double the city’s transfer tax from 2.75% to 5.5% for sales from $10 million to less than $25 million. Sales of $25 million and over would have their tax rate increase from 3% to 6%.
Prop. I’s revenue would go to the general fund. Preston has said the Board of Supervisors would take future legislative action to use the funds to provide rent payment assistance to tenants hurt by the coronavirus pandemic and to build much-needed affordable housing.
Opponents from the real estate industry raised around $5.3 million to defeat the measure, by far the most money spent on a city race or ballot measure during November’s election.
The California Association of Realtors, National Associations of Realtors, and major office landlords Brookfield Properties, Boston Properties and Kilroy Realty were major donors. The San Francisco Chamber of Commerce organized the opposition.
Opponents said the measure would harm the economy. The city’s Office of the Controller reached the same conclusion, finding that the tax would discourage property investment and make it more expensive to build new housing by increasing the cost of land.
The measure would result in a loss of 625 jobs, half in the real estate and construction industry, and a $50 million decline in the city’s gross domestic product, according to the Controller’s report. The city would have 1,050 fewer people by 2030 because of higher housing prices, and slightly lower annual income of $100 less per capita.
The controller expected the measure to increase tax revenue by $10 million for the remainder of the fiscal year and $100 million for the following year. But the agency said the transfer tax is the city’s “most volatile revenue source.”
San Francisco’s real estate sales activity, which boomed over the past decade, has slowed significantly during the coronavirus pandemic. Office buildings and hotels have been closed for the majority of the year and asking rents for both offices and housing are dropping.
Properties worth $2.5 million or more sold for a combined $2 billion through September, according to Real Capital Analytics, a real estate data firm. That’s far less than in the first three quarters of 2019, when properties worth $2.5 million or more sold for a combined $8 billion.
Chronicle staff writer J.D. Morris contributed to this report.