SF Ballot Measure On Office-to-Resi Leading Early Votes – The Real Deal
A ballot measure meant to spur the conversion of empty offices into homes in San Francisco was leading in early returns Wednesday and appeared likely to pass.
Measure C, proposed by Mayor London Breed, was leading with 53.9 percent of the vote with 98,663 ballots counted, the San Francisco Chronicle reported.
The measure would waive real estate transfer taxes on converted buildings sold for the first time to help boost housing and lower the city’s record office vacancy, now at 35.9 percent. The transfer tax varies from 0.5 percent to 6 percent.
Its proponents, including Breed, believe lowering the cost of office-to-housing conversions would encourage their development and help bring residents and foot traffic into Downtown, whose businesses now depend on visitors.
Only a few landlords in Downtown have filed plans for conversions, including a project to add 27 units to the Warfield Building at 988 Market Street, approved late last year.
Developers have been loath to convert their office buildings into apartments because of the high costs of construction and challenges in obtaining financing.
Measure C was supported by Breed and organizations affiliated with the pro-housing Yes in My Backyard, or YIMBY, movement, as well as the moderate advocacy group Grow SF.
Developers had mixed opinions. Some said the measure was a step in the right direction while others called it a “performative” measure that could do more harm than good.
Critics included the Council of Community Housing Organizations and the San Francisco Democratic Party.
Opponents of Measure C said it could allow politicians to hand out big tax breaks to corporate interests without public input, since the measure allows a majority of the Board of Supervisors to reduce or eliminate the city’s transfer tax without going back to voters.
The transfer tax, the city’s most volatile revenue source, brought in $186 million to city coffers last fiscal year, according to the City Controller’s Office.
The City Controller’s Office concluded the measure won’t likely save developers enough money to help them turn a profit, according to an economic impact report last month.
If market conditions shift, allowing more office conversions, it could result in less tax revenue because of fewer jobs, according to the report. It said conversion of offices to housing doesn’t appear to currently pencil out for developers, with the Measure C tax incentive not likely to bridge the gap.
The report said there could be more effective ways to encourage new housing development without using a tax break, such as “through zoning changes that could be economically and financially beneficial to the city.”
— Dana Bartholomew
