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Housing & Development

5 Key Questions About a Push to Tax Landlords of SF’s Vacant Homes

Written by Kevin Truong, Sarah WrightPublished Feb. 08, 2022 • 3:31pm

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Flanked by democratic socialists, tenants rights proponents and faith-based activists, San Francisco Supervisor Dean Preston on Tuesday announced a new proposal for the November ballot that would tax landlords who fail to rent out their residential properties. The goal is to activate a portion of what the city estimates are 40,000 vacant homes.

Here are five key questions to consider as the city weighs the new tax:

Wait, are there really 40,000 vacant homes in SF?

That number was taken from a one-year estimate in the American Community Survey—a product of the U.S. Census Bureau, which uses monthly surveys to create yearly statistics. It’s really just an estimate the U.S. Census does for major cities like San Francisco.

The one-year ACS estimate isn’t the only way of measuring the city’s vacancy rate. The ACS’s five-year survey, which relies on the same data but spans from 2014 to 2019, showed just 35,500 vacant homes in the city. And the 2020 U.S. Census counted even fewer vacant homes. But a representative from the U.S. Census said the agency recommends using the 2019 one-year estimate because more granular 2020 data was delayed due to the pandemic. 

Using the one-year estimate, the BLA found that San Francisco has around a 1% homeowner vacancy rate and a 3% rental vacancy rate—both on par with median vacancy rates in major metro areas nationwide. It’s the rest of the data, which includes units that are being held for seasonal or recreational use, that makes San Francisco’s 10% vacancy rate come out higher than average. The Census considers a unit to be vacant if no one lives there for more than two months. If no one is available at the unit for an interview, the interviewers ask neighbors or use their own observations to evaluate the property.

So what would this tax do?

Dubbed the “Empty Home Tax,” the measure would apply to buildings with three units or more where a residential unit has been vacant for more than 182 days in a year. It is broadly modeled on the commercial vacancy tax passed by San Francisco voters in 2020, and it ties the tax amount to the size of the vacant property. The fee increases the longer a home is kept vacant. If the measure makes it onto the ballot and passes, the tax would go into effect on Jan. 1, 2024.

Revenue gained from the tax would be split equally between funding for rental subsidies for seniors and low-income residents and the purchase and rehab of multi-unit affordable housing projects. All single-family homes, two-unit buildings, SRO units and affordable housing run by the city or a nonprofit would be exempt from the law, as well as properties that are leased or listed as primary residences. There is also an exclusion in the case of an owner’s death or serious illness, or if the building is under construction or repair or in the event of a natural disaster. For context, single-family homes make up 31.2% of the city’s housing stock, according to the American Community Survey.

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Why is this being organized by the Democratic Socialists of America San Francisco and Faith in Action Bay Area?

Instead of being introduced to the Board of Supervisors, the measure is attempting to make it on the ballot through the voter-initiative process. In order to qualify for the November ballot, supporters would have to collect 8,797 signatures by July 11. The decision to qualify for the ballot via the voter initiative process lowers the threshold for passage from a two-thirds supermajority to a simple majority. A San Francisco Superior Court decision that upheld San Francisco’s Prop. C tax to fund anti-homelessness efforts—even though it failed to meet the two-thirds threshold—brought about the threshold change. 

Why should we believe this will work?

Preston and other advocates of a residential vacancy tax point to the Canadian city Vancouver, which charges owners a fee tied to the assessed property value of vacant units. Results from the city, which initially enacted its tax in 2017, have been promising at activating underused housing. In 2019, Vancouver saw landlords convert 8,824 condos into long-term rental units. Last year, the city nearly tripled its vacancy tax rate in 2021 from 1.25% to 3% of a property’s assessed value. There are still open questions about what the impact has been on housing costs, particularly as the empty properties are typically higher-end units. 

Where has this not worked?

Washington D.C. instituted a tax aimed at vacant and blighted properties that tacked on additional property taxes. However, even though city officials identified nearly 3,000 properties in the city as being blighted or empty, only a small fraction were taxed at the higher rate. According to Phil Mendelson, chairman of the Council of the District of Columbia, one of the major stumbling blocks has been enforcement of the law, as well as dated record keeping practices. Preston told The Standard that a number of avenues exist for San Francisco officials to enforce the tax if it passes. He specifically mentioned utility usage and the forthcoming vacant properties registry as potential avenues to track vacant units.  

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Kevin Truong can be reached at [email protected]
Sarah Wright can be reached at [email protected]




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