Supervisor Preston proposes transfer tax exemption for affordable housing in San Francisco

In a recent San Francisco County government meeting, the Board of Supervisors discussed a significant ordinance aimed at enhancing affordable housing availability in the city. The proposed legislation seeks to amend the business and tax regulations code by exempting certain transfers of rent-restricted affordable housing valued at $5 million or more from increased transfer tax rates, which were established by a voter-approved measure last year.

Supervisor Preston, who introduced the ordinance, emphasized that the goal is to facilitate the creation and preservation of affordable housing. The ordinance builds on the existing transfer tax framework, which doubled rates for high-value properties, and extends exemptions to include deed-restricted affordable residential rental properties. This change is expected to provide clarity and support for nonprofit developers, allowing them to allocate more resources toward affordable housing projects.

The ordinance defines affordable housing as units restricted to households earning up to 120% of the area median income, with an average maximum income of 80% for all units in a building. Additionally, it mandates that affordability restrictions be recorded for at least 55 years and requires government oversight to ensure compliance.

During the meeting, members of the Board expressed their support for the ordinance, highlighting its potential to alleviate the housing crisis in San Francisco. The Budget Legislative Analyst reported that the proposed changes could reduce transfer tax revenues by approximately $8.1 million over the next year, a small fraction of the anticipated revenue from the transfer tax, which is projected to generate over $128 million in the current fiscal year.

Public comments during the meeting reflected widespread support from housing advocates and community organizations. Many speakers praised the ordinance for its potential to incentivize property sales for affordable housing and for its alignment with existing programs aimed at preserving affordable units.

As the Board moves forward with this legislation, it represents a critical step in addressing the ongoing housing affordability challenges faced by many residents in San Francisco. The anticipated next steps include further discussions and a vote by the full Board of Supervisors, with advocates hopeful that the ordinance will soon be enacted to support the city's affordable housing initiatives.