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Supervisors advance exemption from Prop. I transfer tax for certain rent‑restricted affordable projects on first reading
Summary
The board on Oct. 26 passed on first reading an ordinance allowing the city to exempt specified transfers of rent‑restricted affordable housing from higher transfer‑tax rates enacted by Prop. I. Sponsor Supervisor Preston said the exemption aims to prevent the transfer tax from discouraging preservation or development of permanently affordable
The Board of Supervisors on Oct. 26 passed on first reading an ordinance authored by Supervisor Preston that exempts certain transfers of rent‑restricted affordable housing from the increased transfer‑tax rates approved by voters in Proposition I.
The ordinance responds to concerns that the higher transfer tax on very high‑value property could discourage preservation or development of affordable housing. Preston said the measure would exempt qualifying transfers occurring on or after Jan. 1, 2021, and would apply where the consideration or value of the transfer meets a specified threshold in the ordinance. Under the city’s calculation, the exemption is expected to reduce Prop. I revenues by a small fraction — Preston cited a controller estimate that the measure has brought in more than $128 million in the current fiscal year and said the exemption would likely account for less than 2 percent of annual revenues.
The ordinance sets a flat 0.75% transfer tax for eligible affordable projects as an alternative to the higher graduated rates that apply under Prop. I for the most valuable transfers. The measure also clarifies the city’s ability to exempt transfers of rent‑restricted units in certain circumstances and affirms the planning and policy intent to support preservation and production of permanently affordable housing.
Supervisor Preston framed the ordinance as a refinement to make sure Prop. I’s revenues continue to support housing stability without unduly penalizing nonprofit and mission‑driven affordable housing transactions. Several supervisors added their names as co‑sponsors at the Oct. 26 meeting, and the board took the item on first reading without objection.
Action: ordinance passed on first reading unanimously; further votes will be required for final adoption.
(Reporting note: factual details and numerical estimates are drawn from the Oct. 26, 2021 board meeting transcript and the planning department presentation.)
