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Committee forwards ordinance to cut transfer tax for union‑pension‑backed rental projects
Summary
Supervisors advanced an ordinance that would lower certain real‑property transfer tax rates to 3% for newly constructed rentals meeting on‑site affordability and union pension investment criteria; analysts warned the change could reduce general fund revenue by up to ~$5 million annually but supporters said it would unlock capital and jobs.
The Budget & Finance Committee on July 31 forwarded to the full Board a proposed ordinance to reduce specified real property transfer tax rates for newly constructed rental projects financed with union pension investments and built with union labor.
Sponsor Supervisor Safa‑Yi said the ordinance would temporarily lower transfer tax rates to 3 percent for eligible properties, arguing the change would attract union pension capital, create union jobs and accelerate housing production. "This ordinance will bring good union‑paying jobs and good investment...to create thousands of jobs and build rental housing our city needs," Safa‑Yi said.
The ordinance applies to projects that meet multiple criteria: certificate of final completion on or after June 3, 2014; at least 12 percent of units rent‑restricted on‑site; construction by workers represented by a labor organization; and a minimum of $25 million in debt or equity investment from a qualified labor‑organization pension plan. The ordinance includes sunset provisions: generally effective through January 1, 2034, with an earlier sunset (July 1, 2029) for properties completed prior to the ordinance effective date.
The Budget Legislative Analyst and the Controller cautioned on fiscal uncertainty. The BLA estimated the ordinance could reduce general fund revenues by up to about $5 million per year over an 11‑year period; Controller Greg Wagner said the estimate is uncertain and may be on the high end because the city lacks the data to screen precisely for pension‑fund criteria. "Since we're unable to screen for the pension criteria...the estimates here are likely on the high end," Wagner said.
Public comment featured multiple labor and developer supporters who urged approval, including representatives from Operating Engineers Local 3, Plasterers & Cement Masons Local 300, the Painters union, the Housing Action Coalition, and developers such as Emerald Fund. Speakers argued the targeted reduction would help pencil projects, draw responsible capital and restore union construction jobs in the city.
The committee moved the ordinance to the full Board with a positive recommendation; the clerk recorded three 'I' votes and the motion passed.
