Mayor-backed transfer-tax waiver for office-to-housing conversions is heard amid warnings it could erode Prop I funds

The Rules Committee on Nov. 13 considered a mayor-sponsored ballot initiative that would exempt the first transfer after office-to-residential conversion from the city's real property transfer tax and make planning-code adjustments to support office-to-housing conversions. The measure is presented as part of a downtown recovery strategy to make adaptive reuse financially feasible by removing a frequently cited fiscal impediment.

Anne Topier of the Office of Economic and Workforce Development told the committee that responses to a recent request for information indicated transfer-tax liabilities are a key barrier to conversions. The mayor's office and OEWD said the program is capped at 5,000,000 square feet of conversions, requires planning applications by Jan. 1, 2030 and construction permits within three years of application, and the waiver would apply only to the initial sale after conversion.

Supervisor Dean Preston objected sharply, arguing the measure goes further than conversions by authorizing the Board of Supervisors to amend or repeal the transfer tax by ordinance without returning to voters, and warned it risks diverting Prop I revenues that the supervisor said have funded rent relief and housing preservation. Committee members questioned the fiscal projection range cited by the controller and whether the measure's claimed housing yield (the mayor's office said as many as 5,000 new households if conversions are successful) justifies potential revenue loss.

After public comment urging inclusion of local-business participation in project requirements, the committee moved to consider the hearing heard and filed (procedural); the vote passed unanimously. The item will be forwarded to the full Board for further consideration and any refinements.