It’s no secret that San Francisco’s economy is flourishing. The median home price has floated above $1 million for over a year. In 2014, The City enjoyed an all-time employment high of 640,000 jobs. The average wage in San Francisco is $91,940.
But not everyone is relishing in the wealth. There are 6,686 homeless adults living in San Francisco — a 4 percent increase from 2013, according to this year’s homeless count. That’s also more than the 6,248 adults without a home in The City in 2005.
That’s why Supervisor Jane Kim today will introduce what she calls a fair sharing economy package comprised of two ballot measures in June or November. The measures would raise the hotel tax by 1 percent – with funds potentially dedicated for homeless services – and increase the real estate transfer tax for properties over $5 million, respectively.
“We are very fortunate here in San Francisco to be doing extremely well,” Kim said. “But not everyone is sharing in that wealth.”
Kim said she is working with the city attorney and controller’s offices to draft the revenue-generating measures, with the possibility of dedicating the hotel tax increase for homeless services like more housing and mental health support.
That measure would raise San Francisco’s hotel tax, currently at 14 percent, by 1 percent for the first time since 1996. Such an increase would generate a gross revenue of $27.4 million annually.
“We’re asking tourists and visitors to contribute a little more so we can really address homelessness here in San Francisco,” Kim said.
The hotel tax increase would apply to short-term rentals like Airbnb and VRBO as well, and Kim said she is exploring whether short-term can be taxed more than hotels. Airbnb infamously released ads on bus shelters and billboards in October touting its payment of $12 million in hotel taxes after it paid years of back taxes, much to the repulsion of residents. Airbnb later apologized for the ads.
“Short term rentals have a particular impact on exacerbating our housing crisis,” said Kim. “I am really interested to see if…we want to raise the hotel tax on short-term rentals even more than hotels, [if] that’s something we can do.”
The real estate transfer tax increase, which Kim called an “ultra-luxury housing tax,” would apply only to properties selling for more than $5 million. There would also be a new bracket introduced for homes that sell for more than $25 million. Homes that are sold for under $5 million would not be impacted by the tax increase.
Taxes on homes that are sold for more than $5 million – currently taxed at $10 for each $500 for homes sold up just under $10 million, and $12.50 for each $500 for homes $10 million or more – would increase by 0.25 percent.
“With the average median [home] price now $1 million, we didn’t want to touch anything under $5 million,” Kim said. “We don’t want to impact our average homeowners.”
For the first time in San Francisco history, there would also be a tax bracket set at 3 percent for homes sold at more than $25 million.
“We can’t stop ultra-luxury homeownership, but we can ask them to pay more of their fair share,” Kim said.