By Dean Preston
The lack of affordable housing in San Francisco has been a crisis for years. Real estate prices have skyrocketed and economic inequality has left many San Franciscans without enough money to pay rent let alone buy a house. COVID-19 has only exacerbated this situation. The K-shaped recovery, where the rich have seen their assets grow thanks to a stock market disconnected from reality while everyone else struggles, has only added fuel to this fire.
As a city, we need to take bold action to address this problem head on, and we have no time to wait. That is why I authored a new ballot measure, Prop I, that will increase the tax on property sales over $10 million and raise an estimated $196 million per year. The City plans to use funds generated to create new affordable housing and provide COVID-related rent relief to struggling tenants and small property owners. The increased tax will not be charged on sales to the city or affordable housing nonprofits, providing an important incentive for sellers to sell for affordable housing not to real estate speculators.
This tax will only affect the richest investors in the city and will have no impact on everyday San Franciscans. Speculators like Donald Trump, who is reportedly selling his 30% stake in 555 California, would pay the tax. Consider this: If we pass Prop I, we can actually hand Trump a $15-18 million tax bill on his way out of office, and then use that money to house more San Franciscans.
We need to pass Prop I so we don’t repeat the same mistakes we made a decade ago during the Great Recession. In that era, as real estate values declined, institutional investment firms, armed with loads of money, gobbled up as much property as they could. As a result, San Francisco experienced a consolidation of private real estate ownership previously unseen, a trend that occurred across urban America.
These firms preyed upon our vulnerable housing stock. Veritas, San Francisco’s largest residential landlord, ballooned from a modest 100 apartments in 2011 to nearly 5500 by 2017 and in the process evicted hundreds of rent-controlled tenants so they could pad their profit margins. Private equity companies, according to a recent Bloomberg report, entered this year with a staggering $1.5 trillion that they can use to buy real estate. Prop I is our best bet to make sure that private equity doesn’t further dominate our local real estate market.
The plan is to direct the funds generated by the tax to the creation of permanently affordable, social housing. This would include land banking, community land trusts, limited equity coops, municipal housing, or other crucial efforts to provide permanently affordable housing. Revenue from this measure will also be used to fund a Rent Relief and Resolution Program. This program will make grants to small property owners whose tenants are unable to make rent because of COVID-related hardship.
We stand at a precipice. If we do nothing, real estate prices will remain prohibitively expensive for the working class, and we’ll see even more displacement in San Francisco. Displacement hits communities of color the hardest, especially black and brown communities that have been victimized by the worst forms of real estate speculation for decades, and it drives away the artists, drag queens, writers, and diverse residents that make San Francisco so special.
If we act now, we can start a new chapter in our city: one that prioritizes housing stability. Prop I will help curtail real estate speculation, while generating new funds to keep people in their homes and create more affordable housing for those who need a roof over their head. In the face of this pandemic, let’s come together for a fair recovery for all San Franciscans.
Supervisor Dean Preston represents San Francisco’s District 5. He is running for reelection in November.