Arguing that “when wealthy people who don’t actually live here buy up San Francisco residential properties, housing prices skyrocket beyond the reach of [everyday] residents,” San Francisco Supervisor Eric Mar has begun working on potential legislation to discourage nonresidents from buying or owning property in the city, perhaps by way of a new “pied-à-terre tax.”
A pied-à-terre tax “would address a very real problem that arises when a significant number of homes are bought by wealthy out-of-towners for the simple purpose of a place to stay on occasion, as an investment, or as a hedge against market swings,” according to Mar.
And next week, Supervisor Mar is slated to formally ask Mayor Ed Lee for his explicit support in helping to address “the issue of residential real estate hoarding by out of town buyers” and preventing “zombie neighborhoods,” with “beautiful new luxury units but no residents,” from forming in San Francisco.
“residential real estate hoarding by out of town buyers” and preventing zombie neighborhoods”
Please identify any individual “hoarding” individual units or any particular “zombie” neighborhood? Such crap. He’s just copying Bill DB in Manhattan. Maybe we should include “out of town” buyers of apartment and commercial properties?
Can’t wait to see Mars termed out.
SOMA. There is no life there except 9-5 M-F.
Eastern SOMA, definitely not Western. Move past 4th street, and ideally 6th except for Tempest
SOMA? I’m not sure how broadly you are draining it, but I lived there for over 5 years. (I still live in the City, just in a different neighborhood). There was FAR more life in the evening than from 9-5. Maybe, you are thinking of the Financial District? And, even then, it is not an entirely accurate description.
Huhwhat? Maybe east of 2nd, north of Folsom. Everywhere else has tons going on
This is a VERY good proposal, much better than broadly demonizing landlords that actually live in the City. Bravo. Please get behind this, San Francisco!
why does living here give you more rights? this is a BS proposal
I think you could argue that living here contributes more, or affords more opportunity to contribute, to the neighborhood/community, no?
It’s evil, but locals always try to squeeze out of towners, everywhere. Some places it’s really extreme. In Martha’s Vineyard the [locals] who squat there and never move are actually proud of their dropout, do-nothing lives.
Well, out-of-towners pay all their taxes and use almost no services. There’s that.
You’re absolutely correct; but don’t try arguing facts against the Marxist wannabes who make up SF’s radical Left.
i like this too, mostly because though it’ll make no difference to the rich types who buy these properties, it’ll bring in extra taxes that could then be directed into affordable housing or whatever.
It is true that the extra dollars make no difference to such people. But unfortunately, they are the ones who have the money to fight tooth and nail to keep every cent they have, even though they don’t need or use the extra funds.
“Rich Types”. Really? I own in SF and live in NV. That doesn’t make me a “rich type”. That makes me someone who followed his SO to her new job.
Yeah, you’re practically destitute what with only having been able to buy property it at least three different countries over the years. Plus you lost your shirt when you got out of real estate before the crash then bought at the bottom of the market. Yep, definitely not a “rich type” that brags about all the money they have made in real estate over the years.
Not a rich type. Middle class who invested. There is a difference. Plus if you want punishment for people who sacrificed and put their energy and brains into it, then I would suggest switching countries.
Mar is really the successor to Agnos and Matt Gonzales.
The best that can be said about him is that he copying the increased tax on second homes just proposed by the French.
I’m sure that the developers and realtors will balk at this because it is very effective disincentive for out of state and/or foreign buyers. I think this is an excellent idea and goes right to the heart of the problem we are seeing in San Francisco. This truly is a anti-speculation tax, unlike the POS that was designed to tax smalltime landlords. London is a good example of what happens when real estate becomes a currency for foreign investors who don’t pay taxes. Let’s not let this happen here.
Because London is a zombie town?
Actually, yes: “The property market is no longer about people making a long-term investment in owning their shelter, but a place for the world’s richest people to park their money at an annualized rate of return of around 10 percent…”
Genius! The more expensive we make ownership in San Francisco the cheaper it will be!
WTF?!?
It’s a free market.
“Zombie neighborhoods”? Is this really a problem?
Is Eric Mar any good at anything except banning things?
They need to just come out and say that this is to prevent newly minted Chinese millionaires from buying up units and not using them. Apparently Lumina is partly funded by a Chinese company, Vanke, that’s marketing heavily back home. Just google “Lumina Chinese investors” and read about how they buying up tons of units. It’s an issue that’s affecting cities all over the world right now. Overseas investors buy up property and don’t use it- whether it’s Brazilians in Miami or Russian oligarchs in NYC, it’s all the same. We need to be taxing FOREIGN buyers, not Bay Area residents who happen to have a second home in the city. Foreign buyers don’t pay nearly as many taxes to California or the US and are dodging taxes back home. We need to focus on closing these loopholes, not levying additional taxes on anyone who has a pied-a-terre.
Don’t we already tax them via property taxes?
People buy homes and choose not to live in them. Why is that a problem? It is similar to the idiotic “speculator tax”. The City wants to punish people who do not behave according to some unwritten rules.
Are we planning to punish intent now? When will we see City Hall employees playing with owners like Tom Cruise in Minority Report?
How is this punishing intent or like minority report? I’m asking because I’m curious. I assume the tax would be based on residency, which is relatively straightforward information.
Is he insane? Seriously, is does he have mental issues?
Frankly, the best kind of homeowner is an absentee owner, and high-value one at that – they pay a lot of taxes to the city, while imposing no costs (no school kids, no transit impact, no parking impact, etc.).
Totally agree!
Maybe the city should just tax all home owners based on the sale price, oh wait, that already exists, it’s called a property tax.
What if you rent your property? You get taxed on that already. Crazy laws.
any numbers on how many owners are “wealthy” out of towners?
I might get behind a wealthy foreigner tax, but extra taxing someone from monterrey who owns in SF is just stupid. there has to be an anti-competitive legal issue with this proposal. they are basically making it more expensive for one class of owners, which frankly is probably illegal
I am not sure its constitutional to tax a pied a terre owner from outside of California differently from a California pied a terre owner. Put differently, I don’t think you can have a pied-à-terre tax that only applies to foreigners and not other Californians. I think the law is a bit more murky when it comes to whether you can discriminate between U.S. and foreign nationals. So in your case, the tax would have to apply equally to the Texan investor as well as the Monterrey investor. And, the tax probably has to apply equally to a Chinese investor as well as a Monterrey investor. But more fundamentally, I am not sure how they plan to enforce this. A simple workaround is a California registered single member LLC, which then holds legal title to the apartment. Sure the LLC costs $800 a year, but the City wouldn’t be getting the proceeds.
If they plan to apply the tax equally to any nonresident homeowner in California, there is already tax infrastructure and precedence for that. It’s the homeowner’s exemption.
SF could model it’s law similarly.
Won’t high HOA dues discourage hoarding vacancies and encourage owners to rent their units out? If an owner can really endure paying $700/month to keep their unit vacant, let them.
That is right!
While you are at it, SF why don’t you do hoarders of cars and parking spots! That is one of the biggest problems. Is there any reason that some household have five cars! Tax them higher for each car… higher and higher. Make it so there are stickers for parking in your own neighborhood for just two cars per house hold. More Laws for everyone!
So, Al Gore’s penthouse at the St. Regis falls under this, right?
In Paris taxes are split between Property and Occupancy. A landlord will pay only the property tax and the occupant (as of jan 1st of that year) only the occupancy tax. This is actually a very “just” system since landlords who do not live there shouldn’t have to pay for services he will never use. They voted a “hoarders law” 8 years ago. The landlord of an empty dwelling will pay a tax similar to the occupancy tax. It motivates landlords to put their property to a better use. As a landlord of several properties in Paris, I make sure my places have someone on January 1st.
It seems the Paris system is unnecessary complex. In SF or other places, with a single property tax, they owner can simply pass on the occupancy portion to their tenant. A separate bill incentivize keeping a unit vacant, which does not seems to be desirable for the commnuity. Also the city has to go after two or more parties for each property, adding to their administrative expenses. And do they have any leverage going after tenant who does not pay?
the Paris system is unnecessary complex
It looks like it, and you point is valid when it comes to passing the costs to the tenant. They decided to separate the collection part.
do they have any leverage going after tenant who does not pay?
Easy: if no occupancy tax is collected on a property because no occupant has been identified, then the landlord receives a letter asking to clarify the situation. It’s a pain and I have to do this anytime I have new tenants.
What happen if the tenant refuse to pay the occupancy tax? Will the Paris government evict the tenant?
I think Paris government will lose some of the occupancy tax due to non-payment. With property tax, government can foreclose on the property so property tax is easier to collect.
If the landlord can produce the identity of the tenant and a lease, then it’s a question between the taxman and the tenant. If the tenant doesn’t pay his bill, the taxman in France has the right to collect the funds directly on the tenant’s accounts (I think there must be a court decision).
I’ll add that when that happens your bank freezes the amount on your account and you have to make the check to the tax authority else you have to pay more fines than you have accrued.
That’s an interesting system; the property owner’s tax is more a wealth tax, while occupier’s is a use/consumption tax. Aside from the additional paperwork you have to do, what do you think about it?
Rose Pak needs to put her arm around Supervisor [Mar] and remind him how valuable Chinese money is to this City (and its Pols). He should focus on issues he is most capable of understanding – children’s toys.
Totally confused.
If only SF resident can buy property in SF, there will be zero rental property in SF. How can people move to SF? Eric Mar is essentially restricting newcomers to people who can afford buying a property in SF. No one can move into SF before he/she actually buy a property. So he wants SF to be a city of rich people only? Even Zuckerberg can not move into SF when he moved Facebook to bay area. Zuckerberg rented for a few years before he bought a house. Basically none of the new graduates and most of the young families will be excluded from SF since there will be no rental property available for them and they can not afford to buy, or not ready to buy.
Is Eric Mar from Mars? He seems to have a different brain than the people living on the Earth.
I thought he was a crazy liberal. Somehow he has converted to Tea Party and wants to kick out all the non-rich people out of SF.
The more oppression against property ownership, the higher the rental price and property value, simply supply and demand. We do not see as high rental prices in Silicon Valley as SF because they have no rent control.
Is is this legal under the constraints of Prop. 13?
That would be my thought. How does one structure an additional tax on non-residents without increasing the property tax rate. And the idea of an income tax on non-residents is a non-starter.
I suspect this political grandstanding by Eric Mar as he surveys his options once he is termed out of office. Like Campos he is looking to garner attention for his next election run, whatever that might be. I would suggest that everyone remember that his legacy pretty much revolves around the happy meal toy ban.
Oh, maybe he was forcing property owner to live in their property or become a landlord? I almost forgot that SF politics is all about rent control.
If a homeowner needs to leave SF and work in another place for some months, will the property be taxed or confiscated?
Mar seems determined to make our life very complicated. His silly proposal was just defeated and now he is doing more silly stuff. Is Mar trying to compete against Campos on who has the most silly ideas?
Jack Boots a be a coming down the street and I think they be adorned with brown shirts. Me thinks it might be a good time to sell my empty condos and move to Amerika.
The horror, the horror!
Communism is not love. Communism is a hammer which we use to crush the enemy.
Mao Zedong…aka Eric Mar
I call BS
this is a very very badly thought out idea ,,,
Yeah, but then WHERE ARE ALL THE ZOMBIES GONNA LIVE IF THIS PASSES?!?!?!
Can I get a what-what for some affordable zombie housing?
Maybe we can zone for it.
Mar, Campos, and Avalos. All we need is one more and we’ll have the Four Horsemen of the Rights Destroyers.
You might get your wish come true if Cindy Wu get appointed to take over Chiu’s seat, she would be the worst among all those 3!
Mayor Lee already knows what hell can come from appointing a leftist Planning Commissioner as a Supervisor, so I suspect he will not repeat the Olague scenario with Wu.
He will choose someone he can count on, as any wise politician would. Lee is more shrewd than his folksy image predicts, and he learns his lessons.
Kim is a communist too – so there you go. She sponsored prop G then backed off right before the election.
Yet another terrible idea by a useless group of politicians. Actually, they are not useless – they excel at providing negative value to their constituents. At what point do we learn that all of this regulation produces the exact opposite of the intended effect?
The problem with these loopy officials is they are and will always remain several steps behind the private sector. The private sector will find loopholes to exploit and the officials will be left scratching their heads when the unintended consequences of their actions come to fruition. He is getting paid to think of ways to waste your tax dollars.
Instead of limiting them buying, why not force them to Air-BNB?
Oh, wait…
The problem this plan is targeting is so unimportant. The positive effect from this policy will be negligible. The complications it will cause will be so much a pain.
Mar is adding complexity to everyone’s life but provides no value. What’s the name for this kind of act? What’s the name for this kind of person?
well said!!
In many other cities they have a reverse tax policy that primary residence get a homestead exception and a lower tax rate. Others pay a so called commercial rate. Works well, I have no idea how that would work under crazy CA laws
We have that already with the minimal homeowners property tax exemption. Unfortunately or fortunately, as the case may be, Prop 13 pretty much eliminates any ability to use that avenue for Mar’s misguided idea.
How about every SF resident is given an ankle bracelet, and if they leave city limits, they are shocked by electric charge.
Really, SF?
The only thing that will bring sanity back to City Hall is the elimination of neighborhood elected city Supervisors.
This has got to be the most ridiculous thing I’ve heard. “Zombie” neighborhoods In SF?
i would love more zombie neighbors. then we would have more parking..:)
How about zombie hoa members? Please Santa
Nah. Zombies are pedestrians and very bad at it to boot. Yes you would park better but every crossing would look like 7th & Market @ 2AM.
There are only so many supervisors to put only so many fingers in the leaking holes in the dam of SF property policy. End of the day, Rent Control isn’t working. Prop 13 isn’t sustainable. And rich people want to live here. So, other rich people invest here. It will get more expensive. Until it’s a communist country, it is America. I’m as liberal as they come, but this is way too much to remain comfortable, though how can they (legally) enforce something like this anyway?
I’m with another commenter, if someone has enough money to buy a place and sit on it while paying outrageous property taxes, then it’s a net positive for the City as they aren’t draining on city services. And if they can take that kind of loss while “hoping” the bubble hasn’t bursted yet, then that’s their risky investment strategy privilege.
I agree, it’s only a phase. Yes some rich people are buying property but ultimately laws of economics will win and these properties will be utilized.
The reason is that there are several kinds of absentee owners:
1 – People speculating on appreciation. Once this appreciation is realized, they will move on. The person buying will cannot expect much appreciation and therefore will want some kind of ROI by putting the property for rent.
2 – People using property as a storage of value who are not keen on collecting any revenue. It is clearly NEW money, from very unsophisticated buyers, probably newly minted capitalists. As a proverb says “wealth doesn’t pass 3 generations”. I would say in that case it will not pass 2 generations, as the heirs of unsophisticated types tend to squander wealth and liquidate unused real estate. Plus new money also tends to be unstable, even at the first generation. Not getting any income from an asset is a sure sign the person exposes himself to future problems.
In short, it will even out eventually. Don’t force it, we need the incentive to build more. If we restrict what people can do, we will end up with less housing in the long run.
So, along this way of thinking, if anyone has any currently unused possessions (clothing, a television, etc.) they should pay more taxes because someone else could be using these possessions. So much for freedom.
We must stop… wait for it… the Carmelization of Ess Eff. There, I said it.
In property law there’s a long standing concept of “highest and best use.” Doesn’t seem a stretch at all for a locality to decide that having occupied units (vs. ghost town or zombie neighborhood, pick your genre) is the highest and best use, and taxes a pied-à-terre higher. If it’s really that great of an investment to buy and let sit vacant 350 days a year, then Richie Rich can pony up a big penalty. This isn’t a curb on freedom, it’s government using its taxation power to reshape a broken market. That said, there are about a 1000 bigger and more direct things the board *could* be doing that would have more impact on the market imbalances… but the whiners would rather have campaign issues instead of solutions.
Zombie walks into a coffee shop and is like, “I’ll have a grande human brain latte.”
Barista is all, “Whoa whoa whoa, do you think this is some kind of formula retail place? We only serve organically-harvested locally-sourced artisanal brains in a variety of sizes, none of which is a grande, bro.”
SF isn’t close to having zombie neighborhoods. If you want to see entire unoccupied high rises and street after street of dark, empty homes, look no further north than Vancouver and some of its high-end suburbs (eg British Properties) for prime examples of investors parking cash in multimillion dollar homes that are never even occupied.
why would anyone go looking farther north than Vancouver?
^^That is my true calling in life: house sit in Vancouver. I know someone whose daughter and boyfriend recently bought a 2 bdrm/2 bath condo in a luxury building in downtown Vancouver for $600K. Building has a 24 hr. coffee bar as one of its many amenities. They walk to work everyday and spend weekends skiing in Whistler. Canadians seems so much happier.
Which building just out of curiosity? I have a friend looking for exactly that 2/2 Condo downtown … $600k is a decent number.
I don’t know Jimmy, Mar’s district includes one the largest former cemeteries in San Francisco (map at namelink). How do we really know what is under the Lincoln Park golf course?
Mar is representing Richmond. However, I doubt the people in Richmond district supports his low quality and counter productive proposals.
Mar is leaning from failures. His mentor might be the same mentors for Campos?
no, none of us in the inner richmond support this lunatic. At least not the homeowners.
they interviewed him on NPR this morning, and he sounded like a complete imbecile. had no answers to any tough questions. there was a lot of “we’ll have to think about that” Well, then maybe you should think 1st before you propose another stupid idea. there are certainly no zombie neighborhoods in the richmond, except for the homeless in GGP
I think we should decree that everyone is entitled to 250sf in SF. Say someone owns a 2500sf house in NV. He should have to house 10 people. If his family has only 4 people, then he must make room for 6 more. Because THIS is the “highest and best use”.
To hell with property rights! We in the People’s Republic of Yerba Buena know what is good for the People!
Another one of Eric Mar’s terrible ideas. Putting the solution to the housing crisis on the backs of a small slice of the population is unfair. Owners of 2nd homes in San Francisco will be in an impossible position. They’ll be taxed for owning a 2nd home in SF, but at the same time will be unable to rent their home when they aren’t there because of the City’s onerous rent control laws. If it’s important to increase the amount of affordable housing in the City, then change the rent-control law to assure that a short-term tenant will vacate the premises when the owner returns. I know people who keep their SF residences vacant while they’re out of town instead of renting them because they do not want to risk a tenant refusing to leave at the end of the rental period. So before passing a 2nd home tax, revise the rent control laws.
Owning a home in San Francisco should not be so punishing. There’s no question that SF need more housing, especially affordable housing. But why put the cost of that housing on a small segment of the population? How about taxing the new high-tech companies that are creating this demand for housing instead? They need to pay their fair share for this housing crises.
This is a fun rant, but it is all just silly talk.
First, Prop 13 does not allow this tax (without a 2/3 popular vote – good luck with that).
And even if it somehow overcame that hurdle, I’m fairly certain this would run afoul of the Constitution – equal protection, commerce clause, and other grounds. If this were legal, a thousand communities would have done it as it is always easier to tax people who don’t actually live and vote in the community. So it is not only a dumb idea, it is illegal.
Jimmy: Not sure which building. Will need to ask. I have to wonder how things could have been if the U.S. adopted the same immigration policies as Canada. But we are fearful and resentful of wealthy and educated entrepreneurs. Cuts into the progressives voter base.
JR: I should forward this thread to Eric Mar and show him the consequences of his sloppy thinking.