San Francisco Mayor, Supervisor Pause Transfer Tax Cut

Mayor Daniel Lurie and Supervisor Bilal Mahmood are pumping the brakes on their plan to slash San Francisco’s transfer tax in half.

Mahmood acknowledged that San Francisco is in a budget crisis and, as a result, he and Lurie are “shifting focus” to search for new revenue sources for the city amid a bruising budget deficit, Mission Local reported. “Until that is resolved we are not proceeding,” Mahmood said.

The proposed legislation, known as the BUILD Act, would have cut the transfer tax rate implemented in 2020 with Proposition I. Under the new structure, taxes would drop from 5.75 percent to 2.75 percent for properties that sell for more than $10 million, and from 6 percent to 3 percent for those over $25 million.

The goal with the BUILD Act was to stimulate housing development and provide jobs for union construction workers. The legislation, like Measure ULA in Los Angeles, ran into opposition as sellers of properties of $10 million or more faced large tax bills, clamping down their ability to build new housing. At present, the city’s tax rate would generate approximately $400 million for the city’s general fund over the next few years; Lurie and Mahmood’s proposal would have cut that tax in half.

Prop I passed in 2020 with 58 percent of the vote. Mahmood reiterated to the labor sector that he does not plan to move forward with the tax cut unless he could make it revenue-neutral. In order to do that, Mahmood and Lurie previously pledged to put a measure on the November ballot to apply the tax to certain properties, namely foreclosures, that are currently exempt from the existing transfer tax.

Whether that proposition is still planned for November is unclear. “From my perspective this is still generally good policy,” Mahmood said of that plan, but noted that he hopes to create a plan with more universal support, according to Mission Local.

While the BUILD Act is on pause, the mayor’s office plans to “continue moving aggressively to build affordable homes and drive our economic recovery,” Lurie spokesperson Charles Lutvak told Mission Local.

— Chris Malone Méndez