SF Suspends Empty-Homes Tax in Bid to Save It

San Francisco officials have delayed suspending a voter-approved “Empty Homes Tax” during a legal challenge because of a push by Supervisor Jackie Fielder to keep the measure alive.

The tax, known as Proposition M, was approved in November 2022 with 54 percent of the vote and targets property owners with residential units left vacant for over 182 days a year, the San Francisco Chronicle reported.

Taxes range from $2,500 to $5,000 based on size, rising to a maximum of $20,000 a year per unit, applying only to buildings with three or more apartments.

Fielder argued that amendments should be explored to prevent the tax from being suspended indefinitely while the city fights a lawsuit from landlords and property owners who say it violates their property rights.

She proposed that the tax suspension should only last “until the courts tell us otherwise,” allowing the city to collect if legally permitted. Fielder’s motion to continue the vote passed unanimously, with a hearing set for March 18.

The Empty Homes Tax took effect at the beginning of last year, with collections planned for upcoming April.

Proponents estimated it would generate more than $20 million a year for housing and unlock about 5,000 units within two years, though critics have questioned the projections.

The tax has faced legal challenges since February 2023, when property owner groups filed a lawsuit alleging it was coercive and infringed on their rights.

In December 2023, Superior Court Judge Charles Haines declined to dismiss the lawsuit arguing in a ruling that property owners don’t need to wait until the tax is due to challenge it in court. In October, Haines struck down the tax, saying that it violated the U.S. and California constitutions and was preempted by California law.

The court subsequently ordered the city to halt enforcement and collection, and the city treasurer stated that property owners would not be required to pay by the original April 30, 2025 deadline unless the court’s decision is reversed on appeal.

The city attorney’s office is now appealing the ruling and has expressed disappointment with the trial court’s decision.

— Dana Bartholomew