Shall the City impose a new gross receipts tax of 1.7% on revenues a business receives from leasing some commercial spaces in San Francisco, to fund homeless services, housing for extremely low-to middle-income households and for other public purposes?
Should the City impose an additional tax of 1.7% on the gross receipts from the lease of commercial space in the City to fund low and middle-income housing and homelessness services and the General Fund?
NOTE: Propositions C and D concern the same tax. If the voters approve both measures, the one with the greater number of votes over the threshold will be enacted.
Note: The Pros & Cons are also available in Spanish and Chinese.
The City collects a gross receipts tax from many businesses receiving revenue from the lease of commercial property, such as office buildings, warehouses and other industrial buildings, and retail spaces. The current tax rate ranges from 0.285% to 0.3%.
Businesses with $1 million or less in total gross revenues within San Francisco are generally exempt from the gross receipts tax. Certain other businesses are also exempt, including some nonprofit organizations, banks and insurance companies.
Proposition D would impose an additional gross receipts tax of 1.7% on revenues some businesses receive from the lease of commercial space in the City. This additional tax would generally not apply to businesses exempt from the existing gross receipts tax.
It would also not apply to revenues received from leases to businesses engaged in:
¡ Production, Distribution or Repair (PDR) uses. PDR uses include a variety of business-related uses such as industrial, automotive, storage and wholesale. They also include uses by small businesses such as furniture makers, recording studios, auto repair shops, plumbing supply stores, art studios and lumberyards;
¡ The retail sale of goods and services directly to consumers; or
¡ Arts or entertainment activities.
This additional tax would also not apply to revenues received from certain nonprofit organizations.
The City would be required to first use between $1.5 million and $3 million of the total collected tax per fiscal year for any general purpose.
The City would be required to use all remaining revenues collected from this new tax as follows:
¡ 45% to help homeless adults, families or youth move into temporary shelter or permanent housing;
¡ 35% to acquire and rehabilitate rent-controlled apartment buildings to protect vulnerable residents from displacement, and to create permanently affordable homes for middle-income households;
¡ 10% to acquire, rehabilitate or operate single room occupancy (SRO) buildings and to help house people with extremely low and very low incomes, especially seniors, veterans, persons with disabilities, or immigrants; and
¡ 10% to provide permanent rent subsidies to extremely low-income senior households that are in income-restricted developments.
A “YES” Vote Means: You want to impose a new gross receipts tax of 1.7% on revenues a business receives from the lease of some commercial spaces in San Francisco to fund homeless services, extremely low- to middle-income housing and other general purposes.
A “NO” Vote Means: You do not approve this tax.
¡ Proposition D would create new, permanently affordable housing for low and middle-class residents without increasing residential rents or tax burden on homeowners.
¡ Would reduce of homelessness through housing and treatment for mental illness and substance abuse.
¡ Could reduce displacement of teachers, nurses, firefighters, and other vital professionals from San Francisco.
¡ Would protect vulnerable residents from eviction and keep communities diverse and intact.
¡ Proposition D would increase cost of commercial rents, potentially costing jobs in San Francisco.
¡ Proposition D does nothing to address the effectiveness of the City’s current approach to homelessness.
¡ Would contribute millions of dollars annually to the General Fund and may not be used to assist the homeless.
¡ Temporary navigation centers funded by measure offer no long-term solution for homelessness.
A “YES” Vote Means: If you vote "yes," you want to impose a new gross receipts tax of 1.7% on revenues a business receives from the lease of some commercial spaces in San Francisco to fund homeless services, extremely low- to middle-income housing and other general purposes.
A “NO” Vote Means: If you vote "no," you do not approve this tax.
The Way It Is Now: The City collects a gross receipts tax from many businesses receiving revenue from the lease of commercial property, such as office buildings, warehouses and other industrial buildings, and retail spaces. The current tax rate ranges from 0.285% to 0.3%.
Businesses with $1 million or less in total gross revenues within San Francisco are generally exempt from the gross receipts tax. Certain other businesses are also exempt, including some nonprofit organizations, banks and insurance companies.
Propositions C and D concern the same tax. If both measures are adopted by the voters, the one with the most votes will be enacted.
The Proposal: Proposition D would impose an additional gross receipts tax of 1.7% on revenues some businesses receive from the lease of commercial space in the City. This additional tax would generally not apply to businesses exempt from the existing gross receipts tax.
It would also not apply to revenues received from leases to businesses engaged in:
• Production, Distribution or Repair (PDR) uses. PDR uses include a variety of business-related uses such as industrial, automotive, storage and wholesale. They also include uses by small businesses such as furniture makers, recording studios, auto repair shops, plumbing supply stores, art studios and lumberyards;
• The retail sale of goods and services directly to consumers; or
• Arts or entertainment activities.
This additional tax would also not apply to revenues received from certain nonprofit organizations.
The City would be required to first use between $1.5 million and $3 million of the total collected tax per fiscal year for any general purpose.
The City would be required to use all remaining revenues collected from this new tax as follows:
• 45% to help homeless adults, families or youth move into temporary shelter or permanent housing;
• 35% to acquire and rehabilitate rent-controlled apartment buildings to protect vulnerable residents from displacement, and to create permanently affordable homes for middle-income households;
• 10% to acquire, rehabilitate or operate single room occupancy (SRO) buildings and to help house people with extremely low and very low incomes, especially seniors, veterans, persons with disabilities, or immigrants; and
• 10% to provide permanent rent subsidies to extremely low-income senior households that are in income-restricted developments.
City Controller Ben Rosenfield has issued the following statement on the fiscal impact of Proposition D:
Should the proposed ordinance be approved by the voters, in my opinion, it would generate additional net annual revenue to the City of approximately $70 million. The proposed ordinance would raise the gross receipts tax paid by commercial landlords in San Francisco. The revenues from the tax would be designated for affordable housing programs and homelessness programs, except that $3.0 million annually, adjusted for inflation in subsequent years, would be available for any public purpose. Total tax collections would change over time at the rate of inflation of commercial rents in the City.
The current gross receipts tax was passed by the voters in November 2012 and replaced the former 1.5% payroll tax with a gross receipts tax that varies by the size and type of business. Commercial landlords generally pay a rate between 0.285% and 0.3% of gross receipts currently. The proposed ordinance would add a new tax of 1.7% for most commercial spaces, in addition to the current gross receipts tax.
The proposal exempts commercial landlords with less than $1.0 million in gross receipts, rents paid from non-profit tenants, arts, industrial uses, and retail uses as well as other exemptions required under State law. We estimate that these exemptions represent approximately 22% of the tax base, and therefore that 78% of commercial rents paid in the City would be subject to the tax.
As noted above, total tax revenues that would be generated are estimated to be approximately $70 million annually based on the current tax base, exemptions and rates, and would change over time at the rate of inflation of commercial rents in the City.
