Preliminary Election Results Show New Rules Coming to SF

On November 5th of last week, voters took to the polls to cast their ballots in an election with several measures that will affect businesses and City Commissions. With preliminary election results available, below is an overview of some of the key results.

Proposition 33: Local Government Residential Rent Control – Failed

Prop 33 sought the statewide repeal of the Costa-Hawkins Rental Housing Act of 1995 (“Costa-Hawkins”), which restricts the ability for local jurisdictions to impose rent control. Proponents for the proposition argued that repeal of Costa-Hawkins would allow jurisdictions to expand rent control, while opponents argued it would freeze construction of new housing and effectively reverse dozens of new state housing laws. Preliminary election results show 60.8% of voters voted no on Prop 33, keeping Costa-Hawkins in place and delivering a resounding rejection of stricter rent control.

Measure D: City Commissions and Mayoral Authority – Failed

Measure D proposed to limit the total number of commissions in the City of San Francisco to 65, while also giving the Mayor sole authority to appoint and remove City department heads. The Measure would also have given the police chief the sole authority to adopt rules governing the conduct of police officers. Preliminary election results show that 56.39% of voters voted no on Measure D, maintaining the current number of commissions in the City.

Measure E: Creating a Task Force to Recommend Changing, Eliminating, or Combining City Commissions – Passed

Also aimed at commission reform within the City, it appears that Measure E won out over Measure D, with preliminary election results showing 52.05% voter approval. Measure E asked voters to decide whether the City should create a task force to make recommendations by February 1, 2026 on ways the City could change, eliminate, or consolidate commissions to improve the administration of City government.

Measure L: Additional Business Tax on Transportation Network Companies and Autonomous Vehicle Businesses to Fund Public Transportation – Passed

With preliminary election results showing 56.88% voter approval, it looks like voters have passed Measure L, which places a permanent additional tax on transportation network companies and autonomous vehicle businesses to support Muni transportation services and fare discount programs, titled the “Ride-Hail Platform Gross Receipts Tax.” The Measure will impose the tax specifically on businesses that provide passenger service for compensation and receive more than $500,000 in gross receipts. The tax rates range between 1% and 4.5% of gross receipts. The Controller estimates annual revenue from the measure at approximately $25 million.

Measure M: Changes to Business Taxes – Passed

Measure M proposed to modify several existing taxes in the City, including the Gross Receipts Tax, Homelessness Gross Receipts Tax, Overpaid Executive Gross Receipts Tax, Business Registration Fee, and the Administrative Office Tax on Payroll Expenses. In general, the Measure is expected to cut taxes for many small businesses and shift more tax burden onto medium, large, and wealthier businesses through a variety of changes. Preliminary election results show that Measure M was approved by 69.73% of voters so far.

 

Authored by Reuben, Junius & Rose, LLP Attorney, Kaitlin Sheber.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient. Readers should consult with legal counsel before relying on any of the information contained herein. Reuben, Junius & Rose, LLP is a full service real estate law firm. We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.

November 8th Elections Update – Real Estate Edition

measures

Now that the election is a week behind us, the final results of the various political races and ballot measures are becoming clear. There are still 15,500 votes left to count as of November 15th, but many of the results are final. Below are the results that most impact land use and real estate in San Francisco.

Board of Supervisors

With Supervisors Stefani (D2), Mandelman (D8), and Walton (D10), cruising to easy re-elections, the focus has been on Districts 4 and 6. In both, the race has been between a mayoral-backed, moderate candidate and a Board-backed, progressive candidate. The outcome of these two races will shift the makeup of the Board and impact how land use decisions are made, particularly housing policy and project decisions. Currently, the Board leans more progressive and is somewhat conservative when deciding many land use decisions. Recent examples of project denials are 469 Stevenson Street and 450 O’Farrell Street – both of which may have been approved with a more moderate make up of Supervisors.

As of Tuesday November 15th, Joel Engardio is leading Supervisor Gordon Mar, the incumbent, in District 2 at 51% to 48.9%. In District 6, Supervisor Matt Dorsey has won the seat with 51.6% of the vote.

If the current count stands in District 2, then the balance of the Board of Supervisors is sure to tilt to a more moderate stance that is friendlier to the development of housing projects.

SF Propositions

There were 14 propositions on the November ballot, with the following of most interest to land use and real estate.

Prop D & Prop E – Fast Track Affordable Housing

These two measures were perhaps the most written about and discussed (at least in land use circles). Prop D was put on the ballot by the Mayor, Prop E by the Board of Supervisors. Both have a goal of streamlining the approval process for affordable housing developments. However, they differed in qualifying requirements, types and level of affordable units, and project review timing. Each needed a simple majority to pass; if both reached 50% then the measure receiving the most votes wins.

As of this writing, both measures are expected to fail. Neither has reached the 50% threshold, although Prop D is closer at 48.5% (compared to 45.3% for Prop E). With the defeat of Prop D, it will continue to be difficult to review, approve, and construct affordable housing in San Francisco.

Prop M – Vacancy Tax on Landlords

Perhaps one of the more controversial measures on the ballot, this measure will tax landlords that keep residential units vacant and off-market. It applies to property owners with at least three units who keep them vacant for more than 6 months. Fines start at $2,500 and $5,000 per empty unit, increasing annually. While this measure penalizes owners who choose not to be landlords or keep units vacant for a variety of reasons, it does exempt single-family and duplex owners. Meaning, owners of homes with Accessory Dwelling Units (ADUs) and the like that are not rented out will be able to continue to keep them vacant.

Prop M passed with 53% of the vote, which some say shows how the citizens are fed up with the high number of empty units. For others, it is overreach into the private business doings of property owners.

Prop M contained language allowing the Board of Supervisors to amend the tax by 2/3rds vote and without voter approval. Meaning, those with ADUs may soon be subject to this tax. Regardless of how one feels about this, it will be interesting to watch how it plays out over the next several years.

Prop I & Prop J – Vehicles on JFK Drive and the Great Highway

Another set of competing land use measures, this time relating to keeping certain roads vehicle-free. Both were spurred by the Board of Supervisors approval to make JFK Drive permanently car-free in 2020. Prop I would allow cars back on JFK Drive, except on all Sundays, Saturdays during the summer, holidays and special events. Prop I would fully reopen the Great Highway to cars as well. Prop J would affirm the Board’s decision and keep JFK Drive vehicle-free.

Prop J overwhelmingly passed. Residents utilized JFK Drive during the COVID lockdown, and Rec & Park’s efforts to turn the road into a safe public gathering space helped people see the long-term benefits of keeping it car-free. Now that the road’s fate is determined, it will be interesting to see if the city can make it into a true public benefit.

Prop L – Sales Tax to Fund SFMTA Projects

This measure to extend the city’s 0.5% sales tax to fund transportation projects has passed with nearly 71% of the vote; it needed a two-thirds majority vote to pass. The current tax isn’t set to expire for years, but the last measure extending it set strict limits on how the money could be spent. Prop L would allow San Francisco to continue spending funds from the tax on categories where it has currently reached or is nearing its spending cap, including buying new light rail vehicles.

 

Authored by Reuben, Junius & Rose, LLP Attorney Tara Sullivan.

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben, Junius & Rose, LLP is a full service real estate law firm.  We specialize in land use, development and entitlement law.  We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.