Over 40 years ago, San Francisco created a transfer tax exemption to help everyday homeowners facing foreclosure. Fast forward to today, and giant institutional lenders are using that same loophole to move downtown office towers tax-free.
For example, in 2023, A 22-story tower sold for $61 million. Under the city's standard transfer taxes, a sale of that size would generate $3.6 million. But with the loophole, lenders have paid nothing.
In the last three years, large lenders have saved more than $450 million using this loophole.
Proposition J aims to close that gap. It applies standard transfer taxes to foreclosed commercial properties and large residential buildings WORTH over $10 million, while leaving single-family homes, condos, and small multi-family units completely exempt.
Opponents warn that adding any barriers to already-difficult properties could slow downtown's recovery. Analysts also note revenues would fluctuate wildly based on market crashes.
Supporters say that corporate lenders shouldn't exploit a homeowner protection.