San Francisco voters pass Proposition C. to spur housing conversions downtown.
Olivia Wise | Examiner illustration
Editor’s Note: The original version of this story ran on March 6 to reflect the ballots counted on Election Day. It’s going to be continually updated as The City continues tallying votes.
Proposition C, Mayor London Breed’s ballot measure to boost the downtown economy by waiving transfer taxes for conversions of offices into housing, passed with 52.8% of the vote.
Prop. C was highlighted at a moderate Democrats celebration in Hayes Valley on Election Day that was attended by Breed, who made the measure a centerpiece of her strategy for reinvigorating a city with more than a third of its downtown offices vacant following the rise of remote work.
“I saw you guys out there working your butts off, and it looks like it’s so far paying off,” Breed told the cheering crowd that night.
With 222,612 ballots had been counted as of the following Monday, the 9,100 outstanding ballots were not enough to overcome the measure’s margin of victory. The next update is scheduled for 4 p.m. Tuesday.
The Prop. C victory followed a campaign in which critics — who were out-fundraised by a factor of five, or $379,348 to $74,640 — called the measure a giveaway to rich people and a sneaky effort to allow future decreases in the transfer tax without voter approval.
Prop. C would waive first-time transfer taxes for properties after they are converted from commercial to residential use for up to 5 million square feet of converted properties. It would also authorize the Board of Supervisors to amend, reduce, suspend or repeal the transfer tax without voter approval, though voters would have to approve any increase.
Breed proposed the measure to address The City’s record high office-vacancy rate, which the real-estate firm CBRE said was 35.6% in the greater downtown area for the fourth quarter of 2023. Breed also championed planning-code changes and the establishment of an adaptive-reuse program to streamline approvals for office-to-housing conversions.
Affordable-housing bond measure was leading on Tuesday night according to early election results
The City Controller’s Office recently issued a report stating that converting office space to housing did not appear financially feasible, and Prop. C’s incentive was likely too small to close the gap. Further, conversions would likely lead to an extended period before foregone transfer-tax revenue is recouped by higher property-tax revenue, said the report, which suggested zoning changes “might be better.”
Joe Arellano, a spokesman for the Yes on C campaign, disagreed. “San Francisco cannot afford to let offices sit vacant for a decade or longer,” he said.
Recent contributions to the Yes on C, for More Housing & Revitalized Downtown campaign included $25,000 from William Fisher, an investor with Manzanita Capital who is also listed by Gap Inc. as a member of its board of directors. Robert Fisher, also listed as a Gap director, also gave $25,000.
100 Van Ness apartment building in San Francisco as seen on Wednesday, Jan. 17, 2024.
Craig Lee/The Examiner
Another $25,000 came from William Oberndorf, executive chairman of Oberndorf Enterprises and a noted donor to a committee that helped recall former District Attorney Chesa Boudin in 2022. Tony Xu, CEO of the delivery service DoorDash Inc., contributed at least $20,000 while earlier, Jeremy Stoppelman, co-founder and CEO of Yelp, a San Francisco-based online business-review platform, gave a $75,000 donation.
At least $27,500 in opposition came from Supervisor Dean Preston, a member of a coalition of people who warned that Prop. C was intended to let supervisors cut transfer taxes without voter approval.
Preston led the successful 2020 effort to win voter approval of Proposition I, which doubled the transfer tax on property sales of $10 million or more and had already generated $313 million by the end of 2023.
Further opposition donations came from union interests, including the National Union of Healthcare Workers, the San Francisco Labor Council and Service Employees International Union Local 1021.
