Mayor Ed Lee has revamped his Housing Trust Fund proposal. The proposal, which will appear on the November as two ballot measures, is intended to raise between $20 million and $50 million a year for affordable and moderate-income housing. About $13 million of the total would come from a 0.2 percentage-point increase in the city’s real property transfer tax for properties selling for more than $1 million.
The Association has been waging an aggressive campaign to induce the mayor and other policy makers to drop the idea of proposing any increase in the transfer tax. But the mayor says existing funding sources are not sufficient to raise the millions of dollars needed to carry on the work of the city’s Redevelopment Agency which, like all other redevelopment agencies in the State, was dissolved earlier this year by Governor Jerry Brown and the State legislature to free up funds for use by educational institutions and law enforcement agencies.
But the mayor seems to be listening to the concerns of the Association. In the latest iteration of his proposal, the increases in the transfer tax has been trimmed from 0.5 percentage-point for properties selling up to $1 million and 1.0 percentage-point for properties selling for more than $1 million and less than $5 million to 0.2 percentage-point for all properties selling for more than $1 million.
In addition, the trust fund’s scope will be expanded to include moderate-income and market rate housing, and assist households making up to 120 percent of the average median income (currently up to $123,600 for a family of four) with down payment assistance of up to $100,000.
To compare what the mayor proposed previously with what he is proposing currently, see the two descriptions below.
The Mayor’s Housing Trust Fund proposal was intended to raise $50 million per year for affordable housing by increasing the transfer tax on every home sold, including rental units, for $5 million or less.
For properties selling for $1 million or less, the transfer tax rate would increase by .5 percent. This would raise an estimated $32 million per year.
For properties selling for more than $1 million and up to $5 million, the transfer tax rate would increase by 1 percent. This would raise an estimated $22 million per year.
If the mayor’s first proposal had appeared on the ballot and was approved by a majority of the voters, the city’s new transfer tax rates would have been as follows:
More than $100 but less than or equal to $250,000, one percent of the sale price.
More than $250,000 but less than $1,000,000, 1.18 percent of the sale price.
More than $1,000,000 but less than $5,000,000 1.75 percent of the sale price.
More than $5,000,000 but less than $10,000,000, two percent of the sale price.
Over $10,000,000, 2.5 percent of the sale price.
The proposed Housing Trust Fund (HTF) Charter Amendment would establish a General Fund set-aside to fund the creation of permanently affordable below market rate (BMR) housing and homeownership programs. It would stimulate the production of new market-rate housing by reducing the cost obligation of the existing inclusionary on-site BMR program by 20 percent while allowing the Mayor’s Office of Housing (MOH) a “right of first offer” to purchase 8 percent more BMR units and establish a citywide “cost obligation cap” on all existing and future housing requirements or exactions.
BMR requirements would kick in for buildings with 10 units instead of the current five units.
The HTF would create:
- 30-year source of funding for permanently affordable BMR housing;
- $15 million expansion of the down payment assistance program (DALP) available to families earning up to 120 percent of average median income (AMI), currently $123,600 for a family of four. Under the DALP, an applicant could qualify for up to $100,000 in down payment assistance;
- New $15 million Homeownership Stabilization Fund to assist homeowners at risk of losing their homes; and
- New “Complete Neighborhoods Infrastructure Grant Fund” to finance new public realm improvements in neighborhoods receiving new housing growth.
A companion ballot measure would generate additional revenue to ensure the HTF does not negatively impact the General Fund. The mayor is proposing a temporary (20-year) increase in the real property transfer tax of 0.2 percent on all sales above $1 million of assessed value, for both residential and commercial property transactions.
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