Real Estate Transfer Tax Exemption and Office Space Allocation
Shall the City exempt from the real estate transfer tax the first time a property is transferred after being converted from a commercial to residential use, have authority to amend the transfer tax without voter approval but not to increase it, and increase the annual limit on office space available for development by including office space that has been converted to a different use or demolished?
Digest by the Ballot Simplification Committee
The Way It Is Now:
The City collects a real estate transfer tax on most property sales and some leases in San Francisco. The tax rate usually depends on the total sale (or lease) price and ranges from 0.5% to 6%. The money collected from this tax goes into the City’s General Fund and may be spent for any purpose.
Any transfers of rent-restricted affordable housing of $5 million or more may be partially exempt from the tax by the Board of Supervisors (Board). Voters must approve any other changes to the tax.
Voters have limited the amount of new office space the City allows each year. The limit does not change when an office space is converted to a different use or demolished.
The Proposal:
Under Proposition C, the first time a property is transferred after being converted from commercial to residential use, it would be exempt from the transfer tax as long as the property owner receives permission to convert the property before January 1, 2030. The exemption would be available for up to 5 million square feet of converted properties.
Proposition C would authorize the Board to amend, reduce, suspend or repeal the transfer tax without voter approval. Voters must approve any increase of this tax.
Proposition C would allow the City to increase the amount of office space available for development by including property that has been converted or demolished.
A "YES" Vote Means: If you vote "yes," you want to:
- Exempt from the transfer tax the first time a property is transferred after being converted from commercial to residential use.
- Authorize the Board to amend the transfer tax without voter approval, but not to increase it.
- Allow the City to increase the amount of office space available for development by including property that has been converted or demolished.
A "NO" Vote Means: If you vote "no," you do not want to make these changes.
Controller's Statement on "C"
City Controller Ben Rosenfield has issued the following statement on the fiscal impact of Proposition C:
Should the proposed initiative ordinance be approved by the voters, in my opinion, it would significantly decrease the City’s transfer taxes revenues. Revenue losses from the proposed initiative ordinance would be dependent on the number of properties converted then transferred and the transferred properties’ transfer tax rates but could range from $34 million to $150 million if 5 million square feet of converted properties are transferred over the 30-year period. However, the revenue impact to the City will likely be further affected, depending on future decisions by office lessees and property investors, as described below.
The proposed initiative ordinance would amend the Business and Tax Regulations Code, waiving the current real property transfer tax rate of up to 6% for first time transfers on non-residential properties converted to residential use. The tax exemption will apply to the first 5 million square feet of converted property that applies for a qualifying certificate from the Planning Department Additionally, the ordinance would reduce square footage requirements on office developments where a former office space was demolished.
Over the 30-year period, if the 5 million square foot cap is reached, revenue loses could range from approximately $34 million if only condominiums were transferred at the .68% transfer tax rate, to approximately $150 million if only apartments were transferred at the 6% rate. For context, in Fiscal Year (FY) 2022-2023, revenue from the real property transfer tax was $186.2 million. It is important to note that property transfer tax revenue is the City’s most volatile revenue source.
Additionally, the City’s revenue loss may be subsequently increased, or diminished, depending on the property acquired, and the behavior of investors. These impacts may be complex, because office and residential properties pay property tax to the City, while many office tenants pay the gross receipts tax and other business taxes to the City.
- If the Transfer Tax exemption makes residential conversion of a permanently-vacant office building financially feasible, the City would lose transfer tax, because of the exemption, but would likely gain a greater amount of property tax, because the new residential property has a higher value than the vacant office building.
- If the transfer tax exemption makes residential conversion of an office building financially feasible, but that building would have been eventually occupied by future office tenants, the exemption would most likely lead to a net negative revenue impact for the City. The City would lose transfer tax because of the exemption, gain property tax from the new residential investment in the property, but would forego business taxes from future tenants of the office building. In this scenario, the business tax loss would likely exceed the property tax gain, given the comparative rates of the two taxes. The City could additionally face foregone property taxes from potential office investors, who are not eligible for the exemption.
The proposed initiative ordinance would also authorize the Board of Supervisors to amend or repeal any aspect of the real property transfer tax, including adding additional exemptions, without voter approval to the extent that it’s permitted by the California constitution.
How "C" Got on the Ballot
On November 20, 2023, the Department of Elections received a proposed ordinance signed by Mayor Breed.
The Municipal Elections Code allows the Mayor to place an ordinance on the ballot in this manner.
This measure requires 50%+1 affirmative votes to pass.
Arguments are the opinions of the authors and have not been checked for accuracy by any official agency. Arguments are printed as submitted. Spelling and grammatical errors have not been corrected.
Proponent’s Argument in Favor of Proposition C
VOTE YES ON PROP C FOR MORE HOMES AND A VIBRANT DOWNTOWN
By removing barriers to converting office space to housing, Prop C will take vacant space, turn it into homes, and bring more people Downtown.
Prop C waives the City’s transfer tax on projects that convert buildings from non-residential to residential uses, incentivizing underused office buildings to be converted into housing.
San Francisco’s Downtown is undergoing a period of change – and there is a tremendous opportunity to attract investment and excitement in the future of what Downtown can be: a thriving, 24-hour neighborhood filled with residents, workers, arts and culture, and successful small businesses.
The increased repurposing of office buildings into housing will help San Francisco meet its state mandated requirement to build thousands of new units of housing, reduce the vacancy rate downtown, and bring new investment Downtown, increasing opportunities to create a dynamic neighborhood where people can live, learn, work, and play.
Here’s how Prop C works:
- The City’s current Transfer Tax – which is up to a 6% tax rate on transactions over $25 million – would be waived after a qualifying non-residential to residential conversion.
- The tax waiver would be limited to five million square feet of space converted, and requires that planning approval be complete by December 31, 2029.
- Projects would need construction approval within three years of planning approval, to ensure conversions are moving forward.
Downtown revitalization is beginning to take off and Prop C is a critical next step in our multi-pronged effort.
Vote YES on Prop C.
Mayor London Breed
Rebuttal to Proponent’s Argument in Favor of Proposition C
STOP THE GIVEAWAY. VOTE NO ON C
The proponent of Prop C says that immensely wealthy owners of downtown office buildings worth $25 million or more should get a tax break when they sell their building.
If you oppose giving tax breaks to billionaires, vote NO on C!
Here's what they're NOT telling you:
- A billionaire tax break for LUXURY HOUSING. Current law already allows tax exemptions for office conversions for AFFORDABLE HOUSING. Prop C is for huge developers to get a tax break for building LUXURY HOUSING.
- A billionaire tax break you're paying for. When the wealthy don't pay their fair share, it's middle-class and low-income San Franciscans who must make up the difference.
- A billionaire tax break that steals from affordable housing. The tax on mega-office buildings funds affordable housing and rental assistance. Why should struggling renters pay more so billionaires can profit more?
- A billionaire tax break that allows City Hall to pass more giveaways without voter approval. Hidden in the fine print, Prop C allows City Hall to roll back progressive transfer taxes on expensive buildings that were PASSED BY VOTERS. The proponent doesn't even mention this. Wonder why?
Real economic recovery must focus on small businesses, neighborhoods and working families. Not just big corporations and downtown.
Protect affordable housing funds, progressive tax reforms and keeping voters, not City Hall, in charge. Vote NO on C!
Council of Community Housing Organizations
San Francisco Democratic County Central Committee
Affordable Housing Alliance
San Francisco Tenants Union
Senior and Disability Action
Harvey Milk LGBTQ Democratic Club
Small Business Forward
Opponent's Argument Against Proposition C
NO ON C: A DECEPTIVE TAX BREAK FOR BILLIONAIRES
San Francisco voters, don’t be fooled. Vote NO on C to stop a deceptive ballot measure that takes power away from voters and allows City Hall politicians to hand out corporate tax breaks to billionaires and huge property owners.
Watch out for Prop C:
- A deceptive tax break for billionaires. City law already exempts affordable housing projects from the transfer tax. Despite its claims, Prop C does NOTHING to encourage affordable housing in San Francisco.
- Allows politicians to hand out tax breaks to big corporations. Today, only voters can decide whether to increase or decrease the transfer tax on property sales. But this measure would allow politicians to reduce or even eliminate the transfer tax without voter approval.
- Lets City Hall overturn the will of voters. Since 2008, voters have approved ballot measures to close transfer tax loopholes that allowed corporations to avoid paying their fair share. And, we have voted for small tax increases for properties valued over $5 million and $10 million. These were OUR CHOICE. But if Prop C passes, it will be the politicians’ choice instead.
- Threatens affordable housing and vital services. The transfer tax on massive corporate property sales over $5 million provides hundreds of units of affordable housing and helps fund vital services like public safety, schools, and affordable housing. Prop C could take those services away.
- The wrong kind of economic recovery. Our economic recovery should focus on city neighborhoods, small businesses, and working San Franciscans – not downtown corporations.
Prop C is a politician’s magic trick that benefits a select few at the expense of the rest of us. Please join us and vote NO on C.
Council of Community Housing Organizations
San Francisco Democratic County Central Committee
Affordable Housing Alliance
San Francisco Tenants Union
Senior and Disability Action
Harvey Milk LGBTQ Democratic Club
Small Business Forward
Rebuttal to Opponent’s Argument Against Proposition C
Prop C’s opponents want to stick with the status quo – empty office buildings downtown, less revenue for city services like parks and police, and small businesses struggling to stay open.
Prop C is a step we can take now to revitalize our downtown by turning empty office buildings into housing.
The pandemic and work from home shift was a catastrophic event that hollowed out our downtown. Now, formerly packed offices sit empty, streets are quiet, and restaurants continue to close due to lack of foot traffic.
There are property owners interested in converting our empty office buildings into housing, but the cost to do so is extremely high. Things like plumbing need to be entirely changed when you convert office space into homes.
Here’s what Prop C ACTUALLY does: It temporarily waives the City’s transfer tax to make it more affordable to convert office buildings into housing. This new housing will bring investment and residents into downtown, creating a sustainable, 24-hour neighborhood that is more lively and resilient to future economic downturns.
San Francisco needs more housing. It doesn’t need empty office buildings that may sit vacant for decades if we do nothing.
After auto worker jobs went elsewhere, Detroit rebuilt its downtown by repurposing commercial buildings into housing. After 9/11, New York City rebuilt lower Manhattan and added housing, creating a new urban community.
We can rebuild our downtown and create a thriving new neighborhood.
Vote Yes on Prop C.
Supervisor Matt Dorsey
Supervisor Joel Engardio
Supervisor Rafael Mandelman
Supervisor Catherine Stefani
Paid Arguments in Favor of Proposition C
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Paid Argument IN FAVOR of Proposition C
Vote Yes on Prop C for more housing for residents, workers, and families
San Francisco needs more housing for our residents, workers, and families. Prop C will help create more homes by converting empty office space into housing.
Creating more housing in our Downtown is a golden opportunity for San Francisco. While we also need housing across our entire city, housing in our Downtown is close to transit, near where people work, and close to restaurants and businesses that we all want to see thrive. That support requires Downtown to be a 24/7 neighborhood, not a 9-to-5 neighborhood.
Prop C will address two problems at once – our vacant office space that is hurting Downtown and our lack of housing that is hurting our entire city. It will make our Downtown more vibrant, and it will make our city more affordable.
San Francisco’s need for housing is vast, and we need all solutions on the table. Prop C removes a major barrier to creating more housing and is a critical tool to bringing more housing to our City.
Housing Action Coalition
Grow the Richmond
GrowSF
SF YIMBY
SPUR
YIMBY Action
Urban Environmentalists
The true source(s) of funds for the printing fee of this argument: Coalition for More Housing & Revitalized Downtown San Francisco.
The sole contributor to the true source recipient committee: Emerald Fund Inc.
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Paid Argument IN FAVOR of Proposition C
Small Businesses Want Prop C!
Downtown small businesses are struggling. Our restaurants need more customers and our stores need more people coming in to run errands. To have a thriving Downtown small business community, San Francisco must transform from a 9 to 5 Downtown to a 24/7 Downtown. This requires more residents living in and around Downtown.
Prop C will turn empty office space into housing, bringing more people and energy to our Downtown streets. It will bring more people in to support our small businesses on evenings and weekends.
Prop C will help small businesses by creating a more stable base of customers eating in our restaurants and supporting our stores. Prop C will make Downtown a more resilient and dynamic area.
Prop C also helps create housing, which small businesses support to bring more customers but also because our workforce cannot afford to live in this City.
Prop C is good for small businesses and for our workers.
Sharky Laguana, Former Small Business Commission President
Ben Bleiman, SF Bar Owners Alliance
Eva Lee, Chair, Chinatown Merchants Association*
Building Owners and Managers Association of San Francisco
Golden Gate Restaurant Association
San Francisco Council of District Merchants Associations
Small Property Owners of San Francisco Institute
*For identification purposes only; author is signing as an individual and not on behalf of an organization.
The true source(s) of funds for the printing fee of this argument: Coalition for More Housing & Revitalized Downtown San Francisco.
The sole contributor to the true source recipient committee: Emerald Fund Inc.
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Paid Argument IN FAVOR of Proposition C
STATE AND LOCAL ELECTED OFFICIALS SUPPORT PROP C
San Francisco is an international destination that is known around the world for its beautiful vistas, landmarks, and culture. More recently, our downtown has been in the news because of the devastation it has endured from the pandemic and the shift to employees working from home.
We cannot let our downtown become a ghost town. We cannot accept empty streets, storefronts, and buildings as the norm. This city has been built and rebuilt over and over again throughout its history — and we can do it again by passing Prop C.
Prop C will spur a new boom in our city’s downtown by allowing a temporary waiver of the transfer tax to help jumpstart the conversion of vacant office buildings into much-needed housing. Any loss in the transfer tax will be more than offset by the investment that will flow into downtown in the form of new housing, new businesses, new residents, and new nightlife.
Rebuilding our downtown requires thinking big. Prop C is the next step on our city’s road to recovery.
For the future of our downtown and San Francisco, please vote YES on Prop C.
Assessor Joaquín Torres
California State Treasurer Fiona Ma
Senator Scott Wiener
Supervisor Matt Dorsey
Supervisor Joel Engardio
Supervisor Rafael Mandelman
Supervisor Catherine Stefani
The true source(s) of funds for the printing fee of this argument: Coalition for More Housing & Revitalized Downtown San Francisco.
The sole contributor to the true source recipient committee: Emerald Fund Inc.
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Paid Argument IN FAVOR of Proposition C
Help Chinatown's Economic Recovery — Support Prop C!
Since the pandemic, San Francisco's downtown has suffered. Shops and cafés have closed, offices are empty, and there are far fewer visitors to the area. That lack of activity hurts Chinatown, where many merchants and restaurants continue to feel pain from the loss of workers and business.
Our Chinatown small businesses are very concerned and worried that this is the new normal.
We can't let that happen.
We have to bring people back to the area. We need a plan that tries something new and different. That's why we're supporting Prop C.
Prop C will temporarily waive the transfer tax for companies that turn our empty downtown buildings into housing. That will create more homes, and put our high-rises to use in new ways.
We can reduce the number of vacant buildings and create more places for people to live.
It's time to re-envision our downtown and identify new and efficient ways to use the buildings and infrastructure we have.
For our Chinatown merchants and for a better city, Vote Yes on C.
Vanita Louie, AAPI Leader
Cyn Wang, Entertainment Commissioner*
Sharon Lai, Former San Francisco Municipal Transit Agency Director
Mike Chen, DCCC Candidate
Lily Ho, DCCC Candidate
Marjan Philhour, DCCC Candidate
Brian Quan, DCCC Candidate
Eva Lee, Chair, Chinatown Merchants Association*
Steven Lee, AAPI Leader
Forrest Liu, Stop Asian Hate Activist
San Francisco Filipino American Democratic Club
Stand with Asian Americans
Stand with Asians
*For identification purposes only; author is signing as an individual and not on behalf of an organization.
The true source(s) of funds for the printing fee of this argument: Coalition for More Housing & Revitalized Downtown San Francisco.
The sole contributor to the true source recipient committee: Emerald Fund Inc.
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Paid Argument IN FAVOR of Proposition C
Prop C will help build the housing San Francisco needs.
By converting available office space to residential housing, Prop C will give more people an opportunity to live closer to downtown and bring more housing near where people work.
Prop C will create a more sustainable neighborhood that connects all parts of San Francisco, where people can live, work, and enjoy nightlife, all in one area.
Downtown San Francisco needs to be reimagined as a neighborhood for all, not just a place of employment for some. The area already has access to local and regional transit. By bringing more housing downtown, we can provide people with the opportunity to walk, bike, and easily take transit to work, instead of having to drive long commutes.
By taking advantage of empty office space to create new housing, Prop C will create a stronger, and healthier downtown neighborhood, and a more sustainable and inclusive city for all.
Mayor London Breed
Pastor Amos Brown
Dr. Veronica Hunnicutt
Dr. James McCray Jr., Executive Director, Tabernacle CDC
David Miles Jr., Founder, Church of 8 Wheels
Meaghan Mitchell
Bayard Rustin Coalition
The true source(s) of funds for the printing fee of this argument: Coalition for More Housing & Revitalized Downtown San Francisco.
The sole contributor to the true source recipient committee: Emerald Fund Inc.
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Paid Argument IN FAVOR of Proposition C
LGBTQ COMMUNITY LEADERS SUPPORT PROP C
The cost of housing in San Francisco is still too high. Something needs to be done to make owning and renting a home more affordable.
That's where Prop C comes into play.
Prop C is a new way to tackle our housing crisis, while also reducing all the empty downtown buildings leftover from the pandemic.
Prop C uses a new approach that temporarily waives the City's transfer tax to make it more cost-effective to turn our empty office buildings into homes. It's literally a win-win: instead of starting from scratch, we can create new housing, breathe life into vacant buildings, and remake our downtown.
Let's not go backwards. Let's rebuild our downtown to make it more vibrant and immune to the next downturn. Let's get creative and turn older, commercial buildings into classy, new homes. Other cities like New York are already adopting similar strategies. Let's do the same, so the naysayers that predicted our city's demise are proven wrong.
Vote Yes on C and stand with those that want to see a more affordable San Francisco and a more innovative downtown.
Alice B. Toklas LGBTQ Democratic Club
Senator Scott Wiener
Supervisor Matt Dorsey
Supervisor Rafael Mandelman
Cyn Wang, Entertainment Commissioner*
Mike Chen, DCCC Candidate
Luis Zamora, DCCC Candidate
Bayard Rustin Coalition
*For identification purposes only; author is signing as an individual and not on behalf of an organization.
The true source(s) of funds for the printing fee of this argument: Coalition for More Housing & Revitalized Downtown San Francisco.
The sole contributor to the true source recipient committee: Emerald Fund Inc.
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Paid Argument IN FAVOR of Proposition C
San Francisco Democrats for Change Endorse Prop C
Everyone can agree that public safety, homelessness, and the cost of housing are the main issues concerning all San Franciscans. What if we told you there's a way to help address all three of those issues? Well, there is, and it's called Prop C.
Prop C reduces the transfer tax so buildings currently sitting empty can be turned into housing. Repurposing our empty buildings will mean more housing and less vacant storefronts. It will mean less unattended public spaces that can lead to graffiti, crime, homelessness, and drug dealing.
Prop C will help transform our downtown from being reliant on traditional 9-5 businesses.
By placing more people in homes downtown, Prop C will create a new 24-hour downtown neighborhood, with diverse nightlife, activity, businesses, and people - all next to easily accessible public transportation.
The pandemic and shift to working from home has dramatically changed the way many people work and live. It's time to build a downtown that is sustainable and able to weather future economic downturns.
Vote Yes on Prop C to put downtown San Francisco on the path to recovery!
Assembly District 19
Marjan Philhour
Michela Alioto-Pier
Sara Barz
Mike Chen
Lanier Coles
Parag Gupta
Brian Quan
Catherine Stefani
Jade Tu
Assembly District 17
Cedric Akbar
Carrie Elise Barnes
Trevor Chandler
Matt Dorsey
Emma Heiken
Lily Ho
Michael Lai
Laurence Lem Lee
Peter Lee
Joe Sangirardi
Nancy Tung
Luis Zamora
The true source(s) of funds for the printing fee of this argument: Coalition for More Housing & Revitalized Downtown San Francisco.
The sole contributor to the true source recipient committee: Emerald Fund Inc.
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Paid Argument IN FAVOR of Proposition C
Prop C Will Help Create a Thriving Downtown
Big cities like San Francisco need a thriving downtown. The pandemic and shift to working from home has gutted our downtown.
The current situation is unsustainable. We can't let San Francisco become a failed city.
We need an all-hands approach that encourages investment and a new model for our downtown.
Prop C is a major part of the strategy.
Prop C will waive the transfer tax on projects that convert commercial buildings into homes that people can live in.
Prop C will reduce office vacancies, help with the city's housing shortage, and create a more sustainable, lively neighborhood.
After the auto companies outsourced manufacturing jobs, Detroit was able to come back from the brink. After 9-11, lower Manhattan was reimagined and rebuilt. San Francisco can do the same.
On March 5, Vote Yes on C.
TogetherSF Action
The true source(s) of funds for the printing fee of this argument: Coalition for More Housing & Revitalized Downtown San Francisco.
The sole contributor to the true source recipient committee: Emerald Fund Inc.
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Paid Argument IN FAVOR of Proposition C
San Francisco Families Support Prop C
As parents choosing to raise our families in San Francisco, we strongly urge you to support Prop C this March. Prop C will temporarily waive the city's transfer tax to make it easier to convert downtown office buildings into housing.
Creating more housing at all levels is vitally important to make our city more affordable for families, renters, and lower-income individuals.
It does not make sense to have a bunch of empty office buildings downtown. Prop C is a creative way to make the cost of office conversions more enticing to the companies interested in turning the properties into homes.
Infusing downtown with more families and young people who are committed to raising their kids in an urban environment will create a new, more sustainable downtown. That will bring life to our city, after we have endured so much the last few years.
For those concerned about reducing the City’s influx of taxes, there is a built-in provision that ends the transfer tax after a few years.
Please support this temporary measure to rebuild our downtown and make housing more affordable for all.
Please support Prop C to turn empty office buildings into new downtown housing.
Westside Family Democratic Club
The true source(s) of funds for the printing fee of this argument: Yes on C, Coalition for More Housing & Revitalized Downtown San Francisco.
The sole contributor to the true source recipient committee: Emerald Fund Inc.
Paid Arguments Against Proposition C
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Paid Argument AGAINST Proposition C
Threatens Affordable Housing
Join San Francisco's tenant advocacy and affordable housing organizations and vote NO on C.
Don't be fooled. City law already gives tax breaks to developers willing to build affordable housing for our city. Proposition C just gives those tax breaks to billionaire luxury developers who will build more units no one can afford in our already empty downtown.
Every year, San Francisco exceeds its goals of creating market-rate, luxury housing, but falls short for homes that working people can afford. Proposition C does nothing to change that-- it is a luxury developer giveaway that ONLY helps build those luxury homes.
Stop the corporate giveaway -- Vote NO on C.
Affordable Housing Alliance
Council of Community Housing Organizations
Community Tenants Association
Eviction Defense Collaborative
Tenants and Owners Development Development Corporation (TODCO)
Mission Economic Development Agency (MEDA)
San Francisco Anti Displacement Coalition
The true source(s) of funds for the printing fee of this argument: Stop the Giveaway, NO on C.
The three largest contributors to the true source recipient committee: 1. Affordable Housing Alliance Political Action Committee, 2. Council of Community Housing Organizations, 3. Small Business Forward.
2
Paid Argument AGAINST Proposition C
San Francisco's Democratic leaders ask you to vote NO on C
For the past 15 years, San Francisco Democrats have supported progressive tax reform that increased transfer taxes on the most wealthy corporations and individuals — those who are selling property valued at $5 million or more.
These progressive tax reforms have resulted in hundreds of millions of dollars for affordable housing, rent assistance and other vital programs. Now they are under attack by Prop C.
Prop C takes the power to reduce transfer taxes away from voters and puts it in the hands of City Hall politicians, many of whom are supported by the billionaires and real estate corporations who opposed the transfer tax in the first place. If Prop C passes, it could mean a tax giveaway for the wealthiest, and a reduction in vital funding for programs working families depend upon.
Please join us as we need to stand together against the greed of billionaires and vote NO on Proposition C.
San Francisco Democratic County Central Committee
San Francisco Democratic Party Vice Chair Li Miao Lovett
San Francisco Democratic Party Vice Chair Peter Gallotta
San Francisco Democratic Party Vice Chair Leah LaCroix
San Francisco Democratic Party Corresponding Secretary Anabel Ibáñez
DCCC Member Gloria Berry
Former Supervisor Gordon Mar
Former Supervisor John Avalos
Haight Ashbury Neighborhood Council
Richmond District Democratic Club
Alida Fisher, Commissioner, San Francisco Board of Education
The true source(s) of funds for the printing fee of this argument: Stop the Giveaway, NO on C.
The three largest contributors to the true source recipient committee: 1. Affordable Housing Alliance Political Action Committee, 2. Council of Community Housing Organizations, 3. Small Business Forward.
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Paid Argument AGAINST Proposition C
Let small businesses recover— giant corporations don't need huge tax breaks. Vote NO on C.
The Real Estate Transfer Tax, approved by voters in November 2020, has provided San Francisco with more than $400 million year over year in additional revenue to help fund badly needed affordable housing. It has been a wild success.
Prop C, which would overturn this tax, is nothing more than an enormous tax break to those who need it the least — billionaires, downtown corporations and big real estate investors. The proposition will risk losing a huge source of funding for affordable housing by taking the power away from the voters and putting it in the hands of a simple majority of the Board of Supervisors.
Small businesses are struggling post-pandemic as sales have not returned to what they were pre-2020. Due to inflation, small businesses have seen an increase in cost of goods and services, all while commercial rent and payroll expenses remain high.
We support programs that improve the economic health of the community and believe that businesses profiting the most from the current conditions should be the ones investing the most to make our city a better place to live— leaving behind a legacy that allows others to economically prosper as well.
Join small business owners and vote NO on Proposition C.
Small Business Forward
Alembic
Bar Part Time
Bisou Bisou Wines
Body Philosophy Club
Booksmith
Day Moon
Gravel & Gold
Happy House
No Shop
Mercury Cafe
Sour Cherry Comics
Yo También LLC
The true source(s) of funds for the printing fee of this argument: Stop the Giveaway, NO on C.
The three largest contributors to the true source recipient committee: 1. Affordable Housing Alliance Political Action Committee, 2. Council of Community Housing Organizations, 3. Small Business Forward.
4
Paid Argument AGAINST Proposition C
Stand up for all of our communities - vote NO on C
San Francisco's Black community has been hit hard by our affordable housing crisis. While only 4% of the population of San Francisco, African Americans make up 37% of our homeless population.
As African American leaders, we oppose Prop C because it will not deliver housing to communities like ours who need help the most.
Instead, Prop C giveaways tax breaks to large corporations to encourage them to change commercial office space to MARKET RATE, LUXURY HOUSING. This hurts two ways — first, it encourages developers to build more luxury housing rather than homes working families can afford. Second, it reduces funding that is currently dedicated to real affordable housing and rental assistance that prevents more homelessness.
We need real solutions, not tax breaks for the wealthy. Vote NO on C.
Supervisor Shamann Walton
San Francisco Democratic Party Vice Chair Leah LaCroix
DCCC Member Gloria Berry
The true source(s) of funds for the printing fee of this argument: Stop the Giveaway, NO on C.
The three largest contributors to the true source recipient committee: 1. Affordable Housing Alliance Political Action Committee, 2. Council of Community Housing Organizations, 3. Small Business Forward.
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Paid Argument AGAINST Proposition C
Prop C is the wrong solution.
San Francisco's Asian & Pacific Islander communities face tough housing challenges. Our low-income senior renters are sometimes forced to choose between food and rent. Housing, especially in Chinatown, is extremely overcrowded. And fewer and fewer families can afford to purchase a home or rent an apartment large enough for a family.
Prop C promises to address these problems, but it's the wrong solution. Instead of encouraging affordable housing, it focuses on luxury housing we can't afford. And it gives our hard-earned tax dollars to immensely wealthy developers and corporations — while reducing funding for affordable housing and other vital public services like community and pedestrian safety.
We are united in our opposition to this measure. Please join us and vote NO on Proposition C.
Former Supervisor Gordon Mar
Former Supervisor Jane Kim
San Francisco Democratic Party Vice Chair Li Miao Lovett
Tenderloin Chinese Rights Association
The true source(s) of funds for the printing fee of this argument: Stop the Giveaway, NO on C.
The three largest contributors to the true source recipient committee: 1. Affordable Housing Alliance Political Action Committee, 2. Council of Community Housing Organizations, 3. Small Business Forward.
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Paid Argument AGAINST Proposition C
Prop C is a false solution, vote NO
In San Francisco, Latino renters must spend an average of 75% of their income just to pay rent. Homelessness in the Latino community skyrocketed by 55% during the pandemic. Our housing challenge is urgent, and getting worse.
We are united against Prop C because it is a FALSE SOLUTION to our problems of housing and economic recovery. At the end of the day, the only housing that will be built by Prop C is downtown luxury housing that is far out of reach for working families. And it will be built at the expense of affordable housing programs that, while not enough, are making a difference.
We are united in our opposition to Prop C, the wrong direction for San Francisco.
Latino Task Force
Former Supervisor John Avalos
San Francisco Democratic Party Corresponding Secretary Anabel Ibáñez
The true source(s) of funds for the printing fee of this argument: Stop the Giveaway, NO on C.
The three largest contributors to the true source recipient committee: 1. Affordable Housing Alliance Political Action Committee, 2. Council of Community Housing Organizations, 3. Small Business Forward.
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Paid Argument AGAINST Proposition C
Prop C hurts the LGBTQ+ community
Prop C will allow extremely wealthy developers, real estate investors and huge corporations to escape paying their fair share of taxes that fund vital services for our community.
In return, it makes no requirements that they build affordable housing — not a single unit! Instead, they stand to pocket millions in tax-savings while working San Franciscans continue to face an unaffordable housing market.
Prop C will hurt LGBTQ+ community by decreasing funds that are aimed at providing affordable housing and rental assistance to both low-income seniors and LGBTQ+ youth, who continue to suffer some of the highest rates of homelessness among all San Francisco youth.
We need critical resources for our most underserved communities - not another giveaway to the wealthy few. Join us and vote NO on Proposition C.
Harvey Milk LGBTQ Democratic Club
Former State Senator Mark Leno
Former Assemblymember Tom Ammiano
BART Director Bevan Dufty
San Francisco Democratic Party Vice Chair Peter Gallotta
The true source(s) of funds for the printing fee of this argument: Stop the Giveaway, NO on C.
The three largest contributors to the true source recipient committee: 1. Affordable Housing Alliance Political Action Committee, 2. Council of Community Housing Organizations, 3. Small Business Forward.
Legal Text
Ordinance amending the Business and Tax Regulations Code to exempt from the real property transfer tax the first transfer of property that has been converted from nonresidential to residential use and to authorize the Board of Supervisors to amend or repeal any aspect of the real property transfer tax, including adopting additional exemptions from the tax, without voter approval to the extent constitutionally permitted; and amending the Planning Code to allow square footage of office space that is converted to non-office use or demolished to be available for allocation to office developments of at least 50,000 square feet in gross floor area, and to allow demolished office space that is preexisting on a site to be deducted from the required allocation for an office development on that same site.
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subsections or parts of tables.
Be it ordained by the People of the City and County of San Francisco:
Section 1. Article 12-C of the Business and Tax Regulations Code is hereby amended by adding Sections 1108.7 and 1119, to read as follows:
SEC. 1108.7. EXEMPTION FOR CONVERSION TO RESIDENTIAL USE.
(a) Definitions. For purposes of this Section 1108.7, the following terms have the following meanings:
“Converted Residential Property” has the meaning set forth in subsection (b) of this Section 1108.7.
“Development Application” means any application for a building permit, site permit, conditional use authorization, variance, or for any other authorization of a conversion of a property or portion thereof from a Nonresidential Property to a Residential Property required to be approved by the Planning Department, Zoning Administrator, Planning Commission, or Historic Preservation Commission.
“Exemption Certificate” means a certificate issued by the Planning Department showing:
(1) the square feet of gross floor area being transferred that is a First Transfer of Converted Residential Property that falls within the 5,000,000 square foot limitation in subsection (c) of this Section 1108.7; and
(2) the total square feet of gross floor area being transferred.
“Final Approval” means:
(1) approval of a conversion’s first Development Application, unless such approval is appealed;
(2) if subsection (1) does not apply and a conversion only requires a site or building permit, issuance of the first site or building permit, unless such permit is appealed; or
(3) if the first Development Application or first site or building permit is appealed, then the final decision upholding the Development Application, or first site or building permit, on the appeal by the relevant City board or commission.
“First Certificate of Occupancy” means the earlier of a certificate of final completion and occupancy, or a temporary certificate of occupancy, as those terms are used in Section 109A of the Building Code, as may be amended from time to time.
“First Construction Document” means the first building permit, building permit addendum, or other document that authorizes construction of the conversion, not including permits or addenda for demolition, grading, shoring, pile driving, or site preparation work.
“First Transfer” means the first transfer of a Converted Residential Property following issuance of its First Certificate of Occupancy if such transfer would have been subject to the tax imposed under this Article 12-C absent the exemption in this Section 1108.7. For Converted Residential Properties transferred in part, the first taxable transfer of each portion of a Converted Residential Property following issuance of its First Certificate of Occupancy constitutes a “First Transfer,” but subsequent transfers of the same portion do not constitute “First Transfers.” Notwithstanding the prior sentence, a “First Transfer” does not include any transfer of all or a portion of a Converted Residential Property after a transfer subject to the exemption in this Section 1108.7 where the tax on such transfer would have been imposed on the fair market value of the entire Converted Residential Property absent the exemption in this Section 1108.7.
“Nonresidential Property” means any property or portion of a property, other than a Residential Property and other than a property that contains no buildings or other structures.
“Qualifying Certificate” means a certificate issued by the Planning Department showing the square feet of gross floor area that is proposed to qualify as Converted Residential Property within the 5,000,000 square foot limitation in subsection (c) of this Section 1108.7.
“Residential Property” means a property or portion of a property with a structure or structures or portion thereof that may only be used for housing individuals, excluding travelers, vacationers, or other similarly transient individuals, for greater than 30 consecutive days (including permitted incidental uses). It includes, but is not limited to, dwelling units, student housing, group housing, residential hotels, senior housing, nursing homes, homeless shelters, and residential care facilities, regardless of how such uses would be considered under the Planning Code. “Residential Property” includes 100% of the gross floor area of a live/work unit. In properties with mixed residential and non‑residential uses, “Residential Property” includes mechanical space and common areas including but not limited to circulation, lobbies, storage rooms, balconies, roof terraces, laundry rooms, and other resident amenity spaces, and including parking spaces or garages, in the proportion that such areas serve the residential uses to the total square feet of gross floor area served by such areas.
(b) Converted Residential Property.
(1) For purposes of this Section 1108.7, “Converted Residential Property” means a property or portion thereof that has received a First Certificate of Occupancy following conversion from a Nonresidential Property to a Residential Property, including conversions involving the demolition of Nonresidential Property to construct new Residential Property, and that meets all of the following requirements for such conversion:
(A) received a Final Approval before January 1, 2030;
(B) a Qualifying Certificate was requested with respect to the property or portion thereof on or after the effective date of this Section 1108.7, but before January 1, 2030;
(C) within three years of the later of receiving Final Approval or the effective date of this Section 1108.7, but not before the effective date of this Section, received a First Construction Document; and
(D) at the time of the transfer for which the exemption in this Section 1108.7 is claimed, the square feet of gross floor area of the improvements on the property divided by the lot area of that property is at least one.
(2) New square feet of Residential Property gross floor area in excess of the square feet of gross floor area of the original Nonresidential Property shall constitute Converted Residential Property only up to the new square feet of gross floor area that equals 10% of the square feet of gross floor area that was converted from Nonresidential Property to Residential Property.
(3) For demolitions of Nonresidential Property to construct new Residential Property, “Converted Residential Property” includes only the square feet of gross floor area of Residential Property in the new building that exceeds the square feet of gross floor area of Residential Property in the demolished building, up to a maximum square feet of gross floor area of Converted Residential Property equal to the total gross floor area of Non-Residential Property in the demolished building plus 10%.
(c) Exemption from Tax. Any deed, instrument, or writing that effects a First Transfer of Converted Residential Property, up to the first 5,000,000 square feet of gross floor area of Converted Residential Property, shall be exempt from the tax imposed under this Article 12-C, except as otherwise provided in this Section 1108.7. For purposes of this subsection (c), the “first 5,000,000 square feet of gross floor area” shall be determined in the order that the Planning Department receives each request for a Qualifying Certificate and shall be aggregated across all Qualifying Certificates issued and outstanding. If a deed, instrument, or writing effects a transfer of property only a portion of which is a First Transfer of Converted Residential Property, or only a portion of which is within the 5,000,000 square foot limitation, the tax shall apply to the proportion of the consideration or value that the square feet of gross floor area transferred that is not a First Transfer of Converted Residential Property or that is not within the 5,000,000 square foot limitation bears to the total square feet of gross floor area transferred, with the rate in Section 1102 determined based solely on that proportional consideration or value. Land associated with gross floor area qualifying for the exemption in this subsection (c) shall also be exempt in the proportion that the square feet of gross floor area transferred that is exempt under this subsection (c) bears to the total square feet of gross floor area transferred.
(d) Requirements for Exemption. Every person claiming the exemption under this Section 1108.7 must do all of the following:
(1) Request, at any time after Final Approval and in the form and manner required by the Planning Department, a Qualifying Certificate from the Planning Department. At any time after receiving a Qualifying Certificate, a request to confirm or adjust the square feet of gross floor area that is proposed to qualify as Converted Residential Property may be submitted to the Planning Department in the form and manner required by the Planning Department. Any increase in the square feet of gross floor area requested under this subsection (d)(1) that exceeds the qualifying square feet of gross floor area stated on the Qualifying Certificate or any amendment thereto shall qualify for the exemption in this Section 1108.7 only to the extent that the 5,000,000 square foot limitation in subsection (c) has not been exceeded at the time the Planning Department approves the requested increase.
(2) After receiving the First Certificate of Occupancy and in the form and manner required by the Planning Department, request an Exemption Certificate from the Planning Department for each transfer for which the person intends to claim the exemption in this Section 1108.7. Any increase in the square feet of gross floor area requested under this subsection (d)(2) that exceeds the qualifying square feet of gross floor area stated on the Qualifying Certificate or any amendment thereto shall qualify for the exemption in this Section 1108.7 only to the extent that the 5,000,000 square foot limitation in subsection (c) has not been exceeded at the time the Planning Department issues the Exemption Certificate.
(3) For each transfer for which the exemption in this Section 1108.7 is claimed, submit the Exemption Certificate to the County Recorder at the time such person submits the affidavit described in subsection (c) or (d) of Section 1111.
(4) Failure to timely satisfy the requirements of this subsection (d) renders the transfer ineligible for the exemption in this Section 1108.7.
(e) Effect of Exemption on Other Taxes. Any tax exempted under this Section 1108.7 shall be deemed to have been paid for purposes of Section 954(d) of Article 12-A-1 of the Business and Tax Regulations Code.
(g) Sunset Date. This Section 1108.7 shall expire by operation of law at the end of the day on December 31, 2054, and shall not apply to any deeds, instruments, or writings delivered on or after January 1, 2055.
SEC. 1119. AMENDMENT OF ARTICLE.
The Board of Supervisors may amend or repeal this Article 12-C by ordinance without a vote of the people except as limited by the California Constitution.
Section 2. Article 12-C of the Business and Tax Regulations Code is hereby amended by revising Section 1102, to read as follows:
SEC. 1102. TAX IMPOSED.
There is hereby imposed on each deed, instrument or writing by which any lands, tenements, or other realty sold within the City and County of San Francisco shall be granted, assigned, transferred or otherwise conveyed to, or vested in, the purchaser or purchasers, or any other person or persons, by his or her or their direction, when the consideration or value of the interest or property conveyed (not excluding the value of any lien or encumbrances remaining thereon at the time of sale) (a) exceeds $100 but is less than or equal to $250,000, a tax at the rate of $2.50 for each $500 or fractional part thereof; or (b) more than $250,000 and less than $1,000,000, a tax at the rate of $3.40 for each $500 or fractional part thereof for the entire value or consideration, including, but not limited to, any portion of such value or consideration that is less than $250,000; or (c) at least $1,000,000 and less than $5,000,000, a tax at the rate of $3.75 for each $500 or fractional part thereof for the entire value or consideration, including, but not limited to, any portion of such value or consideration that is less than $1,000,000; or (d) at least $5,000,000 and less than $10,000,000, a tax at the rate of $11.25 for each $500 or fractional part thereof for the entire value or consideration, including, but not limited to, any portion of such value or consideration that is less than $5,000,000; or (e) at least $10,000,000 and less than $25,000,000, a tax at the rate of $27.50 for each $500 or fractional part thereof for the entire value or consideration, including but not limited to, any portion of such value or consideration that is less than $10,000,000; or (f) at least $25,000,000, a tax at the rate of $30 for each $500 or fractional part thereof for the entire value or consideration, including but not limited to, any portion of such value or consideration that is less than $25,000,000. The People of the City and County of San Francisco authorize the Board of Supervisors to enact ordinances, without further voter approval, that will exempt rent-restricted affordable housing, as the Board may define that term, from the increased tax rate in subsections (d), (e), and (f).
Section 3. Background on Office Development Allocations Under Sections 4 and 5.
(a) The City’s Office Allocation Program (Planning Code Sections 320 et seq.) sets an annual limit for new office development. But the Office Allocation Program does not increase the annual limit to reflect conversions or demolitions of existing office space, which decrease the City’s preexisting supply of office space. Sections 4 and 5 of this measure would allow office space that is converted to a non-office use or demolished to be returned to the Office Allocation Program and made available for allocation to new office developments of at least 50,000 square feet in gross floor area.
(b) To construct a new office development, a project sponsor must obtain an allocation from the Office Allocation Program. Where new office space is added to a site with existing office space, the Office Allocation Program permits converted or modified, but not demolished, office space to be deducted from the required allocation. Section 4 of this measure would permit demolished office space to be deducted from the required allocation.
(c) To address situations where demolished or converted office space returns to the Office Allocation Program and office space is subsequently proposed on that site, Section 5 of this measure provides that the amount of preexisting office space on the site shall be reduced by the amount of office space that was returned to the Office Allocation Program.
Section 4. Article 3 of the Planning Code is hereby amended by revising Sections 320 and 321, to read as follows:
SEC. 320. OFFICE DEVELOPMENT: DEFINITIONS.
When used in Sections 320–325, the following terms shall each have the meaning indicated. See also Sections 102 and 321.4.
(a) “Additional office space” shall mean the number of square feet of gross floor area of office space created by an office development, reduced, in the case of a modification, orconversion, or demolition, by the number of square feet of gross floor area of preexisting office space which is lost.
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SEC. 321. OFFICE DEVELOPMENT: ANNUAL LIMIT.
(a) Limit.
(1) (A) No office development may be approved during any approval period if the additional office space in that office development, when added to the additional office space in all other office developments previously approved during that approval period, would exceed either 950,000 square feet or the any lesser amount resulting from the calculation of available office development pursuant to this Section 321 et. seq.application of Section 321.1. To the extent the total square footage allowed in any approval period is not allocated, the unallocated amount shall be carried over to the next approval period.
(B) For the one-year approval period that commences in October 2020, the Large Cap Maximum shall be permanently reduced by a percentage equal to the percentage by which the total of New Affordable Housing Units Produced in the City during the five calendar years of 2015-2019 is less than the combined total of five years of the Annual RHNA Affordable Housing Goal (i.e., 10,210 units). In no case shall operation of this Ssubsection (a)(1)(B) act to increase the office development permitted pursuant to Ssubsection (a)(1)(A).
(C) Thereafter, for the one-year approval period that commences in October 2021 and for all subsequent annual approval periods, the Large Cap Maximum for each single year shall be permanently reduced by a percentage equivalent to the percentage by which New Affordable Housing Units Produced in the City during the single complete calendar year prior to the calendar year in which the approval period commenced is less than the annual RHNA Affordable Housing Goal. In no case shall operation of this Ssubsection (a)(1)(C) act to increase the office development permitted pursuant to Ssubsection (a)(1)(A).
(D) For any Approval Period commencing on or after October 17, 2024, following the completion of the calculations set forth in subsection (a)(1)(C), the Large Cap Maximum shall be increased by any Converted Square Footage, as provided in Section 321.4.
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Section 5. Article 3 of the Planning Code is hereby amended by adding Section 321.4, to read as follows:
SEC. 321.4. CONVERTED SQUARE FOOTAGE; ANNUAL LIMIT INCREASE.
(a) Definitions. For purposes of this Section 321.4, the following terms have the following meanings:
“First Certificate of Occupancy” has the meaning set forth in Section 401, as amended from time to time.
(b) Increases to Annual Limit.
(1) For any projects that convert or demolish Office Space on or after March 5, 2024, the Planning Department shall track the total Converted Square Footage resulting from the conversions and demolitions during each Approval Period, and add the total Converted Square Footage to the Large Cap Maximum annually.
(2) For any project that converted or demolished office space before March 5, 2024, the Large Cap Maximum shall be increased by the total Converted Square Footage of such projects no later than the Approval Period beginning October 17, 2024, consistent with the procedures in subsection (c), including any adjustments pursuant to subsection (c)(2).
(3) Any Converted Square Footage calculated pursuant to subsections (b)(1)-(2) of this Section 321.4 shall be treated the same as the newly available office development pursuant to Section 321(a)(1)(A), including being carried over to the next Approval Period; however, pursuant to Section 321(a)(1)(D), such Converted Square Footage shall not be subject to the reductions set forth in Section 321(a)(1)(C).
(c) Administration.
(1) No later than September 1, 2024, the Zoning Administrator shall publish an inventory of projects that converted or demolished Office Space between January 1, 1986 and March 5, 2024 (“Inventory”), inclusive, and the Converted Square Footage proposed to be added to the Large Cap Maximum for the Approval Period beginning October 17, 2024. The Zoning Administrator shall provide the public with an opportunity for meaningful review and comment on the Inventory. Following public review and comment, the Zoning Administrator shall adopt the Inventory, including any revisions, pursuant to the standard set forth in subsection (c)(3) of this Section 321.4. The Zoning Administrator shall then update the Large Cap Maximum accordingly.
(2) Should the Zoning Administrator identify additional Converted Square Footage after the deadlines specified in subsection (c)(1), the Zoning Administrator shall publish an updated Inventory. Following public review and comment, the Zoning Administrator shall adopt the updated Inventory, including any revisions, pursuant to the standard set forth in subsection (c)(3) of this Section 321.4. The new Converted Square Footage shall be added to the Large Cap Maximum for the Approval Period following final approval of the updated Inventory.
(4) The Zoning Administrator is authorized to adopt such rules and regulations as the Zoning Administrator determines are appropriate to carry out the purposes and provisions of this Section 321.4, including but not limited to the process for verifying increases to the Large Cap Maximum resulting from any Converted Square Footage.
(d) Loss of Existing Office Space. Upon the issuance of a First Certificate of Occupancy or completed demolition permit for a project that converted or demolished Office Space, the amount of Preexisting Office Space on the site shall be reduced by the amount of Converted Square Footage that was returned to the Large Cap Maximum.
Section 6. Scope of Ordinance. In enacting this ordinance, the People of the City and County of San Francisco intend to amend only those words, phrases, paragraphs, subsections, sections, articles, numbers, punctuation marks, charts, diagrams, or any other constituent parts of the Municipal Code that are explicitly shown in this ordinance as additions or deletions, in accordance with the “Note” that appears under the official title of the ordinance.
Section 7. Severability. If any section, subsection, sentence, clause, phrase, or word of this ordinance, or any application thereof to any person or circumstance, is held to be invalid or unconstitutional by a decision of a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions or applications of the ordinance. The People of the City and County of San Francisco hereby declare that they would have enacted this ordinance and each and every section, subsection, sentence, clause, phrase, and word not declared invalid or unconstitutional without regard to whether any other portion of this ordinance or application thereof would be subsequently declared invalid or unconstitutional