Friday, June 25, 2010

CALL TO ACTION: Stop the Commercial Rent Tax at the Small Business Commission Meeting on June 28, 2010!



BOMA San Francisco Members:

Supervisor David Chiu's Commercial Rent Tax measure is moving forward, with another hearing at the Small Business Commission scheduled on Monday, June 28, 2:00 p.m. at City Hall, Room 400 and a Rules Committee hearing at the Board of Supervisors planned July 15.

Supervisor Chiu’s proposal would place yet another economic burden upon all local employers, disproportionately impact small business and non-profits, stunt job growth and delay economic recovery.  The proposal would trade a payroll tax on some small businesses for an occupancy tax on a far larger group (commercial rent tax supporters hope that the few small businesses that would see a little relief will speak up, and that the many more small businesses who will see their costs escalate won’t – so they can pass this rent tax).

Please send a message today to help the Small Business Commission see the folly and subterfuge of this proposal!

Before 10 a.m. Monday, June 28, 2010, please email your OPPOSITION to the Commercial Rent Tax to Regina Dick-Endrizzi, Executive Director, Small Business Commission, at regina.dick-endrizzi@sfgov.org.   In your email or phone call, please reference Small Business Commission Meeting, Monday, June 28, 2010, 2:00 p.m. (Her number is 415-554-6481).

NOTE: If you can speak your mind in person, please consider attending the meeting on Monday.  Please click here for the meeting agenda.

The proposed commercial rent tax would:
  • Hurt many small businesses who will see their occupancy costs increase.
  • Kill job expansion, especially in the small business sector.
  • Harm San Francisco’s fragile economy by extending the economic downturn.
  • Reduce the local tax base by driving many more businesses out of the City to avoid the tax.
  • Hand San Francisco another competitive disadvantage by discouraging businesses from locating here
  • Add volatility to San Francisco’s revenue base due to the great swings in commercial rental rates and occupancy levels.
  • Disadvantage many more small businesses than would find relief… it’s a shell game, with many more ‘losers’ than ‘winners’.
  • Trade minimal relief for a few small businesses who now pay the payroll tax, for another occupancy cost penalty for many more businesses.

Carried Interest Defeated in Senate

BOMA San Francisco Members:

On June 24, 2010, the Senate cloture vote to end debate on HR 4213-- American Jobs and Closing Tax Loopholes Act of 2010 or better known as the Extender Package, failed by a vote of 57-41. This is the Senate’s third unsuccessful attempt this month to limit debate and move to an up or down vote on a bill that includes the tax increase on Carried Interest as a revenue off-set. The Senate Leadership will likely set aside the legislation for now. Moving forward, it is unclear when it will revisit the Extenders Package or how they will address Carried Interest in the future.

BOMA International and its partners in the commercial real estate industry could not have won this battle without your help! Thanks to all who called and wrote their senators and representatives in this effort. However, while we may have won the battle, the war is not over. We expect Congress to address this issue once more before the year is over, and we will likely call on you to express your opposition to this ill-advised tax policy. In the meantime, the commercial real estate industry will continue working to educate policymakers on the broad, negative impact that such tax proposals would have on real estate, job creation and economic growth.

Wednesday, June 23, 2010

Fix Muni Now - THE LAST DAY TO TURN IN PETITIONS IS MONDAY, JUNE 28.




BOMA San Francisco Members:


The Fix Muni Now campaign is gathering together all of the signatures volunteers have collected in order to turn them in to the Department of Elections.

THE LAST DAY TO TURN IN PETITIONS IS MONDAY, JUNE 28.

Next week, the campaign will be processing all of the petitions they have gathered for submission. If you have a petition with any signatures on it, please get it back to them! You can return petitions to the San Francisco Planning and Urban Research Association (SPUR) Urban Center, 654 Mission Street, at any time of day or night between now and Monday.  If the Urban Center is closed, simply slip the petitions under the door.

You can also submit petitions at any of their remaining signature-gathering events (list available here), or you can mail them--make sure to use $0.61 in postage per petition--to their PO Box:

San Franciscans for a Better Muni
Post Office Box 192023
San Francisco, CA 94119 

PLEASE MAKE SURE YOU HAVE CORRECTLY FILLED OUT THE AFFIDAVIT OF CIRCULATOR.   Every field must be filled out. For "Place of signing by circulator," put the city in which they were gathered (e.g., "San Francisco"). For an example of how to properly fill out the affidavit, see the image below.


Sample Affidavit



If you have any questions, do not hesitate to send the campaign an email at info@fixmuninow.com, or call (415) 640-7278.


The News Links - June 21-23, 2010

Commercial Real Estate
  • Some leveraged CRE owners beginning to find rescue capital for troubled assets.
  • CRE markets have moved away from the edge, but not out of trouble.
  • Moody's: Commercial real estate prices increase 1.7% in April.
  • Demand for restructurings increases as wave of maturities come due in 2012.
San Francisco
Marin/San Mateo/Sonoma
California
Energy & Environment
General

Tuesday, June 22, 2010

California Legislature - Priority Bills

BOMA San Francisco Members:

Your BOMA Advocacy Team and fellow BOMA San Francisco members will be in Sacramento this week for the 2010 California Commercial Real Estate Summit to talk to our elected Bay Area leaders in the California State Legislature on the following priority measures (click on the links below to review the bills):

Support 

AB 1693 by Assemblymember Fiona Ma  (D-San Francisco)

Measure will modify the code adoption cycle and extend it to an 18 months process, adding 3 month to the interim update process. This will allow more time to write consider new code impacts before adoption, and provide additional time for education and training.


SB 476 by Senator Lou Correa (D - Santa Ana)

Measure will help move forward construction and redevelopment projects by updating and clarifying procedures in the environmental permit process. Protects a previously occupied retail structure and associated parking lot when an alteration or reuse will improve the energy efficiency or reduce the greenhouse gas emissions of the existing structure and associated parking lot, provided the alterations will not result in a material increase of the footprint or floor area ratio of the existing retail structure and associated parking lot.

Oppose

AB 737 by Assemblymember Wes Chesbro (D - Eureka) 

Mandatory Commercial Recycling. Although our industry supports commercial recycling, this measure in redundant and unnecessary in that the new CalRecycle department is finalizing regulations that will enact such a requirement. Furthermore, this measure will require the department , to ensure that 75% of all solid waste generated is source reduced, recycled, or composted. This high rate of mandated diversion is a concern. 

AB 2492 by Assemblymember Tom Ammiano (D - San Francisco) 

Split Roll Property Tax. Measure will instead specify that when 100% of the ownership interests in a legal entity, as defined, are sold or transferred in a single transaction, as specified, the real property owned by that legal entity has changed ownership, whether or not anyone legal entity 01' person that is a patty to the transaction acquires more than 50% of the ownership interests. The bill would require the State Board of Equalization to notify assessors when a change ill ownership as so described occurs. This bill is at best redundant of current law - at worst, it is a fundamental change in commercial protections afforded under Proposition 13.

SB 1316 by Senator Gloria Romero (D - Los Angeles)

This measure takes California out of conformity with federal law for 1031 Like-Kind Exchanges. Measure will exclude any exchange of out-of-state real property that is purchased in exchange for real property located in California. Measure provides a disincentive for new investment ill California property, puts current property owners at a disadvantage for using a common tax practice, would generate retaliation from other states, and most likely violates the Commerce Clause of the U.S. Constitution.

Thank your to our partners at BOMA California for their continued hard work in Sacramento.  If you have any questions on these measures, please contact Matthew Hargrove at mhargrove@cbpa.com.  

Friday, June 18, 2010

Fix Muni Now - Three Weeks Left




BOMA San Francisco Members:

As you may have heard, the Muni operators union, TWU 250-A, rejected the modest concessions proposed by the Mayor's Office. Even after every other city union has gone through rounds of cuts to hours and pay, the TWU rejected very modest concessions that would have restored service that had been cut. We need to qualify real Muni reform for the November ballot now more than ever.

There's just three weeks left to gather the signatures the campaign needs to get Muni reform on the ballot. Can you help?

In addition to signing the petition yourself, there are three ways you can help get Muni reform on the ballot this week -- the first two of which you can do right now:
  • Donate to the campaign. Your donation will help the campaign pay for materials, signs, and paid signature gatherers to complement our volunteer efforts. All told, the campaign is expected to cost hundreds of thousands of dollars. Can you donate to the campaign? If you can make a donation of $100, $50, or even $25, you'll be directly helping them reach more voters, gather more signatures, and move Muni reform closer to becoming a reality. Click here to donate.
  • Email your friends asking them to sign the petition today. A number of voters still don't know just how important it is that they sign this petition.  We're trying hard to reach them all, but people who know you are far more likely to take your word that they should sign this petition. Can you send an email to your contacts, letting them know to sign the petition, and to spread the word? Here's a sample email you can use:
-------------------------
Hi!,
I wanted to make sure you knew about the effort going on right now to get Muni reform on the November ballot. If the campaign, called Fix Muni Now, is successful, the City will be much better able to eliminate inefficient public transit work rules that hurt the Muni system and cost the City-and its taxpayers-millions of dollars each year.
In order to get the measure on the ballot, the campaign needs to gather a total of nearly 50,000 voter signatures by the beginning of July. I've signed the petition, and I hope, if you run into a signature gatherer, that you do too. You can see a list of where signature gatherers are going to be, and learn more about the campaign, at www.fixmuninow.com.
Thanks!
-------------------------
  • Lastly, please help the campaign gather signatures this week. They could use your help!  Signature-gathering is easy -- They'll provide you with a clipboard, pens, petitions, and good company. This week, here's where they'll be: 
    • Wednesday, June 16, 4:30-6:00 PM: ¬ Geneva at Mission
    • Thursday, June 17, 4:30-6:00 PM: ¬ Glen Park BART
    • Friday, June 18, 4:30-6:00 PM: ¬ Balboa Park BART
    • Saturday June 19, 10:00 AM-12:00 PM: ¬ Clement Street
    • Sunday, June 20, 10:00 AM-12:00 PM: Sunday Streets at Mission and 24th Street


UPDATE: Split Roll Bill Revived - AB 2492

BOMA San Francisco Members:

We've learned from our tireless Sacramento advocates at BOMA California that AB 2492, the Split Roll measure authored by Assemblymember Tom Ammiano (D - San Francisco), was heard 'off the Floor' which means that there wasn't an opportunity for discussion or testimony by opponents.  The measure was being held in the Assembly Appropriations Committee before this unusual move.

Wasting no time, BOMA California coordinated a grass roots effort to convince members of the Assembly Appropriations Committee that the bill was bad public policy, although the die had already cast: The bill passed on what is known as a 'B Roll Call Vote – all Democrats in support and all Republicans opposed.  One Democrat, Jose Solario (D-Santa Ana), withheld his vote in support of our position.  As the vote moves to the Assembly Floor, such support from a moderate Democrat will be paramount.

AB 2492 purports to 'close a loophole' in Proposition 13, but BOMA disputes that.  Every example of a problem the author/sponsors of the bill have used has been shown to be counterfactual.  Indeed, testimony in an earlier Assembly committee by San Francisco Assessor Phil Ting incorrectly claimed that businesses are purposefully avoiding reassessment acquisitions and mergers.  Yet his own investigation on this issue reviled that this is simply not the case in San Francisco.  After he held a press conference to highlight the 'problem' the San Francisco Chronicle investigated this issue and found that many of Mr. Ting's claims about corporations not being reassessed were simply not true.  Many of these debunked examples are again being used to bolster AB 2492, although they don’t have a direct correlation to what the bill language suggests will happen if the measure was to be signed into law.  Click here to read the full Chronicle story.

The CalChamber, California Taxpayers Association, California Bankers Association, TechAmerica, and the California Manufacturers and Technology Associations, along with a huge coalition of member companies that lent their name to this effort, have all been essential in this battle, and we also want to acknowledge and thank all of our allies.

Thursday, June 17, 2010

The News Links - June 16-17, 2010

Commercial Real Estate
San Francisco
California
The Economy
Energy & Environment
General

Tuesday, June 15, 2010

The News Links - June 14-15, 2010

Commercial Real Estate
San Francisco
California
The Economy
Energy & Environment
General

Monday, June 14, 2010

Are You Ready For CALGreen?

BOMA San Francisco Members:

California’s green building code becomes mandatory on January 1, 2011 and will affect all new commercial construction.  New mandatory measures address planning and design in the following areas:

  • Site development;
  • Water efficiency and conservation for both indoor and outdoor water use;
  • Energy efficiency;
  • Material conservation and resource efficiency including water resistance and moisture management;
  • Construction waste reduction, disposal and recycling;
  • Building maintenance and operation; 
  • Pollutant control; 
  • Indoor moisture control; 
  • Indoor and outdoor air quality;
  • Environmental comfort.

The California Building Standards Commission is offering a series of regional half-day workshops to help you prepare.  Workshops will provide an overview of the new mandatory standards, voluntary tier structure, compliance checklists and code publication dates. In addition, speakers will provide answers to your specific code questions.

CALGreen classes are being offered up and down the state from San Diego to Redding.  Make sure you are prepared. For more information and to register, visit this website, CALGreen Workshops.

Friday, June 11, 2010

UPDATE: Mandatory Recycling and Composting Ordinance




As we have posted on the blog previously, San Francisco now has a city-wide mandatory recycling and composting requirement. There are five mandatory areas that property managers need to address in the ordinance:
  • Sign-up and pay for adequate recycling, composting and trash service.
  • Have the appropriate number, color and size containers placed close together in convenient locations at your site.
  • Educate and train tenants and employees on the program.
  • Work with the hired janitorial staff or contractors to create an effective program.
  • Make sure your building is participating in separating materials.
There could be fines for buildings that do not provide an adequate program (#1-4 above), but there will not be fines for buildings that do not properly separate all materials until at least July 1, 2011.

Please click here to review the ordinance and here for FAQs.  Contact the San Francisco Department of the Environment at (415) 355-3768 if you need assistance in starting a recycling and composting program to comply with the new law.

Thursday, June 10, 2010

Commercial Rent Tax - The Breakdown




BOMA San Francisco Members:

As we've reported, San Francisco Board of Supervisor's President David Chiu and introduced an ordinance on June 8, 2010 to create an updated tax system on the business community that includes a Commercial Rent Tax.  Please click here to review the proposal. 

The Commercial Rent Tax will be computed at the rates and for the taxable years as follows:

Tax Year Rate
2011 - 0.632%
2012 - 1.263%
2013 and subsequent years 1.895%

This ordinance closely parallels the first of two alternatives to the current payroll tax as suggested by the Controller's final report on this topic. Click here to read the final report and for more detailed coverage of the commercial rent tax issue.

Please email Ken Cleaveland, BOMA San Francisco's Director of Government Affairs at kenc@boma.com, and John Bozeman, BOMA San Francisco's Legislative Assistant at johnb@boma.com with any comments you may have.

San Francisco’s Climate Protection Strategy




BOMA San Francisco Members:

On June 1, 2010, Johanna Partin, Director of Climate Protection Initiatives in Mayor Gavin Newsom's Office, presented the City and County of San Francisco's Climate Protection Strategy to BOMA San Francisco's Energy & Environment Committee.  You can review the presentation by clicking here.

Key Points:
  • San Francisco wants a carbon neutral transportation system by 2030.
    • Charging stations will be installed in the City and Johanna is working with the San Francisco Department of Building Inspection to streamline the permit system with residential property owners.
    • Curbside charging may be a possibility.
  • What is the cost to commercial property owners to install a charging station?
    • Depends on the type of charging station and equipment: L1, L2 or L3 (L3 is the fastest)
      • 1 - normal plug;
      • 2 - clothes dryer type plug;
      • 3 - still under development and will be much more expensive than L1 or L2 stations.
    • The City is working with car companies that will start the permit process to allow a car buyer to install a charging station at home if they buy an electric car.

Tuesday, June 8, 2010

New Tax Proposals Introduced by San Francisco Board of Supervisors



BOMA San Francisco Members:

On June 8, 2010, members of the Board of Supervisors introduced three tax proposals that have a high probability of being placed on the November 2, 2010 ballot in some form:
  • Commercial Rent Tax (Supervisor David Chiu)
    • Click here to review the proposal.
    • This ordinance closely parallels the first of two alternatives to the current payroll tax as suggested by the Controller's final report on this topic.  Click here to read the final report and for more detailed coverage of the commercial rent tax issue.
  • Real Estate Transfer Tax Increase (Supervisor John Avalos)
    • Click here to review the proposal.
  • Parking Tax Increase (Supervisor Ross Mirkarimi)
    • Click here to review the proposal.
We welcome your feedback on these tax measures.  Please email Ken Cleaveland, BOMA San Francisco's Director of Government Affairs at kenc@boma.com, and John Bozeman, BOMA San Francisco's Legislative Assistant at johnb@boma.com with any comments you may have.

November 2010 Election: BOMA SF-PAC Endorses Janet Reilly and Mark Farrell for District 2 Supervisor





BOMA San Francisco Members:

With the June 8, 2010 Primary Election coming to a close, the BOMA San Francisco Political Action Committee (BOMA SF-PAC) is now focused on the November 2, 2010 supervisorial election in the even-districts of the City.  Indeed, the BOMA SF-PAC met with District 2 candidates for supervisor, Janet Reilly and Mark Farrell  in May 2010.  We're pleased to announce that the BOMA SF-PAC has endorsed both Janet Reilly and Mark Farrell for District 2 Supervisor for the November 2010 election.  

Please take a moment to learn more about both candidates on their campaign websites:

The BOMA SF-PAC has also endorsed other moderate candidates for supervisor in Districts 4, 6 and 8 (District 10 candidates are still under review):

District 4 - Carmen Chu


District 6 - Theresa Sparks

Click here to learn more about Theresa and here to visit her campaign website.

District 8 - Scott Wiener

Click here to learn more about Scott and to visit his campaign website.


The News Links - June 6-7, 2010



Commercial Real Estate
San Francisco
Marin/San Mateo/Sonoma
California
The Economy
Energy & Environment
General

Announcement of Certified Access Specialist (CASp) program August 2010 Exam



BOMA San Francisco Members:

Your BOMA San Francsico Advocacy Team is pleased to announce that the Department of General Services will be conducting the Certified Access Specialist (CASp) program (what is this?) examination on August  3 and 4, 2010.

The August 3rd examination will be held in Sacramento while the August 4th exam will be held in San Diego.  There will be a morning and afternoon session for both examination dates and locations.  Registration is open as of Tuesday, June 8, 2010 and will close at 5:00 p.m. July 12, 2010.  

Please note that in order to register for an exam you must have an approved application. We encourage anyone who has yet to apply to do so as soon as possible.  All applications should be received by the CASp Certification Unit no later than July 9, 2010 in order to meet the closing registration deadline on July 12, 2010.  You may apply online here, or you may download a copy of the application from the site to mail into the CASp office along with your money order/check payment.

All program and examination information is available by clicking here.  Please write them at CASprogram@dgs.ca.gov or call (916) 323-2737 if you have any questions regarding registration for the August 3rd and 4th examination.

Monday, June 7, 2010

San Francisco Department of Building Inspection - Impact Fee Deferral Legislation Routing Procedures




BOMA San Francisco Members:

The recently passed Impact Fee Deferral Legislation becomes effective July 1, 2010. As a result of this legislation, the San Francisco Department of Building Inspection (SFDBI) will modify the routing procedures for submitted projects and possibly over the counter permits that require impact fees.
  • Site Permits will be required to be issued prior to the submittal of first construction document. The legislation requires that a project sponsor make a choice between deferring the impact fees or paying them at the time of the first construction document issuance. This choice has to be made before the site permit is issued. The SFDBI cannot accept the first construction document for routing unless this choice is made and the site permit issued.
  • All permits will be routed parallel in the first routing to all impact fee departments, agencies, etc.  8 copies of the plans and application will be required to be submitted for routing. There is extensive behind the scenes accounting work that must be completed by SFDBI and the impact fee agencies before SFDBI can finally approve any site permit or any other permit authorizing construction work that has impact fees.
  • The Development Fee Unit will be creating a fee impact report for any project that requires the payment of impact fees. Unless the project is a very simple one, it is next to impossible to be able to create this report "over the counter."
If you have any questions, please contact the SFDBI by clicking here.

San Francisco Commercial Rent Tax Proposals - Final Report Released





UPDATE - As of June 7, 2010

Please click here to access the Controller’s final report on the two alternative proposals to the current payroll tax structure in San Francisco that was just published. The rational for a tax on commercial rent is found on page 18 of the report.

Please email Ken Cleaveland, BOMA San Francisco's Director of Government Affairs at kenc@boma.com, and John Bozeman, BOMA San Francisco's Legislative Assistant at johnb@boma.com with any comments you may have.

----------------------

UPDATE - As of June 4, 2010


Please click here to read BOMA San Francisco's letter to Ben Rosenfield, City Controller, in response to the two alternative proposals in the interim report that would alter San Francisco's current payroll tax structure to include a commercial rent tax of 1.395% on gross receipts to renters of commercial property.   

----------------------

UPDATE - As of May 11, 2010 - 

Please click here to access the Controller’s interim report on the two alternative proposals to the current payroll tax structure in San Francisco that was just published.   The rational for a tax on commercial rent is found on page 18 of the report. 

----------------------


Ben Rosenfield, Controller for San Francisco and Ted Egan, the City's Chief Economist 

BOMA San Francisco's Government and Public Affairs Committee welcomed Ben Rosenfield, San Francisco's Controller, and Ted Egan, the City's Chief Economist on May 5, 2010 to present two alternative proposals to the current payroll tax structure in San Francisco.  Both include a commercial rent tax.  You can view the presentation by clicking here. With either proposal, the City expects to raise approximately $18 million annually from a commercial rent tax by charging 1.395% on the gross receipts for renters of commercial property.

Background

Mr. Rosenfield mentioned that his staff has been researching this issue for about five months; in April they were able to produce real numbers to solicit feedback from the various stakeholders in the business community that would be affected by the two suggested payroll tax changes.  The Controller's office was asked by the Mayor Gavin Newsom and Board of Supervisors President David Chiu to study this question:  What is the most efficient way to collect money from San Francisco taxpayers?  According to Mr. Rosenfield, the goal in answering this question is to not generate more tax revenue, but to identify if there is a better taxing system to use in San Francisco.

Mr. Egan prefaced the presentation by stating that San Francisco is the only city in California that charges only a payroll tax as opposed to a combination of taxes: payroll tax, commercial rent tax, etc.  As a result, two types of payroll taxes have emerged (see below) that, according to Mr. Egan, may allow a switch from a stand alone payroll tax to a hybrid tax system that is better for the business community and will help create private sector jobs.

Proposal 1: Progressive Payroll Tax

Click on the image to enlarge.


Proposal 2: Gross Receipts Tax


Click on the image to enlarge.


Key Points 
  • Property tax costs can be deducted from the rent receipts the landlord receives for the purposes of paying this new rent tax, but no other costs. 
  • The Controller's office is estimating a 5-year phase-in period for this new tax to gauge its impact.  With either proposal, the City and County of San Francisco is attempting to tax those industries (banking/financial services and insurance) that currently are exempt from local payroll taxes under state law. 
  • The City’s payroll taxes currently yield approximately $350 million a year to the general fund. This commercial rent tax would probably increase what the commercial real estate industry pays in payroll tax by almost a factor of 10--approximately $1 million in payroll taxes is collected from our industry currently; this will go up to an estimated $8-9 million a year. At present, there are 80,000 businesses in San Francisco, but only 6,000 pay payroll taxes. A commercial rent tax would expand the tax base and spread this obligation, according to Mr. Rosenfield and Mr. Egan.

We Need Your Feedback!

Both Mr. Rosenfield and Mr. Egan are requesting feedback on these two proposals from BOMA San Francisco members, affected stakeholders and the general public over the next two weeks.  A interim report will be available shortly--we'll post that report on the blog once we receive it.  The Controller's office will then compile the data collected and produce a final report on the two proposals by the end of May.

Please email Ken Cleaveland, BOMA San Francisco's Director of Government Affairs at kenc@boma.com, and John Bozeman, BOMA San Francisco's Legislative Assistant at johnb@boma.com with any comments you may have.

VOTE ON JUNE 8, 2010 - BOMA San Francisco PAC Official Endorsements + Find Your Polling Place




Click on image to enlarge and print.

BOMA San Francisco Members:

Please find the BOMA San Francisco Political Action Committee's (BOMA SF-PAC) printable slate card of official endorsements for the June 8, 2010 election above.  Detailed  information on each Proposition and the San Francisco Democratic County Central Committee can be found by clicking on the links below.  

What is the DCCC and why is this obscure elected body important?  Please read the articles below!

Please click here to find your polling place.

City Propositions:
Click here to access the San Francisco Department of Elections website for more information about these measures.

State Propositions:
Click here to access the California Secretary of State's website for more information about these measures.

Candidates for the San Francisco Democratic County Central Committee (DCCC) 

  • Andy Clark
  • Ron Dudum
  • Dan Dunnigan
  • Bill Fazio
  • Tom Hsieh
  • Mary Jung
  • Meagan Levitan
  • Connie O’Connor
  • John Shanley
  • Arlo Hale Smith
  • Mike Sullivan
  • Matt Tuchow
  • Alex Volberding
  • Melissa Apuya
  • Keith Baraka
  • Leslie Katz
  • Calvin Louie
  • Owen O’Donnell
  • Linda Richardson
  • Catherine Stefani
  • Joe Alioto Veronese
  • Scott Wiener

Friday, June 4, 2010

San Francisco Commercial Rent Tax Proposals - BOMA San Francisco's Response Letter





UPDATE - As of June 4, 2010


Please click here to read BOMA San Francisco's letter to Ben Rosenfield, City Controller, in response to the two alternative proposals in the interim report that would alter San Francisco's current payroll tax structure to include a commercial rent tax of 1.395% on gross receipts to renters of commercial property.   

----------------------

UPDATE - As of May 11, 2010

Please click here to access the Controller’s interim report on the two alternative proposals to the current payroll tax structure in San Francisco that was just published.   The rational for a tax on commercial rent is found on page 18 of the report.  Please email Ken Cleaveland, BOMA San Francisco's Director of Government Affairs at kenc@boma.com, and John Bozeman, BOMA San Francisco's Legislative Assistant at johnb@boma.com with any comments you may have.  

------------------


Ben Rosenfield, Controller for San Francisco and Ted Egan, the City's Chief Economist 

BOMA San Francisco's Government and Public Affairs Committee welcomed Ben Rosenfield, San Francisco's Controller, and Ted Egan, the City's Chief Economist on May 5, 2010 to present two alternative proposals to the current payroll tax structure in San Francisco.  Both include a commercial rent tax.  You can view the presentation by clicking here. With either proposal, the City expects to raise approximately $18 million annually from a commercial rent tax by charging 1.395% on the gross receipts for renters of commercial property.

Background

Mr. Rosenfield mentioned that his staff has been researching this issue for about five months; in April they were able to produce real numbers to solicit feedback from the various stakeholders in the business community that would be affected by the two suggested payroll tax changes.  The Controller's office was asked by the Mayor Gavin Newsom and Board of Supervisors President David Chiu to study this question:  What is the most efficient way to collect money from San Francisco taxpayers?  According to Mr. Rosenfield, the goal in answering this question is to not generate more tax revenue, but to identify if there is a better taxing system to use in San Francisco.

Mr. Egan prefaced the presentation by stating that San Francisco is the only city in California that charges only a payroll tax as opposed to a combination of taxes: payroll tax, commercial rent tax, etc.  As a result, two types of payroll taxes have emerged (see below) that, according to Mr. Egan, may allow a switch from a stand alone payroll tax to a hybrid tax system that is better for the business community and will help create private sector jobs.

Proposal 1: Progressive Payroll Tax

Click on the image to enlarge.


Proposal 2: Gross Receipts Tax


Click on the image to enlarge.


Key Points 
  • Property tax costs can be deducted from the rent receipts the landlord receives for the purposes of paying this new rent tax, but no other costs. 
  • The Controller's office is estimating a 5-year phase-in period for this new tax to gauge its impact.  With either proposal, the City and County of San Francisco is attempting to tax those industries (banking/financial services and insurance) that currently are exempt from local payroll taxes under state law. 
  • The City’s payroll taxes currently yield approximately $350 million a year to the general fund. This commercial rent tax would probably increase what the commercial real estate industry pays in payroll tax by almost a factor of 10--approximately $1 million in payroll taxes is collected from our industry currently; this will go up to an estimated $8-9 million a year. At present, there are 80,000 businesses in San Francisco, but only 6,000 pay payroll taxes. A commercial rent tax would expand the tax base and spread this obligation, according to Mr. Rosenfield and Mr. Egan.

We Need Your Feedback!

Both Mr. Rosenfield and Mr. Egan are requesting feedback on these two proposals from BOMA San Francisco members, affected stakeholders and the general public over the next two weeks.  A interim report will be available shortly--we'll post that report on the blog once we receive it.  The Controller's office will then compile the data collected and produce a final report on the two proposals by the end of May.

Please email Ken Cleaveland, BOMA San Francisco's Director of Government Affairs at kenc@boma.com, and John Bozeman, BOMA San Francisco's Legislative Assistant at johnb@boma.com with any comments you may have.

Apture