With an unexpected mayoral special election and many charged issues on the ballot, the past election in San Francisco was contentious. Two tax measures on the ballot disproportionately impacted the commercial real estate industry, motivating BOMA/San Francisco members to take action.
While BOMA/San Francisco supports the funding of programs that are important to the City and County of San Francisco, the two proposals targeted commercial real estate—placing an unfair burden on an already heavily taxed industry.
MASSIVE TAX INCREASE
San Francisco currently has a commercial rent tax of 0.3 percent. The two ballot measures both proposed significant increases to this tax rate. Proposition C added an additional tax of 3.5 percent on almost all commercial rent gross receipts—more than a 1,000 percent increase—and was designed to fund childcare and early childhood development. This measure required only a majority vote of 50 percent or more to pass. The second tax measure, Proposition D, would have added an additional 1.7 percent to commercial rent gross receipts and was designed to fund affordable housing and homeless services. This initiative required at least a two-thirds majority vote to pass. The propositions were created by separate political factions with little to no input from the commercial real estate industry. Because both were placed on the ballot quickly, there was little time for them to be thoroughly vetted to ensure the funds would be used as intended.
These types of rapid tax increases can be difficult for building owners to absorb and can have long-ranging financial implications for the commercial real estate industry.
TAKING ACTION
The BOMA/San Francisco Political Action Committee (BOMA-SF-PAC) organized and led a campaign against the two measures. Early funding for the "No on Propositions C and D" campaign came from BOMA International’s Industry Defense Fund (IDF).
BOMA International’s IDF is designed to help fight legislation harmful to the industry to prevent damaging precedents from being set. Taxes targeted at the industry to fund specific projects could be a harbinger for other markets going forward. This early funding gave a boost to the campaign, which then helped bring in additional financial support.
The committee began by conducting an extensive poll of the area to learn more about potential voters. Using this data, the campaigns targeted voters via traditional and digital media with messages that resonated with them, clarifying that the funds collected through the tax might not go towards the intended purpose. According to the collected polling data, the targeted voter preferred television and print media. While traditional media is expensive, it can be very effective if the message is appropriate and strategically placed. The campaign raised more than $1.3 million in a mere six weeks, thanks, in large part, to the fundraising efforts of members, and this money was used to educate voters about the issue as quickly as possible.
PARTIAL VICTORY
On Election Day in June, Proposition D was soundly defeated. However, Proposition C passed by a slim margin of approximately 4,100 votes. With more time and additional funds, BOMA/San Francisco’s efforts would likely have been successful on this measure as well.
As other BOMA local associations deal with similar efforts to target the commercial real estate industry to pay for citywide needs, BOMA/San Francisco’s efforts and lessons learned should prove useful to future campaigns.
ABOUT THE AUTHOR: John Bozeman, CAE, is the director of Government and Industry Affairs for BOMA/San Francisco.
This article was originally published in the September/October 2018 issue of BOMA Magazine.