California Construction News staff writer
A proposal to roll back portions of San Francisco’s transfer tax on large real estate transactions aims to unlock tens of thousands of approved but unbuilt housing units and spur investment in the city’s struggling downtown.
The Balanced Update to Incentivize Local Development, or BUILD Act, would lower transfer tax rates on multifamily housing and commercial property sales of $10 million or more, returning them to pre-2020 levels. The measure was introduced Tuesday by Mayor Daniel Lurie and District 5 Supervisor Bilal Mahmood as part of a broader housing and jobs package.
Under the proposal, transfer taxes would be set at 2.75% for transactions of at least $10 million and 3% for transactions of at least $25 million. The changes would not apply to single-family homes or to property sales under $10 million.
Rudy Gonzalez, representing San Francisco Building and Construction Trades local union 665 supports the plan.
“We have to be clear-eyed about what’s ahead of us,” Gonzalez said at a press conference. “We are in a housing and affordability crisis. Rents are too high. Homeownership is out of reach for the people I represent and for most working families.
“The people who teach our kids, wire our buildings, protect our neighborhoods, and care for our sick are being pushed further away because we are not producing enough housing.”
There are currently 34,000 units of housing in San Francisco’s pipeline tied up in major, multi-phased projects.
“That represents tens of thousands of labor construction job years waiting to move forward, Gonzalez said.
City officials confirmed as many as 50,000 housing units have been approved but remain stalled, in part because of rising construction costs and higher transfer taxes adopted by voters in 2020. They estimate the proposed changes could reduce construction costs by about $32,850 per unit, or up to 5% of total costs for private development projects.
Lurie said the legislation would help jumpstart housing construction and create thousands of union jobs.
Mahmood said the measure would modernize the tax structure in a revenue-neutral way while protecting funding for affordable housing.
Supporters include the San Francisco Building and Construction Trades Council and the San Francisco Chamber of Commerce, along with other labor and business organizations. Backers argue that high transfer taxes have discouraged large real estate transactions and made some projects financially infeasible.
To offset potential impacts on the city’s general fund, the legislative package includes a request to draft a November 2026 ballot measure that could eliminate a transfer tax exemption for certain foreclosure-related transactions.
The proposal is part of a plan to accelerate housing production, convert vacant offices to residential use and support downtown recovery. It now heads to the Board of Supervisors for consideration.
