SF's "Empty Homes Tax" gives empty promises but more importantly, erodes the rights of property owners. A lawsuit challenges Measure M.


When you own something - whether it is a vehicle, a coat, or real estate - you should be able to use it as long as it is not violative of the law. Stands to reason that you should be able to choose not to use it because, well, you own it.

But not in San Francisco, where buildings with three or more rental units must be used for the greater public good or be subject to a vacancy tax after San Franciscan voters ushered in Proposition M, dubbed the "Empty Homes Tax" in a November 2022 ballot initiative.

The taxes are based on the space being squandered in the eyes of regulators and range from $2,500 for units smaller than 1,000 square feet and go up to $5,000 for units over 2,000 square feet, but it doesn't stop there. The tax is ratcheted up each subsequent year a unit is vacant. In 2026, owners of small units could be staring at a tax bill of $10,000, but owners of larger units will see this punitive charge doubled. As if that isn't punishing enough, the penalty will be adjusted for inflation in subsequent years.

When we first shared with our community that a lawsuit is challenging the measure, it struck a nerve and went viral on social media.


What is the likelihood that landlords and their advocates will prevail?

Bornstein Law doesn't have a crystal ball and has shied away from making predictions on what the outcome will be, but we'll say two things.

One is that landlords have industry partners that have been aggressive in litigation, with varied success. Along the way, there were some disappointments, but also victories in the win column. In most recent memory, a lawsuit struck down San Francisco's ordinance requiring owners to issue a 10-day warning letter before demanding rent.

Secondly, the plaintiffs challenging the city's overreaching vacancy tax make some compelling arguments against Big Brother telling what owners can and can't do with their properties. There is quite a lot of case law the plaintiff landlords cited that favor their case.

We don't want to get bogged down in legalese, but for the cerebral types and those of you who study the constitution, the lawsuit is a fascinating read.


Get the whole picture in this doc →


Fuzzy math is perpetuated?

Predictably, the most prolific author of tenant protections chimed in on the lawsuit, calling the litigation frivolous and initiated by lobbyists that have a "sense of entitlement when it comes to broadly popular and essential reforms."

“San Francisco voters delivered a clear mandate that it is completely unacceptable to have tens of thousands of vacant homes as more than 4,000 people are living on our streets."

~ San Francisco Supervisor Dean Preston, quoted here.

When voters went to the polls in 2022, they bought this sales pitch hook, line, and sinker. As a bit of critique, there is a great deal of skepticism that the number of vacant units is in the tens of thousands. More methodical, balanced numbers put the number at around 4,000.

In recent tweets, the Supervisor has amplified his calls for Costa-Hawkins repeal, passing a local ordinance creating vacancy control, and generally, lambasting rental housing providers.


Parting thoughts

We thank our friends at the San Francisco Apartment Association, the Small Property Owners of San Francisco Institute, and the San Francisco Association of Realtors for taking a stance against this absurd measure and express special gratitude for Noni Richen, the head of the SPOSI, for keeping us dialed in.