Supervisor Bilal Mahmood and Mayor Daniel Lurie are pausing their plan to halve the city’s transfer tax on sales of multi-million dollar properties. Mahmood said he recognizes the city is in a budget crisis, and he and the mayor are shifting focus to find new revenue streams that would cover the revenue lost by cutting the tax.

The BUILD Act Proposal

The idea behind the proposal was to stimulate development and produce new jobs for construction workers, but the so-called BUILD Act has raised concerns that the tax break would still lose the city money, accommodating the wealthy with no guarantee of housing production. A controller’s office report from March estimates the tax as-is would raise some $400 million for affordable housing in the next few years, critical income for the city amid a massive budget deficit that has already resulted in widespread cuts to jobs and services.

Mahmood and Lurie had promised a November ballot measure to apply the tax to certain properties that are currently exempt from the existing transfer tax — but Mahmood said that and other proposals would not have sufficiently offset the tax cut. The BUILD Act would have slashed the transfer tax rate put in place by Proposition I in 2020: Taxes would drop from 5.75 percent to 2.75 percent for properties worth over $10 million, and from 6 percent to 3 percent for those over $25 million.

Mahmood also said that separate legislative efforts to generate housing have been encouraging in the months since the BUILD Act was first proposed in February, like the expansion of the Housing Trust Fund and reductions to the inclusionary housing requirements, rendering the need for the BUILD Act less urgent.

Original reporting: Mission Local — read the source article.