“Certificate of Final Completion and Occupancy” means a certificate of final completion and occupancy or an amended certificate of final completion and occupancy as those terms are used in Section 109A of the Building Code, as may be amended from time to time.
“First Construction Document” means the first building permit, building permit addendum, or other document that authorizes construction of a Newly-Constructed Building, not including permits or addenda for demolition, grading, shoring, pile driving, or site preparation work.
“Labor Organization” means any organization of any kind, or any agency or employee representation committee or plan, in which employees participate and which exists for the purpose, in whole or in part, of dealing with employers concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work.
“MOHCD” means the Mayor’s Office of Housing and Community Development, or its successor agency, department, or office.
“MOHCD Area Median Income” means the median income as published annually by MOHCD for the City and County of San Francisco, derived in part from the income limits and area median income determined by the United States Department of Housing and Urban Development, or its successor agency, for the San Francisco County metro fair market rent area, adjusted solely for household size, but not for high housing cost area.
“Newly-Constructed Building” means a building that has never before been used or occupied for any purpose.
“OLSE” means the Office of Labor Standards Enforcement, or its successor agency, department, or office.
“Qualified Investment Manager” means any of the following that manages or invests assets on behalf of one or more Qualified Pension Plans, as defined in this Section 1108.8(a):
(1) An investment adviser registered under the U.S. Investment Advisers Act of 1940, as amended from time to time, or an investment adviser exempt from registration pursuant to Section 203(l) or Section 203(m) of the U.S. Investment Advisers Act of 1940, as amended from time to time;
(2) An investment company registered under the U.S. Investment Company Act of 1940, as amended from time to time; or
(3) An insurance company pooled separate account of a state or District of Columbia regulated life insurance company.
“Qualified Pension Plan” means either subpart (1) or (2), as stated below:
(1) A pension plan that has all of the following elements:
(A) Constitutes a qualified trust under Section 401(a) of the Internal Revenue Code of 1986, as amended from time to time;
(B) Is either:
(i) A multiemployer plan collectively bargained and maintained by more than one employer and a Labor Organization; or
(ii) A plan collectively bargained and maintained by a Labor Organization; and
(C) Its beneficiaries may not decide individually whether to participate or share in the profits and losses of such plan’s investments; or
(2) An annuity plan that meets the requirements for the deduction of the employer’s contribution under Section 402(a)(2) of the Internal Revenue Code of 1986, as amended from time to time, and that has beneficiaries who are represented by a Labor Organization and the assets of which are managed without the direct intervention or control of the plan’s beneficiaries.
“Qualified Residential Rental Property” means a Residential Rental Property, whether or not the property is subject to a condominium map recorded with the County Recorder, that meets all of the requirements in subparts (1) through (4), as stated below:
(1) At the time of the transfer for which an exemption is claimed under this Section 1108.8, no less than 12% of the residential units on the property, which percentage shall be calculated by excluding any density bonus units permitted through Planning Code Section 206.3, California Government Code Section 65915, or any other density bonus program, are, or concurrently with such transfer become, subject to a Recorded Restriction that:
(A) limits the maximum household income for each residential rental unit to no more than 110% of MOHCD Area Median Income; and
(B) limits the maximum monthly rent for each residential rental unit to no more than one-twelfth of 30% of 110% of the MOHCD Area Median Income; and
(C) provides for the regulation, monitoring, and enforcement of the restrictions in this subpart (1) by a governmental agency; and
(D) has a remaining term of no less than 55 years from the date of the transfer.
(2) On or after June 3, 2014, received a Certificate of Final Completion and Occupancy for a Newly-Constructed Building.
(3) All on-site construction of the Newly-Constructed Building, from the date of the First Construction Document through the date of the Certificate of Final Completion and Occupancy for the Newly-Constructed Building, was performed by workers represented by a Labor Organization and paid not less than the Prevailing Rate of Wages as defined in Section 6.1 of the San Francisco Administrative Code, as amended from time to time, for such on-site construction work.
(4) At least one year before and through the date of the transfer for which an exemption is claimed under this Section 1108.8, one or more Qualified Pension Plans, either directly or through a Qualified Investment Manager, collectively held a $25 million debt or equity investment, directly or indirectly, in the single property being transferred, and each such investor maintained and enforced a Responsible Contractor Policy with respect to that investor’s portion of the $25 million investment.
“Recorded Restriction” means a document, agreement, or instrument, recorded with the County Recorder, that restricts the use of the property against which the document, agreement, or instrument is recorded.
“Residential Rental Property” means a property that may only be used to rent to residential tenants, including an onsite property manager, and excluding travelers, vacationers, or other similarly transient individuals, except that it may include: (1) up to 30% of the square footage of all floors other than the ground floor for non-profit space serving residents and/or the community, such as childcare centers, health clinics, or job training centers; and (2) any amount of square footage of the ground floor for non-residential space.
“Responsible Contractor Policy” means a policy that requires all on-site construction work be performed by workers represented by a Labor Organization.
(b) Exemption from Increased Tax Rate. As authorized by Section 1119, the tax rates imposed by subsections (e) and (f) of Section 1102 shall be reduced with respect to any deed, instrument, or writing that effects a transfer of an entire building that constitutes a Qualified Residential Rental Property, or an undivided interest in such entire building that constitutes a Qualified Residential Rental Property. For such transfers, the tax rate shall be $15 for each $500 or fractional part thereof for the entire value or consideration, including but not limited to, any portion of such value or consideration that is less than $10,000,000. If the exemptions in both Sections 1108.6(b) and this Section 1108.8
(b) apply with respect to any deed, instrument, or writing, the lower of the two rates in those two sections shall apply.
(c) Requirements for Exemption. Every person claiming the exemption under subsection (b), above, must meet all of the following requirements:
(1) Maintain all records necessary to prove that they are entitled to the exemption in this Section 1108.8;
(2) Obtain from OLSE a certificate confirming that the deed, instrument, or writing effects a transfer of a Qualified Residential Rental Property; and
(3) Submit the certificate under subsection (c)(2), above, to the County Recorder at the time such person submits the affidavit described in subsection (c) or (d) of Section 1111.
Failure to timely satisfy the requirements in this subsection (c) renders the transfer ineligible for the exemption.
(d) Operative Date. The exemption in Section 1108.8(b) shall apply to all deeds, instruments, or writings that effect transfers of Qualified Residential Rental Properties that are or have been delivered on or after the effective date of the ordinance adding this Section 1108.8, but on or before the sunset date in subsection (e).
(e) Sunset Date.
(1) The exemption in Section 1108.8(b) shall expire by operation of law at the end of the day on December 31, 2033, and shall not apply to any deeds, instruments, or writings that are delivered on or after January 1, 2034.
(2) Notwithstanding subsection (e)(1), above, with respect to a transfer of property that received a Certificate of Final Completion and Occupancy before the effective date of the ordinance adding this Section 1108.8, the exemption in Section 1108.8(b) shall expire by operation of law at the end of the day on June 30, 2029, and shall not apply to any deeds, instruments, or writings that are delivered on or after July 1, 2029.
(f) Non-Severability. If any part or application of this Section 1108.8 is found in a final decision by a court of competent jurisdiction to be invalid or unconstitutional, this Section in its entirety shall have no force or effect.
(g) Undertaking for the General Welfare. In enacting and implementing this Section 1108.8, the City is assuming an undertaking only to promote the general welfare. It is not assuming, nor is it imposing on its officers and employees, an obligation for breach of which it is liable in money damages to any person who claims that such breach proximately caused injury.
(Added by Ord. 225-24, File No. 240728, App. 9/20/2024, Eff. 10/21/2024)