UPDATE! Commercial Rent Tax Ordinance Amended

BOMA San Francisco Members:

UPDATE -  As of July 12, 2010

On July 9, 2010, the San Francisco Board of Supervisors' Budget and Finance Committee reviewed and amended Supervisor David Chiu's Commercial Rent Tax that may be before the San Francisco electorate in November.  You can review the changes in the ordinance, here.  The Commercial Rent Tax will, as amended, be computed at the rates and for the taxable years as follows:

2011 - 0.632% now 0.665%

2012 - 1.263% now 1.330%

2013 and subsequent years 1.895% now 1.995


Further amendments to the original ordinance include:

• A small employer tenant exclusion whereby a commercial landlord can exclude from their tax liability rent from tenants whose annual payment is less than $65,000 year. 
• Reducing the previous standard tax credit from $1,500 to $750. 
• Eliminating the Small Commercial Landlord exclusion for those landlords whose rent rolls are $200,000 a year. 
• Reducing the percentage of net revenue going to the General Fund from 55% to 45%. 

According to Supervisor Chiu, and the city’s economist, Ted Egan, these amendments, in aggregate, would:

• Produce a General Fund revenue gain to San Francisco of $28 million instead of $34 million.
• Exclude 74% of the city’s tenants who would fall under the 'small employer' exemption.
• Exclude an estimated 84% of the city’s non-profits from the rent tax. 
• As a consequence of the small employer tenant exclusions, the 1.995% rate would be effectively reduced to 1.75%.
• Include a lower-bracket payroll tax rate (under $85,000 a year) at 1.24%.
• Lastly, these changes would increase the number private sector jobs from 0 per year to 150 per year, and expand the city’s GDP by an average of $43 million a year. 

Please email Ken Cleaveland, BOMA San Francisco's Director of Government Affairs at kenc@boma.com, and John Bozeman, BOMA San Francisco's Legislative Assistant at johnb@boma.com with any comments you may have.

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Original post on June 10, 2010:

As we've reported, San Francisco Board of Supervisor's President David Chiu and introduced an ordinance on June 8, 2010 to create an updated tax system on the business community that includes a Commercial Rent Tax.  Please click here to review the proposal. 

The Commercial Rent Tax will be computed at the rates and for the taxable years as follows:

Tax Year Rate

2011 - 0.632%

2012 - 1.263%

2013 and subsequent years 1.895%

This ordinance closely parallels the first of two alternatives to the current payroll tax as suggested by the Controller's final report on this topic. Click here to read the final report and for more detailed coverage of the commercial rent tax issue.

Please email Ken Cleaveland, BOMA San Francisco's Director of Government Affairs at kenc@boma.com, and John Bozeman, BOMA San Francisco's Legislative Assistant at johnb@boma.com with any comments you may have.