Understanding San Francisco's Empty Homes Tax Appeal: How BPOA Members are Making Their Voices Heard

A Critical Case for Property Rights Across California

BPOA members should be aware of an important legal battle currently before the California Court of Appeal that may significantly affect property rights throughout the Bay Area and across the state. BPOA has filed an amicus curiae (“friend of the court”) brief in support of the property owners challenging San Francisco’s Empty Homes Tax.

What’s at Stake

In November 2022, San Francisco voters narrowly approved Proposition M, which imposes substantial annual charges on residential property owners whose units remain “vacant” for more than 182 days per year. The charges begin at $2,500 to $5,000 per unit in the first year and increase to $10,000 to $20,000 per unit in subsequent years, adjusted for inflation. For many owners, these amounts exceed their annual property taxes.

A group of San Francisco property owners, including both individuals and trade associations, challenged Proposition M in Superior Court. The court ruled that the measure violates the Takings Clause of the Fifth Amendment, is preempted by California’s Ellis Act, and unconstitutionally burdens due process, equal protection, and privacy rights. The City appealed that decision, and the case is now before the Court of Appeal.

Why Berkeley Property Owners Should Care

Berkeley passed its own vacant property tax in 2022. Berkeley’s law imposes a $6,000 annual charge per apartment unit for the first year of vacancy and $12,000 per unit in subsequent years. The legal principles at issue in San Francisco’s case will likely influence how Berkeley’s law is interpreted and enforced.

Both laws share a similar purpose: to financially pressure property owners into renting units they prefer to keep vacant. The ballot arguments in favor of Berkeley’s tax stated that it “targets corporate landlords and owners of large or multiple properties,” underscoring this intent.

The Core Legal Issues

The property owners argue, and the trial court agreed, that these measures are not ordinary taxes. They are punitive penalties designed to force owners to rent their properties. This raises several constitutional concerns:

Takings Clause. The U.S. Supreme Court has held that the right to exclude others from one’s property is a core constitutional property right. The government cannot compel an owner to rent a unit over their objection. By imposing financially coercive penalties on owners who choose to keep a property vacant, the City is effectively taking property without just compensation.

Ellis Act. The Ellis Act prohibits local governments from forcing property owners to offer residential units for rent. California courts have repeatedly struck down San Francisco ordinances that impose a “prohibitive price” on an owner’s decision to withdraw a unit from the rental market. As one decision put it, “The Ellis Act does not permit the City to condition a property owner’s departure from the rental market on the payment of ransom.”

Privacy and Family Rights. Proposition M also burdens an owner’s ability to allow family members to use the property rather than renting to strangers. Courts have recognized constitutional protections for familial relationships and privacy that these measures may violate.

How BPOA’s Amicus Brief Helps

BPOA’s amicus brief, authored by Clifford E. Fried of Fried, Williams & Grice Conner, strengthens the case by:

• Demonstrating that this is a regional issue, not a San Francisco-only matter. Similar measures in Berkeley and Oakland show a broader trend that affects property owners throughout the Bay Area.

• Explaining how these taxes expressly target owners who choose not to rent their units, contrary to the cities’ claims that owners can freely use the space for other lawful purposes. San Francisco’s own Planning Code contradicts that argument.

• Providing the court with practical insight drawn from more than forty years of BPOA’s experience assisting property owners in Berkeley’s complex regulatory environment.

• Highlighting the widespread impact that the Court of Appeal’s decision will have, affecting thousands of property owners across multiple cities.

What Happens Next

The Court of Appeal will review the briefs and schedule oral arguments. A decision may take several months. BPOA will continue monitoring the case closely and will update members as developments occur.

This case is a critical defense of property rights in California. The outcome will determine whether cities may effectively eliminate an owner’s right to keep property vacant by imposing punitive fees hidden under the label of “taxes.”

⚖️ Read the amicus brief here