A coalition of property owners and real estate groups in San Francisco won their first court battle this week as San Francisco Superior Court Judge Charles Haines issued a tentative ruling in their case against the City’s Proposition M.

Proposition M was passed by 54 percent of San Francisco voters in November 2022 to tax owners of vacant buildings that were vacant 182 days or more during a tax year. It was to take effect in April 2025. The tax was $2,500 to $5,000 a year per empty unit, based on its size. Taxes would have an increase of up to $20,000 per unit in the future. San Francisco has an estimated 61,000 vacant units, up 52 percent from 2019 when there were about 40,000 vacant units. Proposition M did not apply to individual homes, leased properties, or homes intended for tourists and other travelers.

The ruling said the City had failed to create any triable issues of fact with competent admissible evidence. A trial had been set before the end of the year.

Opponents of South Lake Tahoe’s Measure N are encouraged by the judge’s ruling as they’ve long touted Measure N as not being the answer to South Lake Tahoe’s need for affordable housing. Opponents said the divisive measure was unconstitutional, an invasion of privacy, and was going to cause too many layers of bureaucracy.

“This is great news from San Francisco and validates much of our criticism of Measure N here in South Lake Tahoe,” said Sharon Kerrigan, co-chair of the Stop the South Tahoe Vacancy Tax, No on Measure N campaign. “The Proposition M ruling, which would likely apply to Measure N if it were to pass, shows the folly of this approach to address housing issues.”

The San Francisco judge said he was inclined to grant the Plaintiff’s motion for Summary Judgment in the lawsuit challenging San Francisco’s vacancy tax, and asked for them to prepare an order that would explain the court’s ruling. Once the Summary is received the court will decide what relief will follow. The plaintiff’s original complaint asked for a judgment declaring Proposition M unenforceable, for a writ of mandate directing San Francisco to refrain from enforcing it, for a permanent injunction prohibiting enforcement, and for an award of costs and attorneys’ fees.

The plaintiffs moved, and the judge agreed, that Proposition M cannot be enforced because:
1. The Takings and Due Process Clauses of the Constitution Bar the City from Forcing Property Owners to Rent Out Their Property, and the City Cannot Indirectly Coerce the Same Result by Burdensome Taxation.
2. Prop M Is Also Preempted by the Ellis Act.
3. Proposition M Unconstitutionally Disadvantages a Property-Owner’s Choice to Use His or Her Property to House Family Members, in Violation of Due Process and Equal Protection.
4. Proposition M Also Unlawfully Burdens Constitutionally Protected Privacy Interests.

“The great tragedy here is that all the acrimony in the community over Measure N could have been avoided, but for a few folks who insisted they knew best and didn’t want to wait for the San Francisco case,” added Steve Teshara, campaign co-chair. “Instead, they misled voters to get signatures, they’ve misled voters throughout the campaign, and they continue to mislead to this day. Despite this, we remain confident voters in South Tahoe will reject the flawed, divisive, and unconstitutional Measure N next Tuesday!”

“South Lake Tahoe’s Measure N was specifically written to avoid the legal challenges brought against San Francisco’s vacancy tax,” said Amelia Richmond, co-author of Measure N. “For example, Measure N specifically does not discriminate against leases to family members, a key point in the case against San Francisco’s measure. Measure N more closely resembles Berkeley’s policy, which is well underway and currently being enforced.”

The South Lake Tahoe City Council had voted against pursuing a measure to tax second homeowners.