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SF may tax empty storefronts

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Voters will decide whether to charge up to $1,000 per foot for long retail vacancies

Sign in window of retail store noting its April 2019 closure.
A sign is posted on the window of a closed CVS store on June 10, 2019 on Market Street.
Photo by Justin Sullivan/Getty Images

San Francisco’s depressing swath of empty storefronts may face mounting bills in a few years, but only if a supermajority of voters pass a new tax on vacant retail spaces that lawmakers recently voted to put on the ballot.

At a special Thursday meeting of the San Francisco Boards of Supervisors, the board voted 8-0—three members were out of town at the time, including Supervisor Aaron Peskin, the architect of the store plan—to put the tax before voters at the next election on March 3, 2020.

“Storefronts are the building blocks of neighborhood vitality, encouraging people to stroll through San Francisco’s streets, sidewalks, parks, and other open spaces,” reads the text of the measure.

But vacant storefronts in neighborhood commercial districts “degrade the urban environment.”

In a letter encouraging board members to push the tax through, Peskin argues that while brick-and-mortar stores shutter because of online competition, real estate speculation and scheming landlords who hold out for higher rents keep retail spaces empty for longer periods of time.

If passed, the new tax would charge $250 per linear foot in an empty store the first year, increasing to $500 in year two, and $1,000 every year after. The tiered scale would nudge landlords to find new tenants faster and “[reduce] the amount of the tax the property owner could potentially pass on to the tenant during lease negotiations.”

At Thursday’s meeting—which lasted less than six minutes—Board President Norman Yee said of empty stores, “We’ve been grappling with this for years, we’ve tried different things and it seems like nothing has been effective.”

Earlier this month, Eater SF reported on the dramatic tale of Palm City Wines, a burgeoning small business whose owners almost lost everything after the city tried to rescind their permits before opening.

While the story had a happy ending for that one store, it underscores a common counterargument to Peskin’s complaints, alleging that SF simply makes it too difficult for new businesses to open in empty spots.

In March, an SF Budget and Legislative Analyst report on store vacancies in the Castro and Upper Market acknowledged that “while City permitting and approval processes contribute to commercial storefront vacancies,” at the same time “there are other factors that contribute to vacancies,” including landlords simply demanding more for a space than anyone will pay.

Money raised by the plan would go toward the city’s small business fund. The new tax will need approval from two-thirds of SF voters in early 2020 in order to pass.