There are several local ballot propositions you'll be voting on today if you still do things the old fashioned way and go to an actual polling place, and perhaps none of them is more significant than Prop D.
Proposition D made its way to the ballot via the Board of Supervisors, who voted unanimously in its favor back in November. It's the first major legislative effort — with teeth — to address the ongoing problem of widespread retail vacancies in neighborhoods including North Beach and the Castro, but if passed the law would apply to retail districts citywide.
It works like this: Starting in 2021, if a landlord allows a ground-floor retail space to remain vacant more than six months (over 182 days), that landlord will be taxed by the city $250 per linear foot of street frontage per year. That tax doubles in the second year to $500 per foot, and then it's $1000 per foot every year after that. This means that if a property owner is holding out for a tenant who can pay a particular high rent, or if that property owner is holding out leasing a space for any reason, it will be to their financial detriment to wait too long.
For example, an empty storefront with 60 feet of street frontage will cost the property owner $15,000 if it sits empty over six months, and $45,000 total if it sits empty for 18 months. After that, it's costing 60 grand a year as it sits empty, so finding a tenant at any price becomes a much better business decision.
Hoodline has been chronicling the vacancy situation in the Castro for many months now, in particular the stretch of Market Street between Castro and Sanchez, where this year there are about a dozen storefronts sitting empty, seeking tenants. Add to that vacancies on Church Street and the 18th Street corridor, including prominent restaurant spaces like the former Chow, the former Eureka, and the former Firewood, and the neighborhood has gotten to feel half empty.
And while the retail economy and the well documented plight of small restaurants in this city are partly to blame, there are often factors that are within a landlord's control to change.
"Virtually all of us have seen storefront vacancies increase along our most vibrant commercial corridors,” Supervisor Aaron Peskin said to the Examiner back in November. "While some of this can be attributed to the rise in online shopping, our own Budget and Legislative Analyst has pointed to other factors, including absentee landlords, speculative rent increases, and failure to rehabilitate or improve commercial space to attract community-serving tenants."
As Forbes explains, retail lease rates have been trending downward in other cities due to larger economic factors, including London and New York. And San Francisco landlords have been slow to catch up, and reluctant to lower rents. Citywide, the retail vacancy rate here is 12 percent, and in some neighborhoods it's now as high as 27 percent.
Landlords will argue that this tax is just another way that SF makes it harder to do business, and that it's effectively punishing them for economic factors not in their control. But the hope is that Prop D will encourage lazy, overly greedy, and absentee landlords to be more flexible and get more creative, and thereby revive the flagging street life in some of our once vibrant neighborhoods.