A state Senate bill aims to create a revitalized downtown San Francisco with less empty space and more foot traffic by easing tax and regulatory burdens on developers.
Senate Bill 1227, authored by Sen. Scott Wiener, would target a specified area downtown “to speed the conversion and remodeling of outdated buildings into vibrant new uses,” according to a Feb. 16 press release by the San Francisco Democrat.
The bill is sponsored by San Francisco Mayor London Breed, who said in the same announcement that downtown needs to change.
“San Francisco thrives when downtown thrives, but the reality is that we need to evolve beyond the traditional 9 to 5 neighborhood it has been for decades,” she said.
The vacancy rate for the city’s office buildings reached 35.8 percent by the end of the fourth quarter in 2023, according to the press release, more than seven times higher than during the same time in 2019, before the COVID pandemic sent many employees to work from home.
One issue the city faces is a slow return of foot traffic. San Francisco’s foot traffic is 67 percent of 2019 levels while Los Angeles and San Jose have reached 83 percent and 96 percent, according to the press release.
The bill, if passed, would be effective for 10 years, until Dec. 31, 2035. Under it, projects that include certain environmental, labor, and tenant protections could be eligible for exemption from the California Environmental Quality Act (CEQA)—a state law that requires an environmental impact assessment for new developments—which could incentivize and expedite the building of schools, student housing, athletic facilities, or mixed-use projects where housing, retail, and office space are combined.
While projects could be exempt from CEQA, they would still face “strong-anti displacement and environmental protections,” according to the press release, including a rule that projects cannot replace buildings that have housed tenants in the last 10 years, must not demolish any registered historic landmarks, and cannot be built on an “unmitigated hazardous waste site.”
The exemption would be in addition to a law written by Mr. Wiener last year that provides CEQA exemption for projects that are at least two-thirds residential housing. Under the new bill, mixed-use projects that don’t meet the two-thirds requirement but meet the other qualifications would also be eligible.
The bill also expands a property tax exemption for projects that include what’s known as affordable housing, which consists of homes that are subsidized to renters earning less than 80 percent of a county’s area median income, and “workforce housing,” which is affordable to middle-class families.
The so-called “welfare exemption” applies to such housing owned by a nonprofit where the property is considered a charitable use, but under the proposed bill would also require rentals to be at least 10 percent below market value for the workforce housing projects.
In San Francisco, residents earning 120 percent of the county area median income, or $121,000 for a single person, would qualify for such housing, according to 2023 figures from the city.
The downtown area that would be covered by the bill includes Union Square, the Civic Center, the Financial District, Yerba Buena, East Cut, South Beach, and Rincon Hall, according to the bill.
President and CEO of the San Francisco Chamber of Commerce Rodney Fong called the senator’s proposal a “once-in-a-generation” chance to reimagine the city’s downtown as the city recovers from the pandemic, he said in the same announcement.
