A tax on vacant storefronts was proposed to discourage landlords from keeping properties empty for too long. (Kevin N. Hume/S.F. Examiner)

Prop. D’s vacancy storefront tax moves ahead with latest results

After trailing at the polls for most of election night Tuesday, a proposed tax on landlords for vacant storefronts took the lead for the first time with the latest results.

Supervisor Aaron Peskin introduced the tax, which was placed on the ballot with a vote by the Board of Supervisors, to address the problem of vacant storefronts in neighborhoods like the Castro, North Beach and the Sunset.

The tax also has the support of Mayor London Breed.

The measure needs more than 66 percent of the vote to pass. In early returns, it had 63 percent of the vote with 67,157 ballots counted at that point.

The measure moved closer to approval when more votes were counted from nearly all the polling stations, picking up 68 percent of the vote, or 91,007 votes.

However, the Department of Elections will count at least 70,000 more ballots in the coming days. Those include the vote by mail ballots the department received on Election Day and those that were dropped off at polling stations.

“I am more than cautiously optimistic,” Peskin told the San Francisco Examiner. “I don’t want to declare victory. I do want to salute the small business community that came up with this idea and did all of the heavy lifting for a campaign that had relatively little money.”

Peskin said that the tax is one way to address the vacancies and he plans to propose additional ways, like the permit streamlining proposal he recently introduced.

“Hopefully we will all come together and reverse the ground floor neighborhood commercial district vacancies increases that we’ve seen over the last several years,” he said.

The tax revenue would go into a Small Business Assistance Fund that would help small businesses remain open.

Proposition D would impose a tax starting in 2021 of $250 per linear feet of street frontage if a storefront is vacant in specific neighborhood commercial corridors for more than 182 days in year. The tax increases to $1,000 in its third year and is expected to generate up to $5 million annually.

The tax drew support from a number of small business groups, like the Fillmore Merchants Association, Haight Ashbury Merchants Association and the North Beach Business Association. The campaign raised about $70,000, including $10,000 from Airbnb, $7,900 Housing Forward SF, and $5,000 Chris Foley, founder of commercial real estate brokerage firm Ground Matrix.

There was no funded political campaign against the measure, but the San Francisco Republican Party and a real estate broker submitted arguments in the voter information pamphlet against the measure. The San Francisco Chamber of Commerce also opposed the measure.

“In so many cases, storefront vacancies are a result of permitting delays and complexity at City Hall. We think the best way to approach the issue of vacancies is to remove those permitting roadblocks and letting small businesses fill these storefronts,” chamber spokesperson Jay Cheng previously said in a statement.

The pro-development think-tank SPUR had recommended its approval in its voter guide, noting that speculative landlords are just one part of the problem.”

The group said that combined with permitting process improvements “Prop. D could be an effective tool to push property owners to put their buildings into active use.”

Peskin recently introduced legislation to streamline the process for small businesses to obtain a conditional use permit to open for business by lowering the fee and establishing a “90-day shot clock” for The City to act on the application or the fee is reimbursed.

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