Standing today with Elias Bihaki, the proprietor of Caffe Sapore at 790 Lombard St., Supervisor Aaron Peskin told North Beach residents that he and his fellow legislators are aiming to curb the displacement of businesses by “greedy landlords” who increase commercial rents by unreasonable amounts. Bihaki has owned Caffe Sapore for 23 years, but his landlord abruptly terminated his lease so that he will have to close by Dec. 31.
“He has struggled to make ends meet in one of the most expensive cities in the world, only to have his lease unjustly terminated,” Peskin told the crowd during the media event. “We all know what that means: It means another vacant storefront.”
Vacant storefronts are a problem not just in North Beach but throughout the city — especially in the Mission. Peskin has proposed legislation to tax landlords who keep commercial storefronts empty for extended periods of time. The legislation could have a huge impact on the Mission, where a recent Mission Local tally found 49 vacant storefronts on Mission between Duboce and Cesar Chavez alone.
Peskin’s legislation would impose a $250 per-linear-foot tax on empty commercial storefronts in the first year, but would double the tax to $500 the following year. If the commercial unit is still empty in year three, the city would impose a $1,000 per-linear-foot tax until it is occupied.
There are exemptions for a “disaster period,” or a natural disaster, as well as a construction period exemption for earthquake retrofits. There’s also a six-month exemption that can be applied for when a tenant is moving in, but is still applying for the permits to operate.
Any taxes collected would be pooled into a Small Business Assistance Fund that would provide financial help in case of issues with city construction projects, seismic retrofitting or to build ramps and access points, legacy business grants, and other improvements.
The proposal is slated for a citywide vote on March 3, 2020. It would require two-thirds approval to pass.
This measure comes on the heels of legislation from Supervisor Sandra Lee Fewer requiring registration of vacant storefronts.
Philip Lesser, a director with the Mission Merchants Association, chalked up the spate of vacancies to the decline in retail businesses and the rise in e-commerce.
Lesser said that entertainment businesses including restaurants and bars, to better but are constantly being blocked by the city and by community groups. With this in mind, he questioned the efficacy of the proposed legislation.
District 8 Supervisor Rafael Mandelman, whose district extends into Valencia Street and parts of the Mission, said there is still a lot of data missing to gauge what has caused the vacancies. He hopes the tax works, but said legislators are still trying to gather information from the Department of Building Inspection about vacancies in the Castro. He said further information is required before placing the onus solely on bad landlords.
“Is it reasonable to ask the landlord to take a tenant in who has shown they don’t have enough capital to make a go at it? I don’t know yet,” Mandelman queried. Still, he expressed support for the measure.
Mandelman noted that start-up costs, like permits and inspections for small businesses, are too high and often become the biggest obstacle in getting a business off the ground. District 9 Supervisor Hillary Ronen concurred. She said that her office is working on ways to make it easier for small businesses to flourish.
She, too, is supportive of this tax measure.
“What I’m hoping, once this tax is up and running, is that it creates an incentive for landlords to rent their units at reasonable prices,” Ronen said. “This is going to help the district and the city so much.”
If passed, the Board of Supervisors could make amendments to the vacancy tax with a two-thirds vote to include new provisions or remove old ones.
Correction: This article originally said the tax was based on square footage, but it has been updated to correctly say “per linear foot.”