Three San Francisco supervisors on the Budget and Finance Committee unanimously approved a resolution Wednesday that, if the entire board approves, would return property taxes to downtown developers who retrofit old offices into housing.
The rationale for the giveback is that turning offices into housing is expensive, and this would help developers recoup those costs.
The resolution would create a special district spanning the Financial District, SoMa, and parts of Market Street that includes at least 49 commercial properties that could be converted, said Jacob Bintliff, the manager of economic recovery initiatives for the Office of Economic and Workforce Development, which is spearheading the effort.
Converting all of the properties would add some 4,400 new units, which could generate up to $15.2 million in extra property taxes for the city. But that money would be disbursed back to developers, rather than going into the city’s general fund. It represents less than one percent of the nearly $2.5 billion the city is projected to receive in property taxes this fiscal year.
The full Board of Supervisors will likely vote this fall on whether to create the special district.
This resolution follows other incentives recently created by voters and the city to spur investment in the city’s flagging downtown. In November, voters passed Proposition C to waive transfer taxes for office-to-housing conversions. The Board of Supervisors also approved an ordinance in March that waived affordable housing fees for office-to-housing conversions downtown.
But the resolution approved today “is the last piece of the puzzle,” Marc Babsin, the president of the Emerald Fund, a San Francisco-based real estate developer, said during the meeting Wednesday. “We will actually start to see conversions in Downtown and activation in Downtown.”
In 2015, the Emerald Fund turned the former headquarters of the California Automobile Association at 100 Van Ness Ave. into 418 apartments.
Architects say turning offices into homes is expensive. Plumbing has to be rerouted from communal bathrooms to single units. Floor plans of office buildings can be tough to rework in a way that allows enough natural light for a living space.
District 1 Supervisor Connie Chan, who ultimately voted for the resolution, did so after first balking at the extent of incentives going to developers.
The city, she said at the Wednesday meeting, is “giving a lot already.”
The city is giving a lot, while facing a $781.5 million deficit. The administrative costs of managing this special district will need to be added to the city’s budget for next year, Bintliff said. However, state law lets the city recoup these costs.
Mayor Daniel Lurie will present a draft budget to the Board of Supervisors on June 1.
This isn’t the first time San Francisco has offered tax breaks to try to revive parts of downtown. After the 2008 financial crisis, the city tried to revive the mid-Market area by giving a payroll tax break to some tech companies. Known as the “Twitter tax break,” because it was put in place after Twitter threatened to leave town, it had mixed results.
Blight is still a problem in mid-Market, so much so that it’s included in the proposed new zone. Twitter, now X, gutted its workforce, and then moved to Texas anyway.
Office to housing conversions works for about 1-2% of commercial buildings.
Skip the tax incentives, they don’t make sense.
CA is loosing population, we don’t need more housing, we need more jobs first to attract people, then we can think about more housing!
Give the tax incentives to business who bring people to work downtown, and get S.F. back to 1.6M people in the downtown daily. Forget these conversions.
Start seriously cleaning up the TL (convert that whole neighborhood) , clean up Mission St and get serious about the street conditions.
Upzone/rezone the TL.
We’re not returning to 2018 and fill all that office space again, not even close. So, even if it is a drop in the bucket and rather symbolic, I say implement this tax break. Because, why not, it might tip a project or two into conversion.
Look how well the Twitter tax break went, for starters.
If you want to make hyper-expensive luxury yuppie condos, fine.
You shouldn’t need taxpayer money (in a Billion dollar deficit!) to do it!
I say reject more of the same mistakes that Ed Lee and London Breed bent over backwards to make. If it doesn’t pencil out to make YUPPIE CONDOS out of office towers without a handout from TAXPAYERS FACING A DEFICIT, none of which will effectively help the housing crisis felt at the bottom, then it doesn’t pencil out – and the Billionaire property owners can write it off.
Besides, these buildings will LITERALLY take a decade before the first person moves in – and the market rate rents for yuppie condos in 2035 will not be lower than it is now, despite the voluminous YIMBY liars who are paid to obfuscate the issue daily.
Unless it will be family housing (3+ BRs) and/or explicitly affordable housing, only studios and 1BRs will be built, of which there is already a glut as unfillable as the twenty-three Salesforce Towers’ equivalent of empty office space. Even with, or partly because of, the Artificial Idiocy bubble, “tech” is actually downsizing and demand for expensive studios and 1BRs for coders is cratering.
people don’t realize that the structure of an office building is MUCH different than a residential building, meaning the only ones that might qualify are prob less than 1%. The goal is to make expensive condos (this is the highest profit margin. Remember, developers are in it to make money) which are disproportionally sold to people out of town, meaning MORE people come in, meaning this idea people push that “more housing = cheaper rent”, is false, since we don’t live in a vacuum.
Anyway, I was initially a fan, but with the fact that it’s such a small percentage of buildings and the result is almost exclusively to benefit rich out of towners and the rich people that already own the buildings and (like Moritz, who specifically bought some and then donated a million bucks to push this plan in the last election)… well, I’m tired of subsidizing billionaires’ with tax breaks and special exceptions to laws that only benefit them and nobody else.