By Thomas K. Pendergast
In an effort to discourage property owners from leaving storefronts empty along commercial corridors, the San Francisco Board of Supervisors recently passed legislation officially recognizing three areas of the Richmond District as Neighborhood Commercial Districts (NCD).
Geary Boulevard between Masonic and 28th avenues will be designated as the Geary Boulevard NCD; Balboa Street between Second and Eighth avenues will become the Inner Balboa Street NCD; and Balboa between 32nd and 39th avenues will be the Outer Balboa Street NCD. They will be joining the Inner Clement Street NCD, along Clement between Arguello Boulevard and Funston Avenue, and the Outer Clement Street NCD, which lies between 19th and 27th avenues, both of which were previously designated NCDs in 2011.
While all these areas have been commercial corridors for decades, the Board wants to make it official before the March 3 election, when voters will decide on Proposition D, the so-called “vacancy tax” ballot measure.
If passed, it would only apply to officially recognized NCDs that existed before the upcoming election and would tax landlords of commercial space $250 per linear foot of a given shop’s “frontage” – that is the area adjacent or tangent to a public right-of-way – in the 2021 tax year, if they are left empty for more than 182 days within that year. The fee will increase to $500 per linear foot of frontage if the store remains empty through the 2021 tax year and six months into the 2022 tax year.
For the 2023 tax year and subsequent tax years, the tax would be $250 per linear foot of frontage if it has not been vacant in the immediately preceding tax year; $500 per linear foot of frontage if it stays vacant six months into a second tax year; and $1,000 per linear foot of frontage if the property remains vacant six months into a third year.
Exempted from the tax would be any person upon whom the City is prohibited under the constitution or laws of the State of California or the Constitution or laws of the United States from imposing the vacancy tax, like any organization that is exempt from income taxation under Section 501(c)(3) of the Internal Revenue Code of 1986; or if a lessee or sub lessee has operated a business in the NCD for more than 182 consecutive days during a lease or sublease of at least two years, then the lessee or sub lessee shall not be liable for the vacancy tax for the remainder of that lease or sublease, regardless of whether that lessee or sub lessee keeps the space vacant.
Even if Proposition D does not pass, District 1 Supervisor Sandra Lee Fewer said that there are benefits to NCD status.
“Naming these commercial corridors allows the neighbors and merchants to better shape what the corridor looks like by developing more targeted residential and commercial controls to fit the unique needs of their neighborhood,” Fewer wrote in an email statement. “It also ensures that if the vacancy tax proposal on the March 2020 ballot is passed by the voters, it will apply to these commercial areas and provide more leverage for small businesses to negotiate fair lease agreements with commercial landlords.”
Ian Fregosi, legislative aide to Fewer, explained the advantages of being named an NCD to merchants and neighbors in those areas.
“They can make their own targeted controls, like zoning controls, that are specific to that neighborhood corridor without changing the zoning for the rest of the city,” Fregosi said. “If they want to restrict formula retail or a specific thing or if they want to allow a certain use to be allowed or not allowed they can do that, specific to that named (NCD). Just naming it doesn’t change any of the zoning at all, but it does allow for, in the future, that they could do that.”
David Heller, president of the Greater Geary Boulevard Merchants and Property Owners Association, said that officially recognizing these commercial corridors as NCDs is long overdue.
“We’ve been talking about this for quite a few years,” Heller said. “I think it’s a dynamite idea. That’s what we’ve been talking about, me and the early leaders of the Geary Merchants Association. That’s what they really wanted because they believed that this really was a commercial corridor.”
These NCDs are included in a group of 12 new NCDs throughout the City that the Board pushed through in anticipation of Proposition D coming up on the March 3, 2020 election.
District 3 Supervisor Aaron Peskin said this is the largest expansion of NCDs “for many decades.”
“A few have been added one-by-one over the years but adding 12 in six different ` districts is a big deal … and ultimately … will give neighbors and neighborhoods and their supervisors the ability to fine tune those NCDs,” Peskin said.
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