We need residents in downtown San Francisco, not empty offices. Proposition C would help get us there.
By Chronicle Editorial Board Feb 7, 2024 (SFChronicle.com_
It’s no secret; downtown San Francisco is struggling.
Nearly 36% of the city’s office space is empty, totaling over 30 million square feet. Workers would rather stay home than commute, and many of the businesses that relied on the patronage of those commuters have closed, leaving “for lease” signs on vacant spaces. Downtown is the engine that drives San Francisco’s tax revenues. Consequentially, these vacancies are the most significant contributor to the city’s projected budget deficit of nearly $800 million over the next two budget cycles.
Nearly everyone in San Francisco, it seems, sees a solution to this quandary in converting empty, unwanted offices into housing.
Rightly so.
New York successfully converted unwanted offices into housing to revive its ailing financial district after 9/11. Meanwhile, from 2019 to 2023, Salt Lake City added more than 5,000 apartments to its downtown, relying on residents to bounce back the economy, not suburban commuters. It worked. Salt Lake City made headlines for its post-pandemic recovery.
A study from SPUR and the Urban Land Institute found there are somewhere from 15 to 30 office buildings in downtown San Francisco that would be strong contenders for conversions. Doing so could generate around 5,000 units of housing. With some, the process has already started. But conversions are notoriously difficult from a technical perspective, often rendering them financially infeasible.
Proposition C would provide an incentive to get things moving.
Currently, San Francisco collects a real estate transfer tax on most property sales and some leases. The rate can be as high as 6%, and that money goes into the city’s general fund. Prop. C would create a one-time exemption from that tax for owners of empty office buildings who switch their properties to housing. This exemption would only apply to the first 5 million square feet of converted properties.
Prop. C also would give the Board of Supervisors the ability to amend the transfer tax without voter approval, though it wouldn’t be able to increase it. Opponents argue that this is defying the will of the voters who supported transfer tax hikes, most recently in 2020. But asking voters to reconsider these levies and give the Board of Supervisors flexibility to make adjustments during a time of financial instability is entirely reasonable.
Opponents also point out that Prop. C has no housing affordability requirements. But it doesn’t need them. San Francisco already has rules mandating a certain percentage of affordable units in new developments, as do relevant state streamlining laws. Developers who want to use AB2011 to expedite the approval process for conversions, for instance, must provide anywhere from 13% to 30% below-market-rate housing.
Lastly, opponents argue the measure is a giveaway to developers. However, an analysis by the Office of the City Controller found that the conversion of empty office space to housing under Prop. C is likely to generate more property tax revenue than what would be lost to transfer exemptions.
That’s not a giveaway, it’s an investment that can make the city more financially stable and a better place to live.
It was never a good idea for San Francisco’s downtown to have so many offices and so little housing. We need residents in this neighborhood, not empty buildings. Prop. C can help get us there.
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Feb 7, 2024
The editorial positions of The Chronicle, including election recommendations, represent the consensus of the editorial board, consisting of the publisher, the editorial page editor and staff members of the opinion pages. Its judgments are made independent of the news operation, which covers the news without consideration of our editorial positions.
