Short Title. | |
Findings and Purpose. | |
Definitions. | |
Imposition of Tax. | |
Exemptions and Exclusions. | |
Administration. | |
Deposit of Proceeds; Expenditure of Proceeds. | |
Technical Assistance to the Tax Collector. | |
Amendment of Ordinance. | |
Severability. | |
Savings Clause. | |
This Article 29 shall be known as the “Vacancy Tax Ordinance,” and the tax it imposes shall be known as the “Vacancy Tax.”
(Added by Proposition D, 3/3/2020, Eff. 4/17/2020, Oper. 1/1/2021)
(a) San Francisco’s neighborhood commercial districts prioritize street-level, customer-facing businesses as a means of stimulating a bustling, pedestrian-friendly urban environment. Retail storefronts are the building blocks of neighborhood vitality, encouraging people to stroll through San Francisco’s streets, sidewalks, parks, and other open spaces, and inviting them in.
(b) San Francisco residents and visitors have an interest in preserving the vitality of commercial corridors in these districts. Vacant storefronts in otherwise vibrant neighborhood commercial districts degrade the urban environment and reduce the quality of life in those neighborhoods, leading to blight and crime, particularly when storefronts stay empty for extended periods of time. Further, the resulting blight negatively impacts other small businesses in the area by discouraging foot traffic and eroding the character and uniqueness of San Francisco’s diverse neighborhoods and communities.
(c) Retail vacancies may occur when property owners are performing tenant improvements for prospective tenants, while actively seeking a new commercial tenant, or following a disaster requiring wholescale rehabilitation of a structure. These temporary vacancies reflect a property owner’s desire to maintain the active retail storefront environment of San Francisco’s neighborhood commercial corridors and to continue contributing to the surrounding community.
(d) But in other instances, retail vacancies occur when a property owner or landlord fails to actively market a vacant retail storefront to viable commercial tenants and/or fails to offer the property at a reasonable rate. Retail vacancies may persist as property owners and landlords hold storefronts off of the market for extended periods of time or refuse to offer the space for a reasonable market rate.
(e) The purpose of the Vacancy Tax is to stimulate the rehabilitation of long-term retail vacancies, and, in turn, to reinvigorate commercial corridors and stabilize commercial rents, thereby allowing new small businesses to open and existing small businesses to thrive.
(f) By dedicating proceeds from the Vacancy Tax to the Small Business Assistance Fund, the Vacancy Tax will also assist small businesses and provide relief to those small businesses adversely affected by blight, crime, and other negative impacts caused by vacant storefronts in San Francisco.
(Added by Proposition D, 3/3/2020, Eff. 4/17/2020, Oper. 1/1/2021)
Unless otherwise defined in this Article 29, the terms used in this Article shall have the meanings given to them in Article 6 of the Business and Tax Regulations Code, as amended from time to time. For purposes of this Article, the following definitions shall apply:
“Affiliate” means a person under common majority ownership or common control with any other person, whether that ownership or control is direct or indirect. An Affiliate includes but is not limited to a person that majority owns or controls any other person or a person that is majority owned or controlled by any other person.
“Building Permit Application Period” means the period following the date that an application for a building permit for repair, rehabilitation, or construction with respect to Taxable Commercial Space in a building or structure is filed with the City through the date the Department of Building Inspection or its successor agency grants or denies that application, but not to exceed one year. Notwithstanding the preceding sentence, if more than one building permit application is filed by or on behalf of one or more persons in the Taxpayer’s Group for the same Taxable Commercial Space, the Building Permit Application Period shall mean only the applicable period following the date the first application is filed with the City by or on behalf of anyone in the Taxpayer’s Group.
“Conditional Use Application Period” means the 183-day period following the date that a complete application for a conditional use permit for use of Taxable Commercial Space is filed with the City, but if the Planning Commission or its successor agency does not grant or deny that application within 183 days, the Conditional Use Application Period means the period following the date that the application is filed through December 31 of the year in which the date 183 days from the application filing date falls. Notwithstanding the preceding sentence, if more than one complete conditional use permit application is filed by or on behalf of one or more persons in the Taxpayer’s Group for the same Taxable Commercial Space, the Conditional Use Application Period shall mean only the applicable period following the date the first complete application is filed with the City by or on behalf of anyone in the Taxpayer’s Group.
“Construction Period” means the one-year period following the date that the City issues a building permit for repair, rehabilitation, or construction with respect to Taxable Commercial Space in a building or structure, provided that if the City issues multiple building permits to or for the benefit of one or more persons in the Taxpayer’s Group for the same Taxable Commercial Space, the One-Year Construction Period shall mean only the one-year period following the issuance of the first building permit to or for the benefit of anyone in the Taxpayer’s Group.
“Disaster Period” means the two-year period following the date that Taxable Commercial Space was severely damaged and made uninhabitable or unusable due to fire, natural disaster, or other catastrophic event.
“Frontage” means the number of linear feet of Taxable Commercial Space that is adjacent or tangent to a Public Right of Way, rounded to the nearest foot.
“Public Right of Way” means the dedicated public alleys, boulevards, courts, lanes, roads, sidewalks, spaces, streets, and ways within the City, which are under the permitting jurisdiction of the Department of Public Works.
“Related Person” means a spouse or domestic partner, child, parent, or sibling (these latter three relationships including biological, adoptive, and “step” relationships; and the sibling relationship also including half-siblings).
“Residential Real Estate” means real property where the primary use of or right to use the property is for the purpose of dwelling, sleeping or lodging other than as part of the business activity of accommodations. For purposes of this Article 29, “accommodations” means the activity of providing lodging or short-term accommodations for travelers, vacationers, or others, including the business activity described in code 721 of the North American Industry Classification System as of November 6, 2012.
“Taxable Commercial Space” means the ground floor of any building or structure, or the ground floor of any portion of a building or structure, where such ground floor (1) is adjacent or tangent to a Public Right of Way, (2) is located in one of the “Named Neighborhood Commercial Districts” or “Named Neighborhood Commercial Transit Districts” listed in Section 201 of the Planning Code, as those districts exist on March 3, 2020, and irrespective of whether those districts are expanded, narrowed, eliminated, or otherwise modified subsequent to that date, and (3) is not Residential Real Estate.
“Taxpayer’s Group” means for each taxpayer, with respect to each Taxable Commercial Space, the taxpayer, any current or former co-owner or co-tenant of the taxpayer, and any Related Person or Affiliate of the taxpayer or the taxpayer’s current or former co-owner or co-tenant.
“Vacant” means unoccupied, uninhabited, or unused for more than 182 days, whether consecutive or nonconsecutive, in a tax year. Notwithstanding the previous sentence, a person shall not be considered to have kept a building or structure Vacant during the Building Permit Application Period, Construction Period, Disaster Period, and/or Conditional Use Application Period if that Building Permit Application Period, Construction Period, Disaster Period, and/or Conditional Use Application Period applies to that person for that Taxable Commercial Space. In determining whether a person has kept Taxable Commercial Space Vacant, days within the Building Permit Application Period, Construction Period, Disaster Period, and Conditional Use Application Period shall be disregarded if that Building Permit Application Period, Construction Period, Disaster Period, and/or Conditional Use Application Period applies to that person for that Taxable Commercial Space.
(Added by Proposition D, 3/3/2020, Eff. 4/17/2020, Oper. 1/1/2021)
(a) Except as otherwise provided in this Article 29, for the purposes described in Section 2907, the City imposes an annual Vacancy Tax on keeping Taxable Commercial Space Vacant.
(b) The tax on keeping Taxable Commercial Space Vacant in a tax year shall be as follows:
(1) For the 2022 tax year, $250 per linear foot of Frontage.
(2) For the 2023 tax year, $250 per linear foot of Frontage for Taxable Commercial Space that has not been kept Vacant by any person in the 2022 tax year and $500 per linear foot of Frontage for Taxable Commercial Space that has been kept Vacant by any person in the 2022 tax year.
(3) For the 2024 tax year and subsequent tax years:
(A) $250 per linear foot of Frontage for Taxable Commercial Space that has not been kept Vacant by any person in the immediately preceding tax year;
(B) $500 per linear foot of Frontage for Taxable Commercial Space that has been kept Vacant by any person in the immediately preceding tax year but not kept Vacant by any person in the tax year immediately preceding that tax year; and
(C) $1,000 per linear foot of Frontage for all situations in which neither subsection (b)(3)(A) nor subsection (b)(3)(B) of this Section 2904 applies.
(c) The Vacancy Tax shall be payable by: (1) the owner or owners of the Taxable Commercial Space kept Vacant, provided that the Taxable Commercial Space is not leased; (2) the lessee or lessees, and not the owner, of the Taxable Commercial Space kept Vacant, if that Taxable Commercial Space is leased but not subleased; and (3) the sublessee or sublessees, and not the owner or sublessor, of the Taxable Commercial Space kept Vacant, if that Taxable Commercial Space is subleased. Not more than one tax shall be imposed under this Section 2904 by reason of multiple liable owners, lessees, or sublessees. If there are multiple liable owners, lessees, or sublessees, each such person shall be jointly and severally liable for the Vacancy Tax.
(d) A person shall be liable for the Vacancy Tax only if that person has kept Taxable Commercial Space Vacant in a tax year. A person shall be deemed to have kept Taxable Commercial Space Vacant in a tax year if that person and all Related Persons and Affiliates of that person, individually or collectively, have kept that Taxable Commercial Space Vacant for more than 182 days in that tax year.
(e) The imposition of the Vacancy Tax under this Section 2904 shall be suspended for the 2021 tax year.
(Added by Proposition D, 3/3/2020, Eff. 4/17/2020, Oper. 1/1/2021; amended by Ord. 94-20, File No. 200420, App. 6/26/2020, Eff. 7/27/2020)
(a) For only so long as and to the extent that the City is prohibited from imposing the Vacancy Tax, 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 shall be exempt from the Vacancy Tax.
(b) Any organization that is exempt from income taxation under Section 501(c)(3) of the Internal Revenue Code of 1986, as amended, shall be exempt from the Vacancy Tax.
(c) The City shall not be exempt from the Vacancy Tax.
(d) If a lessee or sublessee has operated a business in Taxable Commercial Space for more than 182 consecutive days during a lease or sublease of at least two years, such lessee or sublessee shall not be liable for the Vacancy Tax for the remainder of that lease or sublease, regardless of whether that lessee or sublessee keeps the Taxable Commercial Space Vacant.
(Added by Proposition D, 3/3/2020, Eff. 4/17/2020, Oper. 1/1/2021)
Except as otherwise provided under this Article 29, the Vacancy Tax shall be administered pursuant to Article 6 of the Business and Tax Regulations Code.
(Added by Proposition D, 3/3/2020, Eff. 4/17/2020, Oper. 1/1/2021)
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