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Despite tons of storefronts standing empty across the city, hardly anyone pays the vacant storefront tax

Things may be about to change for non-compliant property owners, who have been getting away scott-free so far

3:43 PM PST on January 10, 2025

San Francisco has a vacant storefront problem. 

Every commercial corridor is pockmarked by darkened, empty windows, and the shells of restaurants and stores driven out by high rents, internet retail, and pandemic-driven changes to foot traffic. 

City legislators and voters have tried to address the problem through various means, including a voter-approved tax on vacant commercial properties that went into effect in 2022. But the jury is still out on whether the nascent programs are actually working — and whether they’re doing more harm than good. 

The city has two programs in effect to track and discourage vacant storefronts by charging them taxes and fees — one with the Department of Building Inspection and the other with the Treasurer & Tax Collector office. But neither program is succeeding in addressing the very visible vacant storefront issue in San Francisco. 

In fact, despite having two programs dedicated to tracking vacant storefronts, it’s pretty clear neither actually know how many commercial properties are empty. 

Data from the city treasurer’s office, which is tasked with managing San Francisco’s voter-approved commercial vacancy tax that went into effect in 2022, shows there were just 95 reported vacancies in 2023 across specific commercial districts that include streets like Fillmore, 24th, Polk, and Mission, Amanda Fried, the treasurer department’s chief of policy and communications, told Gazetteer SF. In 2022, there were 183 reported vacancies, she said. The vacancy tax charges an annual minimum tax rate of $250 per linear foot of vacant storefront.

Whether or not those parcels have vacant storefronts, the property owners and business owners are required to file paperwork with the city’s treasury department noting if they’re vacant, Fried explained. That means multiple people may be required to file reports about the same land. Whoever is responsible for keeping that space vacant is required to pay the tax, she said.

But for a good chunk of these businesses, many of which are not large corporations, Fried said, they simply just don’t have this vacancy tax “top of mind.” For the 2023 tax year, there were about 800 missing filings, according to Fried.

“It’s a little challenging from a compliance perspective,” she said. “We knew this going in, that this is going to be a little hard for people to understand.”

In addition to the commercial vacancy tax with the treasurer’s office, there’s a vacant storefront registry with the building inspection department. On top of the vacancy tax, this program charges a roughly $1,200 annual “fee” for empty storefronts citywide. This department’s data shows there were 537 vacant storefronts from 2023 through 2024 in San Francisco, including 94 in the Mission, 18 in SoMa and four in the Excelsior. A quick walk though any of those neighborhoods would debunk those numbers.. 

Both of these programs rely on property owners and small business owners to self-report and then, in turn, face financial penalties. The building inspection department’s public information officer, Kelley Omran, acknowledged that the agency relies on property owners and small businesses to self-report. If owners choose not to, they’re not included in the data — and are not subject to the fines. 

For the first two years of the program, the city had a grace period where there weren’t any penalties for not filing or filing late. But that’s no more. In the coming months, the city plans to ramp up its efforts to get the owners of vacant storefronts to file appropriate paperwork and pay the tax, Fried said. She doesn’t expect those vacancy numbers to go up astronomically, but she does expect to see a significant uptick in filings. 

When asked last month about vacancy taxes, Excelsior Action Group board member Cathy Mulkey Meyer told Gazetteer she believes the commercial vacancy tax hurts small business owners more than larger-scale property owners. Those corporate property owners “end up being able to afford the fines and it really ends up hurting the small property owner” if they self-report vacancies, she said.

The commercial vacancy tax program has brought in about $3 million, which then goes toward the Small Business Assistance Fund, Fried said. While she said the program was designed to boost storefront occupancy numbers, rather than as “a money-maker,” the city previously said that the program would generate up to $5 million annually.

When asked how well the commercial vacancy program has been going, Fried said “it’s hard” to say.

“I can say how it’s going so far, but yeah, I would sort of leave it to you to figure out what you think,” Fried said. “I don’t, I don’t know what to say.”

Former city Supervisor Aaron Peskin, who authored the legislation that underpinned the 2020 ballot measure, told Gazetteer he believes the program has been successful so far. But that opinion seems to be based on vibes, rather than fact.

“At least anecdotally, [the tax] is leading to historically vacant storefronts getting repopulated faster,” Peskin said. “I can tell you that in the case of the commercial district that I watch most closely, there are today less vacancies in the North Beach neighborhood than there were pre-pandemic.” 

As the filing deadline for the 2024 tax year approaches next month, the city plans to use more of the tools at its disposal to track down non-compliant owners and encourage them to file appropriate documents, Fried said. The goal is to actually help the city accurately identify vacant properties, rather than to punish non-compliance, she said. 

“What that means is we say, ‘Hey, you didn’t answer. You didn’t file your taxes. We’re going to assume you were vacant.’ So that’ll get added in eventually as well, and then we’ll just send them a bill for the highest amount,” she said. “That will get more folks to say, ‘oops, yeah I missed that. I wasn’t vacant, let me correct it.’ And then if we still don’t hear from folks then we have a number of severe tools that we can use to go after people and make sure they’re paying their taxes.”

The department, she said, is “trying to give folks every opportunity to come into compliance before we really kind of like, throw the hammer down.”

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