California legislation that aims to make downtown San Francisco less “office-focused” has passed its legislative first hurdle.
A bill proposed by San Francisco’s Sen. Scott Wiener aims to help transform the city’s beleaguered downtown by creating a “revitalization zone,” temporarily removing environmental reporting required by the California Environmental Quality Act (CEQA), and providing some developers with tax breaks.
The legislation passed the Senate Environmental Quality Committee April 19 and is now waiting for a hearing in the Senate’s Revenue and Taxation Committee.
Crime, drug use, and homelessness have taken over some areas of the once-vibrant downtown. A multitude of tech companies, hotels, and retailers—large and small—have closed in the past few years, especially around the Union Square shopping district.
Businesses continued to vacate office buildings in the city’s core at a record rate last year, according to the international commercial real estate firm CBRE Group.
The city reached a record office vacancy rate of 36.7 percent in the first three months of 2024—up from 35.6 percent at the end of December, CBRE reported.
The business slowdown following COVID-19 pandemic restrictions and shutdowns has impacted San Francisco more than other larger cities, according to a legislative analysis of the bill. Between 2019 and 2023 tax revenue dropped by 25 percent in the city’s financial district, by 38 percent in its Tenderloin District, and by 29 percent in its South of Market district, the analysis revealed.
Downtown also recorded a 33 percent decrease in foot traffic in spring 2023 compared to spring 2019, according to the analysis.
While downtown is recovering, it’s still way behind where it was pre-COVID, according to Mr. Wiener.
“We need to reimagine downtown a more mixed-use place—with office but also housing, entertainment, education and so forth,” Mr. Wiener said. The bill “gives San Francisco one additional tool to do this work sooner rather than later.”
If passed, the bill would exempt projects in the downtown area from environmental study requirements until Jan. 1, 2035. The pause would save projects years of potential litigation and appeals while leaving local zoning and permitting authority intact, according to Mr. Wiener.
It would also expand eligibility for existing property tax “welfare exemptions” for those that provide rental housing up to 120 percent of the area median income if projects are rented 10 percent below market value.
To qualify, projects must be owned and operated by religious, hospital, scientific, or charitable funds, foundations, limited liability companies, corporations, or veterans’ organizations.
Mr. Wiener said he hoped the bill would speed new growth and allow for the conversion and remodeling of outdated buildings into new vibrant uses.
The bill is supported by several Bay Area groups and officials, including Mayor London Breed. The California Retailers Association, a statewide retailer advocacy organization, the San Francisco Chamber of Commerce, and the Union Square Alliance, which serves businesses in Union Square, are among the groups in favor of the bill.
A number of environmental justice and climate action groups, however, oppose it.
In a letter to the Legislature, a coalition of environmental stakeholders claimed the city’s struggles have “nothing to do with CEQA,” the environmental review requirements. Exempting environmental protections would have “serious environmental justice implications, including air pollution, traffic, noise, and pedestrian hazards,” the group wrote, according to a legislative analysis.
For downtown to recover, officials need to stabilize the Bay Area’s public transit systems and provide more flexibility around entertainment, Mr. Wiener additionally said in his X post.
SB 1031 would authorize a Bay Area ballot measure to provide transportation funding and require operational reforms and assessments, and SB 969 would allow cities to create “entertainment zones” in public spaces where local bars and restaurants are allowed to serve alcohol outdoors.
Such would give bars and restaurants and the surrounding businesses a “much-needed boost,” Mr. Wiener said.
