San Francisco wants to propose a vacant property tax

SAN FRANCISCO (KTVU) - San Francisco's Board of Supervisors are proposing putting a tax on vacant housing and storefronts on this November's ballot. It's an aggressive plan to address the issue of landlords deliberately taking property off the market. 

San Francisco's North Beach neighborhood currently has a 10 percent vacancy rate, according to Supervisor Aaron Peskin. City leaders said their studies indicate that 20 percent of that is landlords who have kept their ground floors vacant to work around loopholes. 

WATCH: Sup. Aaron Peskin on The 4 

Some city leaders would like to see the city's vacancy register current and up to date. In order to do that, landlords would be required to pay a $711 fee to self report as a vacant storefront within 30 days. If they fail to do so, that fee would increase to four times the amount. 

It's the first step, they say, in opening up property in San Francisco's tight housing market. 

Within the 500 block of Columbus Avenue in North Beach, the boarded up buildings and vacant properties are becoming an eyesore for longtime residents like CJ Schake. 

"It's kind of like living in a modern ghost town," said Schake. "And it's prosperity that is creating the vacancy, so it's kind of a paradox." 

To address the issue, San Francisco city leaders said the vacancy tax being pushed by Sandra Lee Fewer of District 1, will prevent landlords from exploiting city ordinances. Fewer spoke to the small crowd gathered for the press conference. 

"If you put a sign up in front of your business that says for lease or for rent, you are not condsidered a vacant storefront. So in my district alone, there are people who have had the same sign up for the last 10 years. Clearly there are some bad actors here." 

Fewer added it's the small businesses that are the backbone of the neighborhood. 

"In order to reach their full potential and vibrancy, we have to start filling some of these vacant storefront," said Fewer. 

In supporting the legislation for a vacancy tax, Supervisor Aaron Peskin in District 3 said the tax would be applied to both residential and commercial properties. 

A residential property with three or more units if left vacant for six consecutive months would be faced with a $250 a day fee until it is leased. 

Commerical properties in neighborhood commercial districts would face the same fee, but it would fluctuate based on square footage. 

"This is not designed to be a revenue generator for San Francisco," said Peskin. "It's designed to be a behavior changer for certain problematic landlords both on the commercial side and the residential side."

If several more hundred units of rental stock can be added back to the market, city leaders say the effort is worth it. 

Shadi Zughayar own Alimento and Coit Liquors in North Beach. His second business, Coit Liquors was lost in a fire, but he relocated to another property in the neighborhood. He said the city was always firm with tenants getting fined if properties weren't maintained. He argues if tenants play by the rules, so should the landlords. 

"[Landlords] deserve it the same way if they close their business because they want $15,000 to $20,000 in rent because no one can afford it and they get a tax deductible at the end of the year. Why don't they get a citation like us?" Zughayar said. 

The vacancy measure still needs six votes from the board to get on the November ballot and from there it needs two-thirds voter approval.