San Francisco has been in a housing crisis for years.

A recent study by city government researchers found 1 in 10 of the city’s condos and homes are sitting empty.

For example, at the corner of Third Avenue and Lincoln Way, an entire building sits empty. It’s been boarded up for quite a while, enough time for neighbors to wonder what’s ever going to be done with it.

“I think there should be a date for long it can remain empty. For a certain amount of time, it’s fine,” said San Francisco resident Lauren Turetsky.

The property is in San Francisco Supervisor Dean Preston’s district. He said it’s a prime example of a persistent problem in the city.

High rent, exorbitant home prices, and not enough space — the Bay Area is full of housing problems. There are thousands of places sitting empty in San Francisco and now, Supervisor Dean Preston is proposing a tax for these vacant homes. NBC Bay Area’s Jessica Aguirre spoke to him for more information.

“We see in a lot of neighborhoods, buildings that have just been abandoned,” he said. “They sit vacant not just for a year or two years, sometimes five, ten years or more.”

But the older buildings are a smaller portion of the overall problem. According to city figures, larger towers and condominium complexes that have been built in the Financial District, SOMA and Mission Districts really make up a larger portion of the empty units in the city.

According to a report by the San Francisco budget and legislative analyst’s office’s 2019 data, there are about 40, 458 housing units that are sitting empty.

Of that 2019 data, the vast majority have been sold and are unoccupied or they’re seasonal, recreational and other occasional housing, or they’re off the market renovations, corporate housing or homes tied up in personal family issues.

Preston told NBC Bay Area Wednesday that he is exploring a vacancy tax, aimed at owners who are keeping properties off the market, sometimes for years as a business decision.

“So, one of the things a vacancy tax could do is change that calculation. So now there’s actually a cost to holding it vacant. And they’re going to be more interested in renting it, or selling it to an owner occupant,” he said.

It’s an idea that’s raising questions among residents.

“We have to be very careful about being too arbitrary about time limits and very careful about how you define a vacancy,” said San Francisco resident Ray Vandenberg.

Preston is exploring similar taxes that have already been imposed in Vancouver, Canada, Washington DC and Oakland.

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Having inched down to just under 20 percent at the end of last year, the effective office vacancy rate in San Francisco ticked back up to a pandemic high of 21.7 percent in the first quarter of 2022, representing 18.7 million square feet of vacant office space in the city, including 5.3 million square feet of space which is technically leased but sitting vacant and 13.4 million square feet of un-leased space, according to data from Cushman & Wakefield.

As a point of comparison, there was under 5 million square feet of vacant office space in San Francisco prior to the pandemic with a vacancy rate of 5.7 percent, versus a long-term average of around 12 percent. And as we outlined last quarter, foreshadowing the first quarter rise:

“Despite the drop in the overall vacancy rate at the end of 2021, the amount of un-leased office space in San Francisco actually ticked up, both in the absolute and relatively, with 1.3 million square feet of space that was being offered for sublet in the third quarter having been leased, reoccupied or returned to the market as directly vacant space. And total leasing activity actually dropped from the third to fourth quarter of last year, with “a scarcity of large transactions,” a push back of return to office dates (yes, the surge in COVID cases is meaningful, beyond increasing hospitalizations and deaths) , and under 1 million square feet of space having been leased, including sublets, for a negative net absorption.”

And in terms of active demand for the 18.7 million square feet of vacant space, Cushman & Wakefield is currently tracking active requirements for 4.9 million square feet, which was down from the fourth quarter of last year and 33.8 percent below the pre-pandemic demand.

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Residential vacancies have risen sharply in San Francisco in recent years, from 26,000 in 2013 to more than 40,000 — 10% of all homes in the city — in 2019. In response, Supervisor Dean Preston and his allies have put forward a ballot initiative, the Empty Homes Tax, that would assess an escalating fee on housing units left vacant at least six months out of the year. The tax could incentivize some property owners to put their vacant homes back on the market, either for rent or sale. It’ll also raise millions of dollars in revenue from those who would rather just pay the fee.

Pointing to similar policies in Oakland, Washington, DC, and Vancouver, British Columbia, Preston says the tax could generate $38 million per year and put 4,500 homes back on the market. He has also claimed that vacancies are “overwhelmingly” concentrated in the sleek new condo and apartment buildings in the city’s eastern and northeastern neighborhoods. The initiative itself says the tax applies only to larger buildings because they’re “more likely to include one or more units held vacant by choice.”

The problem is when it comes to long-term vacancies, large condo and apartment buildings aren’t the worst offenders — it’s two-unit homes, and they’re exempt.

The initiative’s proponents might be forgiven for the misconception. Before 2020, detailed data on the duration of vacancies wasn’t available: We knew why a unit was vacant — because it was for sale or rent, rented or sold but not yet occupied, or being used as a vacation home, for example — but the Census Bureau didn’t distinguish between units vacant for a week, a month or a year. That distinction is critical because short-term vacancies are a natural part of the housing market: When someone moves out of a rental, the landlord has to clean it up, put it back on the market and find a new tenant. An owner might vacate a home for renovations before listing it, or a buyer might spend several months on renovations before moving in. We could look to cities like Vancouver and Oakland and make inferences about long-term vacancies in San Francisco, but no one really knew.

But now we do.

In 2020, for the first time, the Census Bureau estimated vacancy duration alongside vacancy type and building size in its American Community Survey. And while the overall case for a vacancy tax looks strong, its exemptions are critical, unforced errors, according to my analysis of census data.

Vacancies continued their rise in 2020, to more than 56,000 units, or 14% of the overall stock. Given the disproportionate impact of COVID-19 on the San Francisco housing market, this shouldn’t be too surprising. Of those 56,000 empty homes, nearly 20,000 were vacant for at least six months. But roughly 8,200 — 41% of long-term vacancies — are in buildings of one or two units. They won’t be subject to the tax, and they’ll be more likely to remain empty.

Long-term vacancies in the biggest buildings — those with 50 units or more — are surprisingly rare: Only 5.5% were empty for at least six months. Two-unit homes, with a rate of 11.9%, have the most long-term vacancies by a wide margin. About 9% of homes with three or four units were vacant for at least half the year, and the rate was under 6% for all other building types.

What can this vacancy data tell us about the likely impact of the San Francisco tax?

Vancouver’s experience may be instructive. Its tax went into effect in 2017, and that year the owners of nearly 2,200 homes were required to pay it. Another 5,500 long-term vacancies were exempted, mostly because of property transfers and renovations or redevelopments. By 2020, the number of taxed properties fell by nearly 600 and exempt properties declined by 1,250 — about a 25% drop in both cases. The tax generated nearly $34 million in 2018, according to the city’s annual Empty Homes Tax Report, though collections had fallen to $21 million by 2021, as vacant homes were returned to market.

In San Francisco, up to 12,000 homes could be eligible for the vacancy tax. If two-thirds are exempt, as in Vancouver, roughly 4,000 might actually pay it. This won’t amount to much revenue. In the first year of vacancy, owners will pay between $2,500 and $5,000, depending on the size of their unit. Homes in larger buildings tend to be smaller, on average, and buildings with one and two units are exempt, so most homeowners will pay the smaller amount.

Vancouver, meanwhile, assesses a tax equal to 1.25% of a property’s assessed value, or roughly $16,000 per vacant unit. Vacant one- and two-unit homes pay a disproportionate share of revenue — $31,000 each, on average — because their typical values ​​($2.5 million) are double those of condos ($1.26 million). All told, San Francisco’s tax might generate $10 million to $15 million in its first year, a far cry from Preston’s estimate of $38 million. It could have doubled that amount, or more, if one-unit and two-unit homes weren’t exempt.

In a nod to the important role of supply in the price of housing, the primary goal of the tax isn’t to raise revenue, but to turn vacant homes into occupied homes. If San Francisco’s tax is as successful as Vancouver’s, it could put around 3,000 homes back on the market within several years. Given that the proposed San Francisco tax is substantially lower, however, this might be optimistic. It’s also less than the 4,000 units built in the city each year, on average, from 2015 to 2020. In Vancouver, the average value of vacant homes is higher than their occupied counterparts, so the homes that return to market may not be particularly affordable , either.

These criticisms don’t mean that a vacancy tax is a bad idea. Especially in a hot housing market like San Francisco’s, it’s better to have houses occupied than not, and revenue generated from units that remain vacant can be put to good use. Long-term vacancies are also a bigger problem in San Francisco — in 2020, at least — where 4.9% of units have been vacant six months or more, compared with 4.3% in Oakland and 2.4% in Los Angeles. But by exempting one- and two-unit buildings, the initiative’s authors have left thousands of empty homes and millions of dollars on the table — and for what?

Political concerns shouldn’t have been an issue: Oakland’s vacancy tax, put on the ballot in 2018, didn’t include these exemptions and it passed easily, with 70% support. The tax raised nearly $10 million last year. Vacant single-unit properties paid twice as much as owners of vacant condo, duplex and town home units. This is a good thing. One- and two-unit homeowners tend to be higher-income and have higher home values, so fairness and equity would suggest heavier penalties, not a special dispensation.

In the end, unfounded biases against new, higher-density housing seem to have won the day in San Francisco. City residents want to be the ones to lose out.

Shane Phillips manages the UCLA Lewis Center Housing Initiative and is author of “The Affordable City.”

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In addition to the 7.87 million square feet of unlet office space now distributed throughout the city of San Francisco, up from 6.7 million square feet of unlet space three months ago, there is now an additional 7.99 million square feet of office space, according to Cushman & Wakefield Rented space that is vacant and offered for sublet. That equates to 7.2 million square feet of sublet space at the end of last year.

This means that there is now 15.85 million square meters of vacant office space across the city, which corresponds to a vacancy rate of 18.7 percent. This corresponds to a vacancy rate of 16.7 percent three months ago compared to a vacancy rate of 6.0 percent at the same time last year. This does not include a further 1.3 million square meters of space that is either under construction or is currently being renovated.

While leasing activity rose from a 30-year low at the end of 2020, only 433,000 square meters of space were rented in the first quarter of 2021. This equates to a lease of 1.1 million square feet in the first quarter in the last quarter, a long-term average of around 1.6 million square feet per quarter and a DotCom-era low of 933,000 square feet in the second quarter of 2001.

And while landlords remained stable in the second quarter of last year, the average asking rents for office space in San Francisco are now down 12 percent to $ 73.76 per square foot per year, reflecting mid-2018 vacancy rates closer to 7 percent, which suggests there is still a lot to fall.

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Daina Lujan

The South San Francisco Unified School District Board of Trustees appointed a new president and agreed to appoint a member after former President Eddie Flores, who had joined the South San Francisco City Council, left.

The trustees unanimously voted to appoint Daina Lujan as president of the school board during a meeting on Thursday, February 11, when officials also agreed to appoint a new member rather than hold an election to approve a replacement for Flores Find.

The decisions come weeks after Flores stepped down from his position on the school board to join the South San Francisco city council to complete the tenure begun by Vice Mayor Mark Nagales during the city’s transition to a district electoral system. Nagales is now in a district seat on the council.

School district officials had considered holding an election where voters could determine who would complete Flores’ term on the Board of Trustees, but ultimately found the cost to be too high to justify it.

“I don’t think I have to spend a million dollars [for a special election] A pandemic is really in the best interests of our students or our district, ”Board Trustee John Baker said in a prepared statement. “So I would agree with the recommendation to make a preliminary appointment.”

The application deadline for the school board ends on Thursday, March 11th. Applications are available on the school district website. A first round of interviews is expected to take place one week after the application deadline, followed by a second round of finalist interviews. Civil servants are required to find a replacement for Flores within 60 days of his resignation.

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