Downtown San Francisco Poised To Attract Housing Development Under Ting Bill Signed By The Governor

For immediate release:

Thursday, September 19, 2024

New housing could play a big role in revitalizing Downtown San Francisco, now that Governor Gavin Newsom today signed AB 2488 by Assemblymember Phil Ting (D- San Francisco). The bill uses tax incentives to entice developers into converting the area's empty office and retail spaces into residences.

"It's time to bring downtown back to life. We have a housing shortage and an unprecedented amount of commercial properties for rent. It makes sense to repurpose under-utilized buildings and turn them into places to live. Tax incentives have been a proven mechanism in other cities to create now thriving, walkable, mixed-use communities. I want the same for San Francisco," said Ting.

Transforming commercial spaces into homes can be expensive, as buildings have to be retrofitted to current residential safety codes. On top of that, construction costs are high. To make the undertaking more appealing, AB 2488 empowers city leaders to establish a downtown revitalization and economic recovery financing district, allowing developers to qualify for a portion of their property tax returned to them annually for thirty years.

"AB 2488 will help San Francisco convert empty and struggling office space downtown into much-needed housing. With his signature, Governor Newsom ushers in a new era of investment, activity and vitality in Downtown San Francisco. The Bay Area Council and our members are proud to have sponsored this bill, and we thank Assemblymember Ting for his leadership and Mayor Breed for her partnership on this important new law," said Jim Wunderman, President and CEO of the Bay Area Council, an organization focused on regional economic development.

In the second quarter of 2024, the City had a record-high 37% office vacancy rate, one of the highest in the state. The retail vacancy rate also reached a record high in the same period, hitting nearly 8%. Today's hybrid model of working from home on some days and in the office on others has diminished foot traffic in Downtown San Francisco. Transit ridership rates and consumer spending consequently dropped, forcing business that catered to workers to shut down and companies to downsize.

Under Ting's legislation, office and retail conversions would create as many as 14,000 additional homes, and good-paying construction jobs will open up as a result of these projects. When complete, bringing more people back to downtown will boost demand for restaurants, nightlife, and other businesses.

AB 2488 takes effect January 1, 2025.