Housing Conversion Bill May Right Century-old Wrong
It appears San Francisco is finally getting the message: commuter commerce is dead and it isn’t coming back. Now, what to do with the leftover skyscraper graveyard? The practical solution has been obvious since in-office culture collapsed in 2020: turn those highrises into homes. We have the square footage. Even Denim Dan supports the renovations. So why aren’t office-to-residential conversions already well underway?
Changing minds, greasing wheels to make conversion happen
Yes, conversions can get expensive, and yes, each building presents its own challenges. What really stops office-to-residence conversions aren’t the costs or even the difficulty, but that it isn’t profitable to everybody involved. That’s the polite way of putting it. Truthfully, too many property owners are sitting on their hands, believing the old ways are coming back.
“People would need to believe that office uses are going away,” Urban Group Real Estate president and CEO Louis Cornejo told the San Francisco Standard. “You talk to 10 people you get 10 different comments. Are we really going to take a chance on our economy based on: ‘Well, it worked for a year or two?’”
The people Cornejo is referring to are likely the city’s tight-fisted highrise property owners, most reluctant to abandon office culture. But it’s us on the ground left with a deteriorating urban core, in case some big-name tenants come along. Even City Hall is trying to get things moving. Mayor Daniel Lurie introduced legislation in April that would establish a unique urban housing district downtown. Lurie’s bill would create thousands of new housing units by converting vacant office blocks into apartment homes. The proposed district covers much of the Financial District, Union Square, Civic Center, and nearly everything South of Market.
Map by Tom Trumbull of the S.F. Chronicle (beautiful map, Tom!).
Not a rehabilitation project, but a renovation district.
Mayor Lurie’s proposal, co-sponsored by Board of Supervisors President Rafael Mandelman, has outlined an ailing portion of SF. Within its bounds, a study recently identified 49 ideal candidates for office-to-housing conversion. These properties, spanning from the edge of the Mission to the waterfront, could create up to 4,400 new homes. Importantly, at least from the city’s perspective, those homes could generate around $15.5 million in annual tax revenue.
Converting those buildings will be practically impossible unless someone can sweeten the deal. It makes no difference that office vacancy rates in San Francisco have hit historic heights in the last five years. The cost-to-profit ratio is stopping developers from investing in office-to-housing conversions. Lurie can’t foot the bill, though he can make it cheaper on the backend. It’s exactly what he hopes to achieve by designating an EIFD, or “enhanced infrastructure financing district.”
In California, local governments can fund grand infrastructure projects like conversions by recouping the increased property tax revenue from future projects in these districts. Additionally, those funds may then contribute to maintenance, further development, and paying off all bonds. A state law went into effect last year giving San Francisco the power to authorize such a district downtown. Actions by city and state governments have lit a walkable path to converting SF’s old building stock into new housing.
“The basic concept is that you invest in a property by doing a project that increases the property tax value by some amount, and that amount, that increment, is now available to be used in some way to support the project,” said Economic & Workforce Development recovery manager Jacob Bintliff. Lurie’s legislation should go before the Board of Supervisors for a vote this Fall.
The answer to San Francisco’s present crisis lie in its Victorian past
Downtown San Francisco’s EIFD would allow developers to pursue conversion at any of the 49 sites through the year 2032. Prospective developers would need to submit and build the project before becoming eligible for reimbursement. A consulting firm hired by the city assessed these 49 buildings according to their age, size, current state, and vacancy. I noticed, embedded in the map another, similar outline resembling the one onscreen. Curiously, the portion of San Francisco that Lurie selected for conversion fits squarely within the area devastated by the 1906 earthquake.
I’ve been touting a theory that San Francisco cursed itself when it rebuilt downtown with less housing. Prior to 1906, downtown was mixed-use, where many of the city’s merchants lived above or near their businesses. Business and residential elements lived in conflict then too, with developers itching to beautify downtown by hiding its working class. They hoped to snatch that prized real estate and redevelop it with fewer or no residential components. Then came the most powerful earthquake San Francisco ever saw, killing at least 3,000 people, and the wealthy got their wish. With fire and violence, the slate had been wiped clean, and downtown became a district you abandoned at night.
Nearly 120 years later, it appears San Francisco is getting the message: commuter commerce is dead, and office culture isn’t coming back. The answer to San Francisco’s present distress lies in its Victorian past, in a mindset that integrates a permanent population with stationary trade. Turns out we got it right the first time. The city should be of and for itself, yet open to the world, and importantly, open for business.
Howdy! My name is Katy Atchison and I'm an Associate Editor for Broke-Ass Stuart.
I want to take the time to say thank you for supporting independent news media by reading BrokeAssstuart.com. Supporting independent news sources like Broke-Ass Stuart is vital to supporting our community because it amplifies the voices of a wide variety of diverse opinions. You also help support small businesses and local artists by sharing stories from Broke-Ass Stuart.
Because you're one of our supporters, I wanted to send over a pro-tip.
Our bi-weekly newsletter is a great way to get round ups of Broke-Ass Stuart stories, learn about new businesses in The Bay Area, find out about fun local events and be first in line for giveaways.
If you’d like to get our newsletter, signup right here, it takes 5 seconds.
You Might Also Like
