Senate Environmental Quality Committee Passes Senator Wiener’s Bill To Revitalize Downtown San Francisco

SACRAMENTO – The Senate Environmental Quality Committee passed Senator Scott Wiener’s (D-San Francisco) Senate Bill 1227, new legislation that spurs the revitalization of downtown San Francisco by providing regulatory and tax relief to a targeted area for a period of 7 years. The bill passed 4-2 and heads next to the Senate Revenue & Taxation Committee.

Vibrant urban centers are a critical tool to reduce greenhouse gas emissions from transportation, and San Francisco holds some of the world’s strongest environmental protections for development. Additionally, Senator Wiener amended the bill to ensure projects meet high environmental standards to qualify for the exemption.

“San Francisco’s downtown is hurting, and we need to move with all possible speed to reimagine it as a vibrant hub of activity,” said Senator Wiener. “In the process, we can slash our greenhouse gas emissions from transportation by building dense housing in our downtown core. I thank the Committee for collaborating with me to achieve these goals.”

Recent new leases and rising tourism show encouraging signs for downtown San Francisco’s economic recovery, but many metrics show a struggle to regain its pre-pandemic levels of activity. The office vacancy rate climbed steadily in recent years to reach 35.8% by the end of Q4 2023 — a steep rise from Q4 2019’s vacancy rate of 5%. Foot traffic is returning more slowly to San Francisco than to other California cities, reaching just 67% of 2019 levels compared to 83% for Los Angeles and 96% for San Jose. These reduced levels of activity are stifling small businesses, hotels, and vital local tax revenue in San Francisco.

The bill provides an expedited pathway to convert parts of downtown San Francisco’s office-heavy downtown to a vibrant mixed-use hub of activity.

First, the bill provides a CEQA exemption for most projects, so long as they meet specific environmental, labor and tenant protections. The exemption could be applied to large-scale projects such as academic institutions, student housing, athletic facilities, laboratories, new office buildings, mixed-use projects that contain housing, retail, infrastructure, and public works projects. It could also be applied to small projects, such as changes to a small business’s façade.

SB 1227 does not relax any local permitting or zoning requirements. The City of San Francisco will continue to implement its local permitting requirements. The City will also be able to invoke this CEQA exemption.

Second, SB 1227 expands the ‘welfare exemption’ from property tax for specified projects that provide rental housing up to 120% of the area median income, so long as projects are rented 10% below the market value, as determined by the Housing and Urban Development Fair Market Rents. This provision expands a property tax exemption used by affordable housing projects to encourage the production of moderate-income workforce housing projects in downtown San Francisco. This expansion will help the City meet its housing goals while giving more moderate-income workers a chance to locate close to jobs and supporting local businesses with an increase in area residents.

The downtown zone covered by the bill includes the Financial District, Union Square, Civic Center, Yerba Buena, East Cut, Eastern and Central SOMA, South Beach, and Rincon Hill.

SB 1227 is sponsored by San Francisco Mayor London Breed. The bill is supported by the San Francisco Housing Accelerator Fund, the San Francisco Chamber of Commerce, YIMBY Action, SPUR, Bay Area Council, and many others.

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