Mayor Edwin M. Lee highlighted the ongoing revitalization of the Central Market neighborhood three years since the creation of the Central Market/Tenderloin Payroll Expense Tax Exclusion. The tax exclusion was adopted by the Board of Supervisors and signed by the Mayor in April 2011 when Central Market had some of the highest vacancy rates in the City. Central Market is now home to 18 technology companies, 17 small businesses and eight arts venues as part of the City’s revitalization efforts. Since 2011, the City has collected $8.4 million in additional revenue from increased property tax and real estate transfer tax in the Central Market area.
“The turnaround and signs of revitalization in the Central Market area in just three years are remarkable, but we have more work to do to help longtime residents and new small business owners alike,” said Mayor Lee. “The Tax Exclusion was carefully crafted to attract investment into the heart of our City, which for years suffered from high vacancy rates and stubbornly resisted previous attempts at revitalization, and it has been a nationally-recognized success. Today, Central Market is at the center of new job creation, housing production and the arts in our City, generating new jobs and bringing millions of dollars in new revenue to fund vital City services for the neighborhood. The decades of disinvestment and abandonment by the public and private sectors in Central Market are over, and we will not turn back the clock on our promising efforts to create a healthy, vibrant and economically diverse community in the Central Market neighborhood.”
Central Market has faced significant challenges for nearly four decades stubbornly resisting attempts at revitalization and improvement. In 2010, thirty percent of storefronts were vacant, the highest in the San Francisco. Office buildings were vacant and blighted and repeated efforts to revitalize the street had not succeeded. There were zero technology firms located on Central Market and zero housing units were under construction.
In the three years of since the creation of the Central Market/Tenderloin Payroll Expense Tax Exclusion, the Central Market area has seen unprecedented economic growth and activity, including:
• 18 tech companies have located to the area—totaling an estimated 2 million square feet of office space, with the Office of Economic and Workforce Development (OEWD) estimating space for more than 13,000 jobs;
• More than 5,000 units of housing are currently under construction or approved on Central Market with 1,453 units permanently affordable (26 percent);
• 17 small businesses have opened on Central Market. The storefront vacancy rate was at 30 percent in 2010; today, the storefront vacancy rate is at 22 percent; and
• Eight new arts venues with two opening on the way including ACT’s new Strand Theater and PianoFight located on Taylor Street.
“The tax incentive for the Central Market area played a critical role in revitalizing a long struggling area of the city,” said South Mountain Economics President Dr. Michael Mandel who recently completed the study San Francisco and the Tech/Info Boom: Making the Transition to a Balanced and Growing Economy. “Mayor Lee’s policies are helping San Francisco achieve the most elusive of goals: a balanced and growing economy, with job growth for a wide range of residents.”
“St. Anthony’s is benefiting from the new energy in the neighborhood,” said St. Anthony’s Foundation Executive Director Barry Stenger. “Not only do we have volunteers from the new companies, but we have new partnerships that are helping to address public safety and previously unmet needs, like LinkSF, an app that connects homeless clients with services. We welcome the new investment and the newcomers to the neighborhood if it means more people coming together to solve our City’s challenges; it’s not a zero sum game.”
“We have seen our business steadily increase in the past three years and have invested to grow our operations accordingly,” said Sam’s Diner Owner Jeanie Kim. “You can feel the positive energy on the street. We look forward to serving our specialty Korean tacos to the new employees at Dolby who are moving in soon across the street.”
“We took a huge risk in purchasing the Strand Theater. We are now thrilled to be less than a year away from having a fabulous mid-sized theater venue that we would not have found anywhere else in the City,” said ACT Artistic Director Carey Perloff. “Being part of the bourgeoning arts scene in Central Market is enabling us think about new audiences and donors, develop work and new artists and to undertake more creative community partnerships that serve youth from the neighborhood.”
The San Francisco Controller’s Office found in 2011 that over a 20-year period, the Central Market/Tenderloin Payroll Expense Tax Exclusion would result a net revenue gain of $54 million dollars in additional payroll revenue for the City.
The Controller’s office is currently working on a three-year assessment and review of the effects of the Central Market Tax Exclusion as required by the legislation. That report is expected out in late Spring.
About the Central Market Tax Exclusion
The Central Market and Tenderloin Area Payroll Expense Tax Exclusion was adopted by the Board of Supervisors and signed by the Mayor in April of 2011. The Exclusion provides eligible businesses a six year payroll tax exclusion during an eight year period. The tax exclusion is open to all businesses in the Central Market and Tenderloin Areas and was designed to be highly targeted, preserves existing revenue to the City and only excludes revenue associated with new jobs. Companies with payroll over $1 million are required to complete Community Benefit Agreements with the City. For more information on the Central Market Exclusion, go to: http://oewd.org/Central_Market_Tax_Credit.aspx