Storefronts are vai cants or abandoned. A number we thought would be relatively easy to get. But it was not in a number of reports and measures made by both city agencies and, of course, private sector real estate companies. But none of them capture the totality of all commercial buildings and storefronts and their vacancy rates. We can get certainly a lot of information about downtown commercial properties and their van can si rates and we can get commercial spaces throughout the city that are not receiving mail. The office of economic and Workforce Development does just commercial storefronts. But for 24 commercial corridors only. So, it is still not the citywide rate. On this chart, you can see some of the rates that are reported and tracked. Oewd reported 5 as a whole for the 24 quarters they track. 8. 2 by the city controller for commercial vacancies downtown in 2016. And the u. S. Postal service, as i mentioned, which reports all commercial addresses that are not receiving mail for 90 or more days had a rate of 7. 4 . And there are about 45,000 commercial sites or addresss in San Francisco. So, that gives you some perspective on that. In terms of the abandoned, vacant commercial property ordinances, the two i mentioned, so those are administered by the department of building inspection and by the ordinances they maintain registris to keep track of how many buildings have reported, that theyre vacant and paid their fee. And you see on this chart the numbers from 2013 to 2016, the commercial storefront ordinance was not in place in the first two years, which is why that was blank. You can see for the last two years, and focusing just on the commercial, the commercial buildings were three in 2015 and 28 in 2016. As for storefronts, 38 were on the registry in 2015 and 25 in 2016. Comparing this to some of the other numbers that we obtained by commercial vacancy, we concluded that there is low compliance with the two ordinances. The numbers are low. Certainly low relative to all commercial vacancis that are reported. But in addition, they have been geographically concentrated. So, for example, in 2016, 16 of the 28 excuse me, 25 commercial storefronts reported were on polk streets and haight streets alone in. 2015, 23 of the 33 were on street streets. So we know just from casual observation that there are properties on other streets that are vai cants or abandoned and this is not capturing the full inventory. There were none reported in 2016 in china town, castro t richmond district, the Central Mission or the financial district. And we did review a study done by hood line and they did a inventory in the Castro District in march 2017 and found 53 vai cants commercial storefronts. These could include some that werent required to register by the ordinance, but it is an indication of the volume of vacancies and commercial properties and some of which we assume are probably qualifying as vai cants or abandoned. This map is a representation of the commercial properties reported by the u. S. Postal service for the Fourth Quarter of 2016. And we included it because it shows the distribution of vacancies and the rates. And you can see the darker the colour, the higher the rate of commercial vacancies. Again, not all of these would be subject to the ordinance and required to register. But it does tell you that they are located in neighbourhoods throughout city and we assume wherever there are blocks of commercial properties, there is going to be some in the subset, which is what qualifies as vacants or abandoned by the ordinances. In addition to a low number of properties that are on the registry with the department of building inspection, because they pay fees, we collected information on the fees that have been paid in the last four years and thats presented in this chart. It has not been a very high amount, particularly for the commercial buildings or the commercial store front as you can see, under 5,000 for both of them in 2016. And the numbers that paid are also lower than the numbers that were on the registry. Seven commercial buildings and five commercial storefronts. That can represent different things. One is the owner may not have been in communication with the department of building inspection because in many cases, the the vacant property is reported not by the owner, but by neighbours. Neighbours will call in and inform d. B. I. That there is a space thats vacant. So, sometimes it gets on the registry without the owners involvement. And in other cases they simply, you know, have not made the payment yet. In addition, another measure for the vai cants and abandoned commercial Property Programme is abatements and closures of cases and you can see here looking at the last four years also that its a small number of cases that get abated and closed. And abated means that the that all the violations, because some of these properties have besides the problem of being vacant, they may have other Building Code or planning Code Violations that are being addressed at the same time. If the owner hasnt resolved that, the case isnt abated. And sometimes the scattered showers abated but the final payments havent been made and the payments closed can. There is a low rate of compliance on these cases. Or closure, i should say. Excuse me. In terms of the limitations, and we worked with d. B. I. To address some of the causes of why the ordinances dont seem to be enforced to tex to the extent that they should be and in many cases, you know, as mentioned, we think the owners are not registering. The department does not have a proactive programme or approach to identify the buildings and contact the owners to ensure that they register their properties and pay their annual fees. So, as mentioned, the most Common Source of information about the properties is neighbours complaining rather than the owners selfreporting. Which is the requirement in the ordinance. In addition to neighbours registering complaints, City Employees will sometimes observe the abandoned or vacant property and report it. These can be d. B. I. Employees or others who observe it when they are working in the field and report the information to d. B. I. Another factor is d. B. I. Does not monitor the vacancies after they are reported and added to the registries. So, there arent updates in terms of the status of the properties once they have been added to the registry. The low fee collection has the added effect, of course, of not making Resources Available to expand or enhance the programmes. So, while we believe d. B. I. Could extend some more proactive efforts to reach out to owners or identify other properties, that does take resources, but there is a source of resources, which is the fees. So, this sort of circular problem here in the programme needs to be enhanced and that will generate the fees which will enable the programme to be enhanced. And finally, the registris are not posted online. So there are limitations in terms of the property aware that they are registered and whether the property they are aware of is on the registry or not. D. By. Has stated that the reason nar is they dont want to make the Information Available for security purposes because a vai cants, abandoned building can be attractive to people to get into it for illegal purposes. As supervisor yee mentioned, were not alone in having a problem with commercial vacancies. We did review some other cities and what their vacancy rates are and this is not just dealing with abandoned and commercial, but commercial vacancies as a whole. New york, there was a report from last martha recorded a 5 to 20 vacancy rate in various retail corridors throughout city. What was interesting there is some of the higher rent districts are having higher vacancy rates and what theyre finding is this problem with the Retail Industry right now in general which is there arent enough highend tenants that want to occupy brick and mortar space any longer. So, everyone is waiting for the big tenants, but theyre cutting back. Chicago had a rate ranging from 3 30i8 to 14. 3 throughout the metro area. And it was 10 overall. They did cite rising costs, higher rents as being a hardship on a lot of the businesss who are subject to the same industry changes. Previously mentioned. And then the 24s commercial corridors tracked by oewd here in San Francisco just for comparison range from 1. 3 to 16. 9 with west portals, retail area being the lowest and visitation valley, lee land street, i believe it was, being the highsest at 16. 9 . We also reviewed some of the approaches being used in other cities. In chicago, theres sort of a twopronged approach. One is Economic Development and funding for particularly neighbourhoods that have had a hard time filling vacant, commercial spaces. It is called the neighbourhood opportunity fund. They collect money from Downtown Developers who, in exchange, get density bonuses and some of those funds are used to provide capital to businesses in hardhit neighbourhoods. The retail thrives zones is another programme and that involves reduced property taxes for certain businesses that meet hardship criteria. And competitive grants to enable them to repair and improve their properties to enable them to be october pieed again. But on ten forcement side, chicago also has a more stringent registration and Fee Programme than we see here. There they require fees to be paid every since months on vai cants or abandoned property. Here were on a oneyear cycle. And here the vacancies are higher if its not reported by the property owner. If it comes in from a complaints from neighbours as we see happens here frequently with d. B. I. , then the fee is higher for the building owner. And if theyre cited for repeat Building Code violations, the fee is also higher in chicago. Washington, d. C. Has a similar approach where there is higher fees charged for propertis that are vacant or blighted. They tack a surtax on to the property tax which is not something that the San Francisco can touch because of state law limitations. It is just pointing out that some cities are using an approach of disincentives for leaving properties vai cants or who are abandoned. And dallas, the city of dallas and state of michigan have both adopted acquisition programmes or land bank where is they acquire and hold properties through the foreclosure process and if they have been vacants or abandoned and take posession of them and turn them over for uses that fulfill their Economic Development objectives. Finally, seattle. And i think supervisor yee, you mentioned that and that is an interesting carefuls and this is probably dealing with the broader issue of commercial vacancies, but like San Francisco, they have had a lot of requirements in their planning and zoning codes to particularly for multistory residential buildings to have retail uses on the ground floor. And we have, of course, those requirements in San Francisco as well. They are removing many of those requirements or making them more flexible so that other uses can go in, including housing on the ground floor, child care on the ground floor and other use. And i think it is an acknowledgment of the process of the fact that building owners can not fill all the Available Space in these residential towers. And i know just around city hall here, you see it in many of the New Buildings being built, there is space reserved for retail on the ground floor and it is empty and has been sitting empty for months and months, if not longer. This issue has come up several times here in San Francisco. The Planning Commission did consider, for example, a proposal to allow retail space in a building in union square to be converted to office. It was ultimately denied but the proposal was made and considered. There was a decision made by the Planning Commission and approved by the board of supervisors last july to expand the definition of neighbourhood commercial districts and make it easier to open child care without conditional use permits. And that includes using what has previously been ground floor retail space for that purpose. And the Planning Department, central soma plan and implementation strategy includes proposals to require smaller ground floor, retail spaces in central soma and that would allow for a mix of retail uses and types. Right now theres certain size requirements that may be inappropriate now that there is that the Retail Market is changing sophomore and different types of businesses and different types of spaces are needed to fulfill the changing requirements of the industry. So we included a number of policy options in our report. Here they are. The board of supervisors could enhance funding for existing Small Business programmes. Again, the oewd programmes. We did, as i mentioned, look at owl of them. We couldnt put them all together to determine which ones in particular have resulted in occupying a previously vacant or commercial space. But we know that is the objective of a lot of their programmes. So we think combined with some additional performance metrics, thats something that the board could consider for additional funding if the programmes are proving effective. Another is for the board to consider requesting the Planning Department and the Planning Commission to consider and report back on possible zoning and planning code changes. To allow for more flexible uses of commercial spaces. Another is to suggest to d. B. I. That they apply t their outreach on commercial storefront ordinances so owners are more aware of the requirements and that they could also help reduce barriers for the public and City Employees to report on vai cants and abandoned commercial properties. The ordinances could be the existing ordinance could be amended by the board of supervisors to raise fees and penalties. Similar to what i was pointing out in both chicago and washington, d. C. Where there are variable fees and if owners arent registering or keeping their property vai cants for prolonged periods of time, higher fees could be attached. Right now it is a flat fee for all properties, regard less of the kfnlts another is that the city require in combination with d. B. I. To access the information thats compiled by the u. S. Postal service. I mentioned that they do compile that information, but it is a rich source of information that could finally give the city a citywide database on commercial properties. That would be extremely useful in monitoring the situation and how its changing over time. And finally, that the board could request a d. B. I. Make the vacant building and commercial store front registries publicly available. That would help get the public more involved in reporting and monitoring Vacant Commercial Properties in their neighbourhoods. So that is the summary of the report. Christina is also here and were available to answer any questions you might have. Thank you. Thank you very much for that overview. I know that our office work add lot on the registry issue. Given that a law was passed but we also noticed that it wasnt really updated as well. And i think as we go on into our other presentations, one of my observations now is that even if we were to have this wonderfully filled database of all the vacancis that that still might not address the issues that were dealing with in terms of the changing nature of retail. I really like the suggestions that were offered in this report. Supervisor fewer . Thank you very much. I just have one question. You mentioned that the city of chicago charges a vacancy property Registration Fee every since months if property is vai cants with higher fees charged if the property is reported by complaint rather than selfreported by the owner. Cefjs im wondering has the city of chicago spaoefrntion add decline in vacant store fronts since it has implemented higher fees and propertis that were not selfreported to see if its had any impact . We do not have information looking at it over time, supervisor. We saw we got a point in time and saw that, you know, they still have a problem also. But the interesting question would be to see if fewer are being reported by complaint and we could get that information, but yoift on hand. Thank you very much. Thank you. And seeing no other questions or comments, thank you to the budget analyst office. I will now turn this over to the Economic Office and Workforce Development and they have a presentation on neighbourhood retail and strategies for store front vacancies. Good afternoon, chair tang. Committee members kim, safai, yee and stefani. Thank you for including oewd about these informational items. We recently completed a study and our strategies for addressing store front and other commercial vacancies in our neighbourhood. Today ill be copresenting with my colleague amy cohen and with our retail study consultant sarah graham strategic economics. Our joint presentation will start with an overview of National Retail trends and key findings from our recently completed can study by strategic economics and this information will them city department, policymakers and the public understand the restrictions that were working within. The Retail Centre reviews Current Research and best practice which is will help inform and guide our policies and programmes so we may better support our store front businesses and neighbourhood shopping districts informed by the notable shifts in the National Retail sector and local economy. Amy and i will also share afterwards oewds goals, strateg