The Office of Economic and Workforce Development (OEWD) provides customized support to stabilize neighborhood commercial corridors and the small businesses and nonprofits within them. The department also invests in physical assets and civic spaces that promote a safe and vibrant environment for social, recreational, cultural and economic activities.
Background
What is Commercial District Planning, Management, Safety and Vibrancy?
Invest In Neighborhoods (IIN) is a division within OEWD that implements programs focused on neighborhood commercial district planning, management, safety, and vibrancy — The strategies deployed are intended to advance opportunities for all. The division implements programs and services with the support of community partners to increase quality of life and economic opportunities within neighborhoods and commercial corridors. IIN seeks to advance economic opportunities in the City’s neighborhoods using strategies centered on diversity, equity, and inclusion to ensure increased quality of life and prosperity for all residents.
The division’s guiding objectives are to build community capacity, fortify neighborhoods and their economies, improve physical conditions and strengthen small businesses. Some of the services offered support small business assistance, safety and cleanliness, physical improvements to buildings or commercial spaces, positive activation of public spaces and engagement of residents along targeted corridors throughout the city. IIN programs and services are intended to maximize impact within five strategic areas: small businesses, storefronts and buildings, commercial corridors, public spaces and neighborhoods. The programs and services focused on supporting small businesses are covered under the business retention and stabilization section of this report.
Services provided to neighborhood commercial districts are largely coordinated and deployed through three commercial district management programs: Community Benefit Districts, Opportunity Neighborhoods and Cultural Districts.
Community Benefit Districts
The Community Benefit District (CBD) Program provides technical assistance for district planning through the management plan and engineer’s report development, district establishment which requires a special election and legislative approval, and operational support to improve the overall quality of life in targeted commercial districts and mixed-use neighborhoods through partnerships between the City and local communities.
OEWD oversees 18 local community benefit districts in the City. Each CBD is managed by a non-profit agency. Community Benefit Districts are required to complete an annual report that outlines the year’s achievements and financials including income, expense, asset, liabilities, new assets, and carry over which are reviewed by OEWD and heard by the San Francisco Board of Supervisors’ Government Audit and Oversight Committee. OEWD’s annual report shares the Department’s accomplishments and financials from that fiscal year.
There are currently 18 CBDs in the city including:
- Castro
- Central Market
- Civic Center
- Discover Polk
- Downtown
- Fisherman’s Wharf
- Greater Rincon Hill/East Cut
- Japantown
- Lower Polk
- Moscone Expansion District
- Noe Valley
- Tenderloin
- Ocean Avenue
- SoMa West
- Top of Broadway
- Tourism Improvement District
- Union Square
- Yerba Buena
The establishment of a CBD is initiated when property owners and other stakeholders, see a benefit and work together to assess the feasibility of passing one through an election process. Once an area has voted to establish a CBD, local property owners within the district boundaries are levied a special assessment to fund improvements to the district area. Services provided by CBDs tend to include, but are not limited to, sidewalk cleaning, security, beautification and decorations, branding, tree and plant maintenance, and pedestrian wayfinding.
Some CBDs tailor services specific to the neighborhood’s needs. For example, the Tenderloin CBD manages the Safe Passage Program, which is a coalition of Corner Captains who are trained to respond to different emergencies in the neighborhood and maintain a daily positive presence for children and youth walking on the sidewalks. The Lower Polk CBD hosts a Tenant-Landlord Clinic designed to help prevent homelessness by keeping people housed in their current homes.
Opportunity Neighborhoods
The Opportunity Neighborhood’s program targets neighborhoods that have experienced historic divestment and have an economic development strategy that promotes diversity, equity and inclusion. These neighborhoods have an assigned project manager that works closely with community stakeholders and other city departments to strategically disburse investments including funds and services and support an economic development strategy.
The opportunity neighborhoods include:
- Bayview
- Central Market/Tenderloin
- Chinatown
- Excelsior
- Lower Fillmore
- Mission (24th and Mission Streets)
Cultural Districts
The Office of Economic and Workforce Development is a key partner to the Mayor’s Office of Housing and Community Development in the implementation of the Cultural District program whose focus is on advancing equitable and shared prosperity for San Franciscans by growing sustainable jobs, supporting businesses of all sizes, creating great places to live and work, and helping everyone achieve economic self-sufficiency. Staff supports and leverages economic resources to ensure that there is alignment and a comprehensive approach to each district’s economic development strategies. In addition, our division coordinates with our neighborhood project managers where the districts overlap with our programs and grants. Additional information on this can be found in the Cultural Districts Program summary.
Other Programs
The Citywide Public Space Initiative is a recently piloted program implemented in collaboration with the San Francisco Parks Alliance that helps communities improve their public spaces. The program supplements the City’s critical cleaning and safety services with regular activation, beautification projects and community engagement in conjunction with community partners.
In addition to the neighborhood commercial district focused program areas described above, OEWD’s Invest In Neighborhood Grants (IIN) Division awards grants to nonprofit and for-profit partners, through a competitive application process. Grants support projects across all four strategic areas: small businesses, storefronts and buildings, public spaces and neighborhood commercial district. Availability and amount of grants varies annually based on funding allocations through the City’s budget process. Projects also vary annually based on proposals, but in the past, they have included activities that increase the vibrancy of our neighborhood commercial districts and support small businesses. Some of these activities include, but are not limited to: public events, marketing campaigns, organizational support to merchants’ organizations, addressing public safety and increased support to small businesses in neighborhood corridors.
Key Trends
Since the inception of the Invest In Neighborhoods Division in 2012, national trends impacting the local economy have changed from high unemployment to low unemployment.
For example in 2012 unemployment peaked at 7.6% in January in comparison, as of October 2019, the San Francisco unemployment rate was 2.0%, ranking below 3% for a record 26 straight months. While low unemployment and increased employment options is a positive trend for our local workforce; it has increased the competition amongst businesses for workers. The high cost of living, increasing labor costs and competition with industries, who offer better compensation or more flexible hours, has created a recruitment and retention challenge for many businesses.
Another way national trends have impacted our commercial districts is related to the shift of retail trends to online shopping, where online sales are driving retail growth.
This has lowered the demand for ground floor retail and is shaping the types of businesses that occupy the districts. Across the nation, cities are grappling with storefront vacancies as retail sales slow. Shopping habits and trends have shifted over the past few years and various types of storefront businesses continue to face local challenges, such as the cost of labor, lack of affordable commercial spaces, and demographic shifts. Many neighborhood commercial districts are beginning to demonstrate modest increases in vacancy rates, and community organizations and stakeholders have observed the closure of long-standing retailers.
In light of these trends, the following are opportunities:
General economic trends point to a strong economy, including job growth, high household incomes, and low unemployment rates.
Americans are increasingly spending their money on experiences – such as dining, personal services, and fitness – rather than objects. For example there is increased spending on food away from home, health and wellness, and travel.
San Francisco has a large number of independent businesses and limited number of regional shopping malls.
What’s happening now now to ensure the vibrancy of commercial districts, management, safety, and vibrancy?
Overtime the services provided by OEWD change to better meet the current needs of small businesses and neighborhoods. Within the last five years programs have evolved to address storefront vacancies, mitigate infrastructure improvements and related construction, expand healthy retail offerings within corner stores, support public spaces, provide emergency funds to small business impacted by unforeseen disasters and strengthening strategic planning around economic development for cultural districts. Our comprehensive approach to addressing commercial district challenges, is comprised of legislation, program investments, and departmental administrative reforms. Our services support economic activity by developing strong community partnerships with communities and organizations.
Issues Related to Commercial District Planning
Despite the following challenges, San Francisco’s neighborhood commercial districts are located within a strong center for regional and international tourism, a strong local economy, and a local culture that values local shopping and culture. Shifts in consumer spending demonstrate that Americans are increasingly spending their money on experiences rather than objects. Many neighborhood commercial districts offer an attractive, interesting shopping experience and can highlight local unique culture and offerings. Retail stores are experimenting with new strategies to capitalize on increasing demand for experiences; by serving food and drinks, offering classes or events, and expanding opportunities for customers to interact with products before purchasing. However, some laws intended to protect traditional retail by limiting types of uses within commercial spaces, limit retailer’s flexibility to adapt to changing economic conditions. While adopting these types of strategies will help some businesses continue to thrive, change is challenging and some businesses will not be able to adapt to a changing market.
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Online sales are driving retail growth, and expanding into new categories. Nationally, non-store retailers accounted for 40 percent of retail sales growth between 2014 and 2016.
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Nationally, growth in retail and restaurant sales is concentrated in a few categories including online sales, food and beverage stores, restaurants and bars, building materials and home furnishings, and health and personal care stores.
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Between 2007 and 2016, retail and restaurant sales in San Francisco increased more quickly than the national average. However, retail sales started to slow in 2016.
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Business owners report increased competition with e-commerce and in more categories (e.g., groceries, clothing, personal care goods).
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Fewer traditional retailers are seeking space, while there is increased interest from other potential tenants of ground floor commercial space (e.g., personal service, restaurants, medical services).
For Future Consideration
The ideas for future consideration that have the potential to increase community stability in San Francisco are described below. They provide a starting point for agencies, decision-makers, and community members to explore stabilization efforts and identify critical pathways forward. Based on preliminary information, staff is qualifying these ideas according to the type of task, scale of resources and level of complexity to underscore that any of these ideas would require time and additional resources not currently identified. These are not City commitments or recommendations, rather informed ideas that will require careful vetting and analysis as to their reach, resource needs, feasibility, unintended consequences, legal implications, and racial and social equity considerations.
Community Benefit Districts (CBDs) continue to support neighborhood stabilization
There is an opportunity to increase the number of Community Benefit Districts (CBDs) and Business Improvement Districts (BIDs), particularly in areas where there is high vacancy rate and less investment. There is an opportunity to better coordinate CBD/BID strategies and financial investments through special assessments and grants with the established and new arts and culture districts. The formation of CBD/BIDs has generally been shown to have positive economic and community impacts on commercial districts including higher levels of cleanliness and lower commercial vacancy rates, increased marketing and promotion and economic resiliency.
Community Benefit District racial and social equity metrics
There is an opportunity to apply racial and social equity metrics to the programs and practices implemented by CBDs. Adding social equity metrics to district management plans can support that activities implemented by the CBDs contribute to the stabilization of neighborhoods.
| Land use and zoning for commercial districts. | There is an opportunity to assess land use and zoning regulations within commercial districts as a tool for strengthening neighborhood and economic goals. In some cases it may mean reducing barriers of entry for businesses and in others adding community priorities or processes. |
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| Commercial district leverage experience and amplify unique character. | There is an opportunity to work more closely with cultural districts and other commercial district groups to amplify unique stories and character of commercial districts. |
Right of first offer and/or the right of first refusal to purchase commercial properties offered for sale in the City
There is an opportunity to explore policies or tools that can require or incentivize property owners to provide existing businesses within their buildings an opportunity to purchase before a building is sold.
| Low-interest short-term financing to buy a commercial property. | There is an opportunity to explore city loan or zero interest or no debt service loans for businesses that may want to purchase their building. |
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| Loan fund/products for property owners (upgrades and retrofits, refinance). | There is an opportunity to expand access to loan products for building improvements of buildings with commercial businesses. |
| Expand legacy business subsidies to businesses that own their own property. | There is an opportunity to add a third category for financial incentives to support legacy businesses that own their property by providing them funding to improve their properties to ensure sustainability of the business. |
