Tax breaks eyed for construction-weary merchants

San Francisco merchants affected by long-term or delayed construction projects may see some economic relief from The City.

At a hearing on Wednesday at the Board of Supervisors Government Audit and Oversight Committee, supervisors suggested grants programs, direct assistance loans, and possibly a tax reduction to businesses seeing a slowdown in sales from impacts of construction projects.

Supervisor Jane Kim said other cities like Los Angeles have programs to help businesses impacted by construction projects, and would like to see The City have a program as well:

“Many of these businesses operate on small margins and they just don’t have the cash flow that enables them to get through the hard times.”

Kim added that while completed projects may bring economic growth to a neighborhood over the next couple of the years, some small businesses may not be able to wait:

“They’re not Target. They’re not Walmart. They can’t make it through the two or three years that it takes.”

City Controller Ben Rosenfield presented early findings of a report that looked at how construction projects can affect merchants. The report looked at projects at Balboa Street, Jefferson Street, two projects on Polk Street, West Portal Avenue and Castro Street.

Of the early findings, Rosenfield said the West Portal and Castro merchants saw a decrease of 12 and 13 percent in sales tax revenue.

The West Portal project lasted for 16 months, which involved repaving and resurfacing, sewer main work and installing pedestrian bulb outs. The Castro project took 11 months, including work on the Muni overhead wires, paving and installing bulb outs.

The City’s Office of Economic Workforce does offer programs to help businesses struggling in The City, but supervisors said the help would serve as little more than a bandage.

Supervisor Norman Yee said:

“This soft mitigation stuff, for businesses that is drowning, is not going to do anything for them.”

Board President London Breed suggested to the Controller’s Office to also look at possible tax reductions for businesses while in the process of possibly receiving compensation from The City as part of its research and study.

Karin Flood, executive director with the Union Square Business Improvement District, said she appreciates the investments being made into Union Square, including the addition of the Central Subway, but said retailers are hurting as the project continues on for another two years:

“We lost at least three businesses.”

The most talked-about project, the San Francisco Municipal Transportation Agency’s Central Subway, is facing delays because of construction at the future Chinatown Station on Stockton Street, which means more construction disruption for Chinatown merchants.

Supervisor Aaron Peskin, who represents the Chinatown neighborhood, said he plans to redirect some general budget funds to help merchants during the latest project delay.

Multiple city agencies appeared at the hearing, including the SFMTA, Department of Public Works and the Public Utilities Commission, who are working together to minimize impacts to businesses, said John Thomas, deputy director of infrastructure for Public Works.

SFMTA officials said they are improving communication with merchants and residents on construction projects during the beginning phase of projects.