California Construction News staff writer
San Francisco officials have established a special financing district aimed at converting vacant and underused downtown office buildings into thousands of new housing units.
The Downtown Revitalization Financing District covers core commercial areas, including the Market Street corridor from the waterfront to Civic Center, the Financial District, Union Square and neighborhoods south of Market such as the East Cut, Rincon Hill and Yerba Buena.
Eligible projects may enroll to receive annual incentive payments for up to 30 years to help offset the cost of converting office and commercial space into residential units. The payments will be backed by future increases in property tax revenue generated by the projects, allowing the city to provide incentives without affecting current revenues.
The legislation was co-sponsored by Board of Supervisors President Rafael Mandelman and Supervisors Danny Sauter, Bilal Mahmood, Stephen Sherrill and Matt Dorsey. The formation process began last spring when the Board of Supervisors unanimously approved initiating legislation.
“Through our Heart of the City plan, our administration is accelerating downtown’s recovery by activating our public spaces, prioritizing safe and clean streets, and creating a downtown where people live, work, play, and learn,” said San Francisco Mayor Daniel Lurie. “This new financing district will support office-to-residential conversions and help turn empty office buildings into thousands of new homes.”
The measure builds on a February 2025 ordinance that waived certain city impact fees and extended the Commercial to Residential Adaptive Reuse Program, which streamlines the approval process for conversion projects.
Officials estimate about 50 properties could qualify for the program based on age, size, condition and vacancy rates. Those projects are projected to yield approximately 4,400 residential units, potentially housing more than 7,000 residents.
Supervisor Stephen Sherrill said the city currently has the equivalent of roughly 20 Salesforce Tower buildings worth of vacant office space.
The district will be governed by an independent board of directors appointed by Mandelman and including Supervisors Sauter, Mahmood, Dorsey and Sherrill, as well as public members Tony Tolentino and Kristy Wang. The board has adopted the district’s financing plan and begun accepting applications.
Eligible projects will have until 2032 to enroll in the program.
City leaders pointed to a similar tax incentive in New York City that led to the conversion of more than 12,000 housing units in lower Manhattan as a model for the initiative.
