Committee advances plan to form Downtown Revitalization Financing District to incentivize office‑to‑housing conversions

The Budget and Finance Committee on May 21 voted 3‑0 to forward to the full Board of Supervisors a resolution stating the city’s intent to form a Downtown Revitalization Financing District under AB 2488.

The district would allow the city to redirect a portion of increased property tax revenue generated when commercial buildings convert to residential use back to those projects for up to 30 years. Jacob Bentliff of the Office of Economic and Workforce Development said preliminary modeling found roughly 1,300 eligible parcels in the proposed boundaries along the Market Street spine and identified about 50 candidate buildings that could yield roughly 4,400 housing units if all opted into the program before the district’s opt‑in deadline in 2032. OEWD estimated roughly $15.2 million in annual incremental property tax could be available to finance conversions in a scenario where all candidate projects proceed.

Why it matters: supporters said the district gives developers a new financing incentive to make conversions financially feasible and could bring residents, foot traffic and tax revenue back to downtown neighborhoods suffering from elevated office vacancy. Opponents and some supervisors pressed for a fuller fiscal analysis: the Budget and Legislative Analyst and controller’s office flagged near‑term administrative costs, complex tax‑division calculations where other tax increment districts overlap, and uncertainty over how much tax revenue the city should divert.

Supervisor Danny Sauter, a sponsor of the legislation, framed the district as a tool to "incentivize adaptive reuse projects" and to help create a 21st‑century mixed‑use downtown. Jacob Bentliff said the district board — a separate legal entity established by ordinance — would draft a financing plan and a fiscal impact analysis, then return to the Board of Supervisors for final approval. Nick Menard, Budget and Legislative Analyst, recommended the forthcoming plan address caps on diversion, net fiscal impacts of new residents, and administrative cost recovery.

Several supervisors and staff emphasized timing and limits: OEWD and consultants told the committee it would likely take at least five years before converted buildings produce the tax increment that can be redirected to projects, and administrative costs would likely be incurred up front. Angela Calvillo, Clerk of the Board, asked that the controller’s office be recognized among city departments eligible to seek reimbursement of district setup costs; staff said the ordinance language under review would allow reimbursement to city agencies that perform work for the district.

Public comment largely supported the measure. Jim Chapin, an urbanist and long‑time resident, told the committee that downtown is "really suffering" and urged passage; other speakers urged more housing to keep residents in the city.

The committee vote to forward the resolution to the full board was unanimous (3 ayes). The city will next develop a financing plan and fiscal impact analysis, hold public hearings and then return the plan to the Board of Supervisors for final action.