The newest tax break for property development in tech-boom-rich San Francisco has nothing do with building luxury housing units. In a year when the city’s median house price broke $1 million, the city government is encouraging property owners to bet on dirt instead of new housing. San Francisco’s new Urban Agriculture Incentive Zone ordinance offers property owners tax incentives for turning their empty lots into farms.
The law, which was passed July 29, is set to go into effect next month. It’s the first local initiative designed to build on a new state law that allows property to be reassessed as farmland if owners dedicate all of it to growing food for five years.
Contracts issued under San Francisco’s ordinance stipulate more than a time frame, however—the urban gardens have to be good for the community too. According to the bill, eligible plots “shall be used to incentivize farming and gardening that has a public benefit,” through food donations, retails sale, or educational outreach and classes.
More clearly stated, this isn’t about planting your own garden on a vacant lot you own and reducing your annual property tax bill; your tax bill cannot be reduced by more than $25,000 per year or $125,000 during the extent of the contract. No property owner would be able to receive the tax incentive on more than five acres of land at the same time.
The ordinance was designed so the “benefit the city gets would be much greater” than the loss of revenue, said David Chiu, president of the San Francisco Board of Supervisors, who introduced the bill. The calculation doesn't end at tax dollars.
He hopes that the incentive will help “revitalize what have been some vacant, blighted, neglected corners of the city,” especially in the southeast parts of San Francisco, where the largely impoverished, minority residents know not of the tech boom.
In keeping with the local environmental ethos that permeates most urban farms, contracts with landowners will regulate the use of certain pesticides and chemical fertilizers. All sprays and soil additives allowed on certified organic farms could be used on properties being farmed under the program. But don’t expect San Francisco to declare its food independence subsisting only on its city-grown organic produce, anytime soon.
“I don’t think anyone thinks that we’ll be able to feed the city with the urban garden space that exists here,” says Marcy Coburn, executive director of San Francisco’s Center for Urban Education About Sustainable Agriculture. Providing public access to the properties covered by the tax incentive through retail sales—a vegetable stand, for example—is one way to fulfill the positive community impact element required by the ordinance. But thinking of the urban agriculture the incentive will hopefully spur solely in terms of feeding people is limiting: “To me, urban gardens are educational spaces, community-building spaces that can be restorative” for a neighborhood in ways that go beyond providing sustenance, Coburn says.
In a 2012 report on the potential for urban agriculture on city-owned land, researchers at the urban planning nonprofit SPUR wrote, “Though private land offers some possibilities, few private landowners are willing to offer long-term land tenure for gardens when, in most cases, other uses of their site would be far more lucrative.” The report later continues by noting, “urban agriculture projects, which can rarely pay much rent, have difficulty securing the long-term leases that are often essential to their success.” Both problems are addressed by the ordinance, making both vacant corner lots and public parks potential community gardens.
Still, reducing property taxes in one of the highest-value real estate markets in the country, where evictions of long-term middle-class tenants to make way for luxury development projects have been rife, drifts toward that third rail of California, Proposition 13. The 1978 ballot initiative froze property tax assessment values of properties and capped the annual increase at 2 percent; properties were reassessed if they were sold, at a rate of 1 percent of the sale price. Many point to the passing of the law at the ballot box as the moment when California state finances became intractable.
Under the state law San Francisco’s local ordinance is implementing, the tax breaks could be far greater. The state law simply allows property to be reassessed as farmland if owners are willing to dedicate their land to agriculture for five years. Reuters notes that irrigated farmland in California was valued at $12,000 an acre in 2012, whereas “a quarter-acre lot in San Francisco's Richmond District is currently for sale for $4 million.” A spokesperson at the San Francisco–based nonprofit Evolve, which advocates for commercial property tax reform, told me it wasn’t tracking the ordinance.
“In a city that’s as small as ours that has so much real estate pressure in terms of lack of square footage and demand for high-value real estate, it’s a great countermove by the city,” Coburn says.