Updated: Jan 8, 2021
The San Francisco Board of Supervisors voted to waive or defer taxes, registration and licensing fees for hard-hit businesses such as restaurants and nightlife venues
The fee and tax waivers are one of a few measures aimed at local business relief, but small proprietors, citing mounting debts, and say the efforts are not enough
At a recent hearing, and days later a demonstration at City Hall, small business owners and workers vented frustrations about a lack of support from the City
In 2018, businesses with 100 or fewer employees accounted for roughly 359,000 jobs in San Francisco, or 41% of all jobs in the city
5,031 San Francisco businesses, or 7.2% of area businesses, were temporarily closed between Dec. 7 and Dec. 13 according to the Budget and Legislative analyst
With San Francisco under an indefinite lockdown, City officials moved to waive or delay taxes and fees as anguished small business owners called for more government aid.
The Board of Supervisors voted on Tuesday to approve $5 million in fee waivers and deferrals for small businesses that have been unable to open due to COVID-19. The program, one of a few City-sponsored initiatives aimed at small business relief, waives two years of registration and license fees, as well as 2020 business taxes, for entertainment venues earning less than $20 million annually. For restaurants earning $750,000 or less in annual gross receipts, the City will waive 2020 payroll taxes and the next round of registration fees.
“This round of relief cannot be the end of the City’s efforts to support our small businesses, but it does re-affirm our commitment to creating an environment where longtime businesses can stabilize and re-grow and new businesses can flourish,” said Supervisor Rafael Mandelman, who sponsored the measure alongside Mayor London Breed.
In addition to the fee waivers for hard-hit businesses, the City is delaying the collection of annual business taxes, registration fees, and unified license fees. The extension affects 100,000 businesses, and represents $46 million in revenue for the City, according to the Mayor's office.
The fee and tax waivers are part of a patchwork of local business relief measures introduced since March 2020, which include a $9 million fund for zero-interest loans, $3.5 million in grants, and an expanded subsidized hiring program. But many struggling small business owners say those efforts aren't nearly enough.
At an hearing in late December, which stretched well into the evening, small business owners and workers vented frustration at the City for what some called arbitrary lockdown rules and apathy from a bureaucracy that placed high costs and burdens on small business well before the pandemic. A 2019 study by Arizona State University, which analyzed business regulations, costs and clarity of rules, ranked San Francisco as the worst U.S. city to start a business.
Several small business owners described falling into deep debt, repeated break-ins and vandalism — including of costly outdoor spaces constructed last year — and a heavy emotional toll arising from the extended closures.
"I've received a notice for intent to file lien of taxes that are unpaid. At a time when I'm seeing multiple restaurants close permanently and having multiple break-ins, this is a huge slap in the face," said Rica Sunga-Kwan, owner of Churn Urban Creamery in San Francisco's Portola neighborhood. "Please forgive 2020 and 2021 taxes and business license fees. Please make it easier to do business in San Francisco."
As of 2018, small businesses — defined as those with fewer than 100 employees —accounted for roughly 359,000 jobs in San Francisco, or 41% of jobs in the City, according to figures from the SF Treasurer and Tax Collector and California Employment Development Department. But the COVID-19 shutdowns have likely forced the closure, either temporary or permanent, of thousands of those businesses since last spring.
According to a report by the SF Budget and Legislative Analyst, the recent tightening of restrictions — which were enacted in early December, and forced the closure of outdoor dining and other activities — triggered 7.2% of San Francisco businesses to temporarily shutter, nearly double the national rate. More than 5,000 businesses temporarily closed between Dec. 7 and Dec. 13, according to the report.
On Monday, dozens of small business owners and workers gathered at City Hall in the pouring rain, demanding that the City ease restrictions and allow more outdoor operations to help keep employers afloat.
"We have to be allowed to make a living with the only thing we’ve been trained to do for 20 years," Giovanni Cincotta, a bartender and server, told the San Francisco Business Times. Other small business workers have raised doubts about the viability of unemployment assistance, given widespread issues, including inefficiencies and fraud, in California's EDD since the pandemic began.
San Francisco officials say that the City is constrained by California's risk tiers, which dictate restrictions based on the availability of intensive care unit beds in a given region. Under California's statewide guidelines, if a region falls below 15% ICU capacity, it enters a mandatory shelter-in-place order that prohibits activities such as outdoor dining.
"We currently have no control over lifting most restrictions," said Mayor Breed on Tuesday, pointing to a new round of federal Paycheck Protection Program loans recently signed into law.
According to the Budget and Legislative Analyst, 21,529 San Francisco small businesses received PPP loans in the first round, which was distributed last spring. Those small businesses received $153,881 apiece on average, but many are racking up deep debt regardless: The BLA estimates that among retail storefronts alone, between $18 million and $36 million in rent is going unpaid per month in San Francisco.
"We are suffering; our employees are starving; rainy day funds were exhausted in the first shutdown," said Benson Wang, manager of The Dorian and Palm House in SF's Marina neighborhood. "We should be leading the recovery efforts."