District 10 generated $14.53 million in sales tax revenue last year, the third highest district haul, and more than the $14 million collected before the start of the pandemic.
District 6, which includes Mission Bay, the Oracle Arena, and South-of-Market produced $17.09 million, compared to $28.3 million in 2019. District 3 – North Beach, Chinatown, and Fisherman’s Wharf – brought in $16.4 million, down from more than $25 million three years ago. Both districts continue to suffer from fewer office workers and tourist activity that’s only recently begun to recover.
Office of the Controller data reveal that the highest amounts of sales tax revenue generated in D10 came from building and construction, $1,525,845, and business and industry – office supplies, biotech, and energy and utilities – $1,028,246, during the first quarter of 2022. Restaurants and hotels brought in $438,894, while general consumer goods contributed $206,467.
The state of California collects a 7.25 percent sales tax from merchants who sell tangible personal property, like clothes, or offer labor and services that yield an item of tangible personal property. For example, food produced at a restaurant is subject to sales tax. Sales to the federal government, prescription medicine, certain medical devices, and items paid for with food assistance are not taxed. The state returns 1.25 percent of the sales tax to the City, of which 0.25 percent is directed to transportation; one percent funds operations.
In 2020 City voters approved a tax rate increase, effective July 1, 2021, which elevated the City’s sales tax from 8.5 percent to 8.625 percent.
The emergence of a new cohort of small businesses along the Third Street corridor, between Jerrold and Yosemite avenues, contributed to the tax revenue rise. In the past two years Cafe Envy, Tallio’s Coffee, Big H BBQ, Loving My Hair, and Feline Finesse Dance Company opened in Bayview. Residents’ support for these and other small businesses, as well as federal, municipal, and philanthropic grants and loans – including Emergency Injury Disaster Loans, U.S. Small Business Administration Express Bridge Loans, and Employee Retention Tax Credit – helped enterprises make taxable sales.
Office of Economic and Workforce Development (OEWD) “investments aim to create economic opportunities for local entrepreneurs while establishing Third Street as a unique destination for local residents and their families,” said Diana Ponce De Leon, OEWD director of community economic development. “As a result, the corridor has seen an increase in new openings since the start of the pandemic.”
“The number of small businesses opening up shop in the state increased by 19.6 percent in 2020 and another 37.3 percent in 2021,” said Heather Purcell, deputy director of communications for the Governor’s Office of Business and Economic Development. “This compared to the starting point of a 0.3 percent year-over-year increase in 2019. Many were e-commerce businesses launched by BIPOC business owners.”
OEWD provided $200,000 to support 30 $5,000 to $10,000 COVID relief grants to Third Street businesses.
“Later we assisted Third Street businesses with applying for San Francisco New Deal’s small business debt relief grants. These grants of $2,500 were given to 400 businesses throughout the City,” said Earl Shaddix, Economic Development on Third (EdoT) executive director.
In collaboration with OEWD, EDoT helped establish the Bayview Maker’s Kitchen, transforming a former Wingstop restaurant at 5698 Third Street into a certified catering and food processing kitchen. The space offers catering and food enterprises an affordable facility to produce their creations.
Ezra Rufino, owner of Pow, a Bernal Heights matcha tea company that opened in 2022, said his company uses the kitchen for “a fair price. Earl is extremely helpful and supportive. The way that everyone there supports each other is awesome. It makes it feel good to be there. The community shares great advice, struggles, connections, and good food.”
Still, Bayview’s commercial corridor continues to face challenges.
“Right now, we’re in a limbo because the majority of catering we used to get from all sorts of companies have not returned yet,” said Eskender Aseged, owner of Radio Africa Kitchen at 4800 Third Street, which opened in 2012. “The high prices on commodities is not helping either. We’re exploring new ideas… well-made, nutritionally balanced delivery food throughout the City…allowing other Bayview local chefs to use our kitchen as a pop-up venue.”
“We’re in one of the only affordable residential neighborhoods in the City and other costs have gone up with inflation,” said Brandon Brown, owner of CDXX, a cannabis dispensary at 4526 Third Street. “That’s why we’re offering lower-priced products, such as joints between $5 and $25. This gives us a very low profit margin. In addition, we pay almost a 15 percent state excise tax upfront for cannabis from suppliers. With the City’s 8.625 percent sales tax, that’s a total of 27.625 percent. Many unlicensed dealers sell cannabis in the street in the southeastern neighborhoods. They don’t pay taxes and compete against those of us that do.”
Brown said he’s particularly concerned about the potential return of the City’s Cannabis Business Tax next year. The San Francisco Board of Supervisors passed an ordinance to suspend a voter-approved one to five percent Cannabis Business Tax in 2021 and 2022.
“Cannabis businesses continue to have disadvantages other businesses do not, such as lack of access to bank accounts, loans, and lines of credit. We also experience a higher incidence of issues like credit card fraud and drivers getting robbed for cash and product. The City could help by listening to why cannabis businesses are losing money and what could be done to alleviate the stresses,” said Brown.