San Francisco proposes vacancy tax on empty grocery and pharmacy stores

San Francisco Supervisor Bilal Mahmood unveiled the Affordable Groceries Act on June 17, putting a vacancy tax on empty grocery and pharmacy properties at the center of a bid to lower food costs and reopen shuttered retail space. The package includes two ballot measures Mahmood wants on the November 2026 ballot and two ordinances he wants the Board of Supervisors to pass, along with permit streamlining and tax incentives for grocers willing to move into vacant sites.

The plan targets zombie stores, buildings left empty by chain grocers and pharmacies while neighborhoods lose convenient places to buy food and medicine. Mahmood said some corporations are holding the properties vacant and paying rent to block competition. Under the proposal, tax revenue and private donations would feed an Affordable Grocery Fund that could help the city buy vacant buildings and lease them to grocers at below-market rates.

San Francisco is trying to widen access to affordable food as prices climb and federal SNAP cuts loom. The San Francisco Department of Public Health estimates more than 20,000 low-income San Franciscans could lose food assistance by the end of next year.

Support from small operators has already surfaced. Satwinder Multani, co-owner of Dalda’s Community Market in the Tenderloin, said there are no big grocery stores around there and the neighborhood needs more produce and essentials. Mahmood also pointed to four liquor stores in his district that he said had been converted into community markets.

USDA Economic Research Service research found that when a dollar store opens in a census tract, independent grocers are about 2.3 percent more likely to exit, employment at those stores falls about 3.7 percent, and sales decline about 5.7 percent. In rural census tracts, the exit risk rises to about 5 percent, roughly three times the urban rate, and the same work found rural sales falling 9.2 percent, with employment and store counts dropping more sharply.

In 2015, independent grocery stores made up about half of the food retailers in 44 percent of U.S. counties, and a 2024 Advances in Nutrition workshop report found dollar-store food access affects diets, nutrition, public health, equity, employment, and local community impacts.