How to Save a City Where Supermarkets Have Disappeared? Why San Francisco Abandoned the "Vacant Storefront Tax"

Lessons Japan Can Learn from San Francisco's Abandonment of "Vacant Store Tax"

Despite being a city that attracts global technology companies and wealthy individuals, residents are losing places where they can buy everyday groceries.

In San Francisco, a city with such contradictions, a plan emerged to impose a new tax on major companies that keep properties or leaseholds vacant after closing supermarkets or pharmacies.

However, in July 2026, this tax proposal was effectively withdrawn due to opposition from the mayor, the business community, and within the city council.

Bilal Mahmood, the city executive who proposed the plan, shifted the focus from taxing companies to policies that support the introduction of fresh food in convenience stores, reduce fees for new supermarkets, and relax zoning regulations to encourage store openings.

At first glance, it may seem like just a tax debate in a U.S. city.

However, underlying this is a question that cannot be ignored in Japan: "Are supermarkets merely private stores, or are they essential public infrastructure for the community?"

The "Food Access Desert" Created by a Series of Supermarket Closures

In recent years, large supermarkets and drugstores have been closing in San Francisco.

In the Fillmore district, Safeway, which had supported the lives of local residents for many years, closed. In the Mid-Market district, Whole Foods, a subsidiary of Amazon, ceased operations, and major food supermarkets disappeared in the Bayview district as well.

Even after stores disappear, their sites are not necessarily taken over by new supermarkets or local stores.

Large properties can remain vacant, known as "zombie stores," when major companies maintain lease contracts, property owners continue to demand high rents, or redevelopment plans stall for years.

People with cars, time, and physical strength can go to supermarkets in distant districts.

However, for seniors, people with disabilities, low-income households, and families with young children who rely on walking or public transportation, the impact of losing a local supermarket is significant.

It's not just the increased transportation costs and time to reach distant stores. If the remaining small local stores have high product prices, the amount of food that can be purchased with the same income decreases. Fewer options for vegetables, fruits, meat, and dairy products can also affect residents' health.

The withdrawal of supermarkets is not merely an "inconvenience."

It can simultaneously worsen multiple issues such as food costs, transportation, nutrition, health, community safety, and employment.

The Initial Proposal Combined "Sanctions on Companies" and "Store Support"

The "Affordable Groceries Act" proposed by Mahmood consisted of two pillars.

One was to establish a fund to increase stores where affordable groceries can be purchased. The other was to tax large chains if they left supermarket or pharmacy locations vacant for extended periods after closure.

The fund was intended to cover costs for general convenience stores and individual shops to sell fresh produce like vegetables and fruits, as well as rent, equipment, and store acquisition for new supermarkets.

The tax aimed not only to secure tax revenue but also to encourage companies to reuse vacant stores.

Reopen closed stores. Rent them to other supermarkets. Hand them over to local retailers. Temporarily use them for farmers' markets until redevelopment.

By increasing the cost of holding vacant stores, the proposal sought to encourage such actions by companies.

Mahmood described this mechanism as a combination of "carrot and stick."

The idea was to provide incentives like subsidies and regulatory easing to businesses improving local food access, while imposing taxes as a stick on companies holding unused large stores.

The Mayor and Business Community Opposed, Saying "Taxes Won't Bring Back Supermarkets"

Opposition came from Mayor Daniel Lurie, the San Francisco Chamber of Commerce, real estate developers, and the food retail industry.

The opposition argued that taxing companies without solving the reasons for supermarket closures would not lead to new supermarkets.

Running a supermarket involves significant costs such as product procurement, labor, security, rent, utilities, refrigeration, logistics, and waste loss.

If the local population or purchasing power is insufficient, or if security costs are high, it may not be profitable to open a store. Taxing closed businesses won't fill the vacancies if new operators can't make a profit.

There were also concerns that the tax could reinforce the impression that "San Francisco is hostile to businesses," making companies more cautious about opening stores.

In the former Safeway site in the Fillmore district, a large-scale redevelopment combining housing and new food outlets is being considered.

Developers argued that if a vacant store tax were imposed, redevelopment costs would increase, potentially complicating plans to attract new supermarkets.

In other words, a tax intended to reduce vacant stores could unintentionally delay store reuse and housing development.

Few Tax Targets and Doubts About Policy Effectiveness

Another reason the tax proposal struggled was the perception that there were few properties that would actually be subject to it.

On social media, comments highlighted that "only a very few properties in the city would be subject to the tax, and significant tax revenue cannot be expected."

By limiting the target to large companies and taxing only properties that meet certain conditions among closed stores, the scale of tax revenue is also limited.

Even if the tax sends a strong symbolic message, if it cannot sufficiently cover the subsidies, land acquisition costs, and equipment costs needed to increase stores, the cost-effectiveness of the policy is low.

Questioning corporate responsibility and actually increasing places to buy food are not necessarily the same.

This was the biggest challenge of the proposal.

Political Conflict Over Amazon's Lobbying

The presence of Amazon complicated the debate.

Amazon owns Whole Foods and is involved with closed stores in central San Francisco.

Mahmood claimed that Amazon actively lobbied against the tax proposal, seeking to exclude former Whole Foods properties and the city center from the targets.

It's unclear how much Amazon's lobbying influenced the stance of the mayor and city executives on the tax proposal. The mayor's side explained that they opposed it due to issues with the system's effectiveness.

Nevertheless, the conflict over whether to prioritize the rights of a giant corporation to hold closed stores or the environment for local residents to purchase affordable food emerged with Amazon as a symbol.

Companies have the freedom to withdraw from unprofitable stores.

However, if a company retains the property after withdrawal and makes it difficult for competitors to enter, it cannot be dismissed as a mere business decision.

Stores are private assets but also places that influence the lives of local residents.

61% Support Tax on Vacant Stores in Survey

While the proposal didn't gain widespread support from the council or business community, it wasn't entirely rejected by citizens.

A public opinion survey released by the proponents indicated that 61% of San Francisco voters supported the vacant store tax.

The survey targeted 400 likely voters, with a margin of error of plus or minus 4 points.

While it's important to note that the survey was commissioned by the proponents, it suggests that many citizens want some form of accountability for large companies leaving closed stores.

For residents, supermarket closures are not abstract corporate policies.

They directly affect weekly shopping time, transportation costs, the food on the table, and the health of children and seniors.

Therefore, some people are not satisfied with the explanation that "the store was closed because it wasn't profitable."

Four Reactions Seen on Social Media

In the San Francisco-related community on Reddit, where the policy shift was discussed, debates were held not only on the pros and cons of the tax but also on the realities of store management and alternatives.

Social media posts are not randomly sampled public opinion surveys and do not represent the views of the entire population. However, they provide insights into which parts of the policy are causing dissatisfaction or questions among citizens.

1. "Companies Just Want to Protect Their Right to Hold Vacant Stores"

Supporters of the tax criticized companies and property owners for not lowering rents and keeping stores vacant.

They questioned whether companies were choosing to keep spaces vacant to maintain high rents that don't match market prices, rather than renting to other supermarkets at lower rates.

From such suspicions, posts emerged perceiving that "companies are trying to protect their freedom to do nothing rather than their obligation to make effective use of vacant stores."

This reaction also reflects distrust towards San Francisco's high rents, living costs, and urban policies perceived to favor giant companies and the wealthy.

2. "Can Small Independently Owned Stores Be Cheaper Than Large Chains?"

On the other hand, there were doubts about the price aspect of policies to convert convenience stores and individual shops into food supermarkets.

Large chains with massive procurement and logistics networks can purchase goods cheaply. Small stores have less purchasing volume and may have to pass logistics and labor costs onto product prices.

Therefore, the question "Can small independently owned stores sell food cheaper than large supermarkets?" is valid.

Simply providing refrigerated shelves for displaying vegetables may not sustain sales at affordable prices.

Without combining joint procurement, delivery support, waste compensation, and rent subsidies, it is difficult for small stores to replace low-cost supermarkets.

3. "The Tax is Symbolic, but There Are Few Actual Targets"

Social media also pointed out the limited number of properties subject to the tax.

If the target is only a few properties, it may serve as a political message against companies but won't provide enough resources to change food access citywide.

Widening the target conditions could affect housing development and general vacant stores, while narrowing them won't increase tax revenue.

The dilemma of stricter regulations leading to greater side effects and cautious design resulting in less impact weakened support for the tax proposal.

4. "Urban-Style Small Supermarkets in Japan and Europe Could Be a Reference"

As an alternative, urban-style small supermarkets common in Japan and Europe gained attention.

Instead of suburban stores with huge parking lots, they focus on small properties in residential areas, offering only the essential daily groceries.

On Reddit, there were posts mentioning stores like Japan's "My Basket." Similar store concepts include the UK's Tesco Express and Sainsbury’s Local.

For residents who shop on foot, placing multiple small grocery stores can be more convenient than waiting years for a large supermarket to open.

However, due to differences in population density, logistics, and transportation habits, Japan's model cannot be directly transplanted to the U.S.

The important idea is not to mimic the store format but to "flexibly consider store size to deliver necessary groceries within the living area."

Post-Policy Shift Focuses on "Carrots" to Increase Stores

The new policy Mahmood is pursuing focuses on making it easier to open food retail stores, rather than taxing companies.

One aspect is supporting existing convenience stores and individual shops with equipment and funding to sell fresh produce.

Refrigerators, freezers, display shelves, loading docks, and food hygiene facilities require initial investment for small stores to handle fresh produce. If the municipality supports part of these costs, it can reduce the risk for store operators.

There is also a proposal to reduce fees for permits and applications when new supermarkets open in underserved areas.

Additionally, incentives such as building conditions and floor area ratio benefits are being considered for developers who incorporate food supermarkets into the lower floors of housing developments.

The sites of closed large supermarkets may be too large for current retail businesses. Therefore, reforming zoning regulations to divide large plots into multiple stores or housing is also important.

These measures are not as politically clear-cut as punishing companies.

However, they are easier to explain as policies that directly reduce costs for businesses opening stores.

"Shopping Difficulties" Worsening in Japan

In Japan, when people think of those with shopping difficulties, they often imagine seniors living in mountainous or depopulated areas.

In reality, the problem is spreading even in urban areas.

Due to aging populations, an increase in single-person households, the closure of local supermarkets and shopping streets, and the reduction of public transportation, more people are finding it inconvenient or challenging to purchase groceries.

In a nationwide municipal survey published by the Ministry of Agriculture, Forestry and Fisheries for the fiscal year 2025, 89.3% of responding municipalities said measures for food access issues were "necessary" or "somewhat necessary."

The percentage of municipalities where some measures are being implemented by the government or private businesses is 86.8%.

In large cities, there is a lot of support for delivery, personal shopping services, and shopping proxy services. In small to medium-sized cities, support focuses on transportation means such as community buses and shared taxis.

Mobile sales vehicles not only deliver goods but also play a role in monitoring seniors and preventing isolation.

In Japan, the issue has not surfaced as a conflict between companies and the government as it has in San Francisco.

However, phenomena such as new stores not opening after supermarkets close, people being unable to drive to suburban stores, and only high-end stores increasing in station area redevelopments are common.

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