My name is Jeff Kessler. I am the President of the Vacancy Fee Project (VacancyFee.org), a Sacramento 501(c)(4) focused on commercial vacancy policy. I support the Enhanced Monitoring and Enforcement Program in Item 6. But I want to be direct with this committee about what it will and will not accomplish.

Enforcement addresses neglect. It does not address strategy.

Consider 1014 10th Street -- the former Insight Coffee building -- vacant since 2018. This is not because there are no businesses that could use the space, but because keeping it empty has been enormously profitable.

The owner purchased the property in 2002 for $260,000. It is now estimated at nearly $2 million, a return exceeding 9% annually through appreciation alone before considering any rent payments over that time. In 2017, the owner took out an $800,000 cash-out loan against that appreciation. The annual carrying cost, taxes and interest, is only around $50,000 per year. On a $2 million asset, that is less than inflation. The math on keeping this building vacant is better than the math on renting it.

The monitoring fees in Item 6, even at the highest nuisance tier, do not change that calculation. They are a cost of neglect, not a cost of strategy. A property earning six figures annually through appreciation will absorb a compliance fee without flinching.
I ask two things of this committee:

First, design the new registry to support a future vacancy tax. Collect square footage, asking rents, duration of vacancy, and ownership data, not just addresses. Make that data public. The registry you build today is the infrastructure a scaled commercial vacancy tax will require.
Second, keep the door open. Your staff report in Item 5 documents what we already know: a citizen-led voter initiative requires only a simple majority not two-thirds. Sacramento residents have a path to act where a city-sponsored measure could not. That work is underway, and this registry will make it possible.

Enforcement is a necessary foundation. A scaled vacancy tax is what will actually change the economics. I urge the committee to pass Item 6 and to design it with that future in mind.

We have created a policy brief about why it's profitable to keep spaces vacant: https://vacancyfee.org/wp-content/uploads/2026/03/VacancyFee_OnePager.pdf

We also have documeneted numerous instances where landlords dramatically raised rents, increasing property valuations while forcing profitable tenants to leave. This has resulted in long-term vacancies that have extracted signifcant value from our community: https://vacancyfee.org/wp-content/uploads/2026/03/Closed-Business-1-pager.pdf