Specific enforcement actions provide Code Enforcement with clearer guidelines.
Explicitly stating that notices will be issued after 90 consecutive days of vacancy for property registration provides a defined and actionable starting point, streamlining initial enforcement. This recommended approach of tracking 90 consecutive days of vacancy prior to issuing notice is a valid one. Alternatively, the City could craft a mandatory duty like Sacramento, whereby a building may not be vacant unless the building is actively being repaired or fit for occupancy and offered for sale/lease.
Failure to comply would be a nuisance with fees and penalties. • Improved Aesthetic Standards and Visual Cohesion
The proposed amendments introduce critical distinctions for permissible and prohibited window coverings, explicitly prohibiting materials like drywall, sheeting, and plain paper, thus ensuring a higher minimum standard for visual quality. The Community Development Department's commitment to providing examples of acceptable displays will offer concrete guidance, fostering consistent and highquality aesthetic contributions. • Direct Regulation of Plywood Blight
A significant benefit is the direct regulation of plywood use, which the expired ordinance did not explicitly address. By allowing bare plywood for only up to 90 days and then requiring it to be covered, the City directly tackles a major source of visual blight. The $500 per month fine creates a strong financial incentive for prompt compliance.
• Encouraging Permanent Solutions
The one-year limit on temporary plywood frontage, with a potential one-year extension, is crucial for encouraging permanent solutions. The $250 per month fine for non-removal reinforces the push for long-term improvements over indefinite temporary coverings, promoting reinvestment and redevelopment. • Effective Fine Collection
The method in which the City collects fines will be carefully crafted in the update to the ordinance to conform with current law. Government Code Section 53069.4 permits a city to enact ordinances to enforce administrative orders by imposing fines and penalties. Assembly Bill (AB) 632 (2025) was passed by the State Senate on September 10, 2025 and by the State Assembly on September 11, 2025. The bill was subsequently vetoed by Governor Newsom on October 11, 2025, one day before the deadline for gubernatorial action. As a result, AB 632 did not become law and will not amend Government Code Section 53069.4 as proposed. Without enactment, the bill’s provisions to allow a city to establish a procedure, by ordinance, to collect administrative fines or penalties by a recorded lien upon the parcel of land on which the violation occurred will not take effect, leaving the City’s current fine collection options unchanged by this legislation.
Conclusion
Reactivating the Vacant Commercial Space in Downtown Ordinance and incorporating the Subcommittee’s proposed amendments into the former ordinance will provide the City with a more robust, clear, and enforceable framework for addressing visual blight.
By setting clearer expectations, establishing stricter aesthetic standards, directly regulating plywood use, encouraging long-term solutions, and streamlining fine collection, the City can more effectively cultivate a vibrant, attractive, and welcoming environment for residents, businesses, and visitors alike.
Vacancy Ordinance Subcommittee
The Vacant Ordinance Subcommittee identified a pressing need for a more comprehensive strategy to address vacant buildings throughout the City, moving beyond existing efforts. To inform their recommendations, the Subcommittee undertook a review of ordinances from other municipalities with established vacancy regulations, including the following:
• Fairfield, California: Fairfield operates a "Vibrant Vacancy Program" that emphasizes transforming vacant commercial storefronts through window dressings, art, and paintings. Their program requires registration of vacant properties within 10 days of vacancy, with a $500 annual fee. • Sacramento, California: Sacramento has a "Vacant Buildings and Structures" chapter addressing properties vacant for more than 45 days (commercial) or 10 days (residential). Their ordinance focuses on securing properties from trespassers and removing blight, with an annual vacant lot program fee of $65 for undeveloped lots. As of September 2025, vacant buildings and storefronts are not included in a mandatory registration ordinance and are addressed on a complaint basis; however, the city is exploring a vacancy tax to encourage development of 3,600 vacant parcels.
• Palm Springs, California: Palm Springs requires vacant commercial properties (defined as 35% or more unoccupied) to be registered within 10 days. Their ordinance emphasizes ongoing maintenance and specific standards for boarding and addressing blight.
• San Francisco, California: San Francisco has implemented a Commercial Vacancy Tax, which applies to spaces vacant for more than 182 days. The tax rates escalate based on frontage and duration of vacancy, starting at $250 per linear foot of frontage for the first year.
• Oakland, California: Oakland's Measure W, the Vacant Property Tax (VPT), imposes an annual tax of $3,000 to $6,000 on properties "in use less than fifty (50) days in a calendar year." This tax varies by property type (e.g., $6,000 for
residential/nonresidential parcels, $3,000 for condominium units or vacant ground-floor commercial parcels).
The Subcommittee's proposal for Gilroy aims to integrate lessons learned from these diverse approaches, developing a comprehensive ordinance to mitigate the negative impacts of prolonged vacancies on community appearance, public safety, and economic vitality.
Key Provisions of Vacancy Ordinance Subcommittee’s Proposal The Subcommittee's proposal defines a vacant building as one where at least 35% of the building is unoccupied, not open for business, or not open to the public. Its core provisions include the following:
▪ Mandatory Registration: Building owners must register their vacant properties within 10 days of vacancy.
▪ City Inspections: Upon registration, the City will inspect the building to assess its code compliance.
▪ Enforced Renovations: Owners must complete necessary renovations to meet code requirements before re-occupancy.
▪ Failure to Register Fine: A $150 per week fine will be assessed for buildings not registered after the 10th day of vacancy.
▪ Annual Monitoring Fee: A $1,500 annual monitoring fee is required upon registration.
▪ Vacancy Tax: A $6,000 annual vacancy tax will be an assessment on the property tax for buildings that remain vacant for longer than 60 days. ▪ "Building Report Card": Contact information for the owner (name, address, phone number, and vacancy date) will be collected and posted in the window, along with any code compliance items.
▪ Potential Exemption for PG&E Delays: The ordinance proposes potentially exempting buildings from the vacancy ordinance if delays are solely due to pending power restoration from PG&E.
Benefits vs. Challenges of the Proposal
Implementing a comprehensive vacancy ordinance presents both significant advantages for our community and potential hurdles to navigate.
Benefits:
• Discouraging Long-Term Blight
Financial penalties incentivize property owners to avoid prolonged vacancies, leading to quicker occupancy or redevelopment, directly addressing visual and economic blight.
• Enhancing Public Safety and Code Compliance
Mandatory inspections and required renovations ensure vacant properties meet safety and building codes, reducing risks for the public and emergency services. • Increasing Transparency and Accountability
The "Building Report Card" publicly displays owner information and code status, fostering community awareness and encouraging prompt issue resolution. • Promoting Economic Revitalization
Compelling owners to reactivate vacant spaces can stimulate economic activity, increase foot traffic, and support local businesses, contributing to a more dynamic commercial environment.
• Balancing Enforcement with Fairness
Inclusion of exemptions for legitimate circumstances (e.g., active marketing, ongoing construction, personal hardships) demonstrates a reasonable approach, targeting neglect rather than unavoidable delays.
Challenges:
• Potential Financial Burden on Owners
The combined $1,500 annual monitoring fee and potential future $6,000 annual vacancy tax for prolonged vacancies represents a significant financial commitment.
Compared to other cities, Gilroy's proposed total could be considerably higher, potentially straining owners already struggling to sell, lease, or renovate, and disproportionately impacting small-scale investors.
• Risk of Unintended Outcomes
High penalties might, in some extreme cases, lead to property abandonment or distressed sales rather than the desired investment and improvement, potentially exacerbating existing problems if not carefully managed. • Increased Administrative Demands
Implementing and overseeing a citywide comprehensive ordinance will require notable administrative resources for registration, inspections, fee collection, and managing the various exemptions. This could necessitate additional staffing, training, and technological upgrades.
• Potential for Legal Challenges
A "vacancy tax" levied as a tax may lead to legal challenges and delays. A San Francisco residential vacancy tax was struck down in Debbane v. City and County of San Francisco CGC-23-604600 in 2024 and is currently on appeal. The City should avoid passing a similar vacancy tax until the case is resolved to clarify if there is threshold of distinction between residential and commercial vacancy taxes.
This San Francisco Superior Court ruling, along with the California Legislature's consideration of SB 789 (2025) of commercial real property registration and annual vacancy filing with the California Department of Tax and Fee Administration, suggests that the City should wait to enact a vacancy tax until the legal considerations are fully developed.
• Scope of Exemptions
Despite the provided exemptions, some property owners may argue that the criteria or durations are too restrictive for complex or prolonged situations (e.g., unforeseen construction delays beyond the specified timeframe).
• Maintaining Positive Community Relations
If not clearly communicated and implemented with a supportive approach, the ordinance could be perceived as punitive rather than a tool for community improvement, potentially straining relationships with segments of the property owner community.
Conclusion
The Vacant Ordinance Subcommittee has researched and proposed provisions designed to address the persistent issue of vacant buildings across Gilroy. Drawing insights from the diverse approaches of cities like Fairfield, Sacramento, Palm Springs, San Francisco, and Oakland, the proposal offers a robust framework built on mandatory registration, inspections, enforced renovations, and financial incentives through fees and a potential future vacancy tax, balanced by thoughtful exemptions.
While the potential benefits are promising in reducing blight, enhancing public safety, increasing transparency, generating revenue, and fostering a more vibrant community, it is crucial to address the challenges, particularly considering recent legal developments in Debbane v. City and County of San Francisco. Staff does not recommend enacting a vacancy tax at this time because this area of law is currently being litigated in the courts and it could expose the City to legal risk. The California Legislature's consideration of SB 789 of commercial real property vacancy registration with the California Department of Tax and Fee Administration also suggests that the City should wait to enact a vacancy tax until the legal considerations are fully developed.
Staff Recommendation
In view of the current legal uncertainty, staff recommends strengthening the City's code pertaining to vacant commercial space in the downtown district in lieu of a vacancy tax.
City regulations pertaining to vacant commercial space in downtown are currently contained in Chapter 5D, which expired in 2016 pursuant to Resolution 2015-56. Staff recommends that Chapter 5D be revived, updated, and strengthened. This approach allows the City to implement robust regulations to address vacant commercial properties, including registration, maintenance standards, and enforcement mechanisms, while mitigating the legal risks associated with a direct vacancy tax. The City can also explore alternative approaches to addressing long-term vacancy, such as crafting a mandatory duty similar to Sacramento's model, where a building may not be vacant unless actively being repaired or fit for occupancy and offered for sale/lease, with non-compliance resulting in nuisance declarations, fees, and penalties.
Staff also recommends exploring the appropriate level and structure of registration and monitoring fees. Further community engagement and stakeholder input will be crucial in defining the ordinance to ensure it is effective, equitable, legally defensible, and ultimately contributes to the long-term vitality of Gilroy.
ALTERNATIVES
The City Council may modify these recommendations or propose alternatives.
FISCAL IMPACT/FUNDING SOURCE
Implementing and effectively managing a new vacant building registration program, along with ongoing monitoring, inspections, and enforcement of boarded-up storefronts, will require dedicated staffing resources to ensure its success. Staffing resources are essential for expanding the mandatory registration area, conducting thorough outreach to all affected property owners, and ensuring compliance with the new regulations.
Investing these resources will be vital to safeguarding our community, maintaining accountability, and achieving the long-term goals of this initiative. As the Community Development Department Code Enforcement function has been expanding the range and scope of its programs, roles, and responsibilities, staff will return to Council with an overall evaluation of Code Enforcement staffing resource needs during a budget update.
PUBLIC OUTREACH
The City Council agenda packets are publicly posted through the City’s webpage. As the development of an ordinance update gets underway, community engagement will be conducted to gather stakeholder input.
NEXT STEPS
Staff will proceed with the implementation of any Council direction received.
If Council direction is for staff to update, strengthen, and revive the expired City Code Chapter 5D without a vacancy tax, staff will conduct community engagement to gather stakeholder input and develop ordinance amendments. The Code Enforcement team is still in the process of completing the recruitment of a vacant position and training new team members. Therefore, staff estimates bringing the ordinance to Council in the first quarter of 2026.
Once adopted, a new ordinance will require ongoing staffing resources to ensure its effective implementation and management. Staff plans to return to Council with an overall evaluation of Code Enforcement staffing resource needs during the mid-cycle budget update, unless staff is directed by Council to bring forth this evaluation sooner.
Attachments:
1. Downtown Subcommittee Reports and Recommendations – Plywood Removal and Vacancy Ordinances
City of Gilroy
STAFF REPORT
Agenda Item Title: City Council Downtown Committee (Part 1) - Subcommittee Reports and Recommendations –
Plywood Removal and Vacancy Ordinances
Meeting Date: January 8, 2024
From: Gilroy Downtown Committee
Department: City Council
Submitted By: Gilroy Downtown Committee
Prepared By: Gilroy Downtown Committee
STRATEGIC PLAN GOALS Promote Economic Development Activities
RECOMMENDATION
Council discussion and direction regarding the report and recommendations provided by the Downtown Committee’s Plywood Removal and Vacancy Ordinance Subcommittees.
BACKGROUND
The Downtown Committee (Committee) was formed by Council on May 1, 2023, with its first meeting on May 9, 2023. The resolution forming the fifteen-member Brown Act committee established five Council Members as members of the Committee, each to appoint two of the remaining ten seats as detailed in the resolution.
The Committee is charged with reviewing and offering recommendations to improve the Gilroy Downtown. The Committee formed five sub-committees, each with a different focus area relating to improving the downtown. Below are the five subcommittees, in no particular order:
• Plywood Removal (PRS)
• Beautification of Downtown (BDS)
• Vacancy Ordinance (VOS)
• Noise Ordinance (NOS)
• Code Enforcement (CES)
Agenda Item No. 11.2 Agenda Packet Page No. 125 of 144
Plywood Prohibitions and Vacancy Ordinances
City of Gilroy City Council Page 2 of 3 January 8, 2024 Tonight’s presentation from the Committee is for the recommendations developed by the PRS and VOS. Should Council direct staff to proceed with the recommendations, staff will return to the Council to update the department work plans to incorporate the work to implement these efforts. There will be legal and other operational review needed on the recommendations and how to proceed with implementation, which will need to be balanced against the other work currently in the department work plans.
ANALYSIS
Plywood Removal Subcommittee
The PRS conducted a review of the City’s current policies and procedures regarding the use of plywood to board up all or portions of buildings in the downtown area. The PRS has identified potential improvements in the Gilroy City Code to help improve the conditions in our downtown related to the use of plywood. The PRS has crafted a draft, conceptual, red-lined version of the PRS's recommended edits to the City Code for Council consideration. If acceptable, the Committee recommends the draft version be finalized by City staff, working with the PRS, to create a finalized version of the ordinance for a future public hearing introduction with the intent of future adoption by the City Council.
The recommended changes to the City Code by this conceptual ordinance are summarized as follows, but will be discussed in the presentation by the Downtown Committee:
• Specifies a role for code enforcement officers in issuing notices after 90 consecutive days of buildings becoming vacant.
• Identifies that displays of art or other displays of cultural, historical, or educational value will have examples available in Community Development. • Adding Section 5D.7(d) prohibiting drywall, sheeting, plastic, butcher paper, plain paper or other raw coverings, elaborating that all windows, openings, doors, facades, awnings, etc. must be finished in appearance.
• Plywood may be utilized for up to 90 days as-is. After 90 days, the plywood must be decorated consistent with the design criteria expressed in Section 5D.7(b).
Failure to decorate would generate a fine of $500 per month. • The temporary frontage of decorated plywood must be removed after one year.
Extenuating circumstances would potentially grant a grace period of an additional year. The fine for failing to remove the temporary plywood front is proposed by the Committee to be $250 per month
• Each of the fines are proposed to be assessments on the property tax bill. • The artwork is required to be respectful and appropriate for all ages in the community.
The proposal to attach the non-paid plywood removal fees to property tax bills, similar to garbage liens.
Agenda Item No. 11.2 Agenda Packet Page No. 126 of 144
Plywood Prohibitions and Vacancy Ordinances
City of Gilroy City Council Page 3 of 3 January 8, 2024 Vacancy Ordinance Subcommittee
The VOS has identified a need for a comprehensive vacancy ordinance. The subcommittee reviewed existing ordinances in cities like Fairfield, Sacramento, and Palm Springs. The VOS has issued the attached report, and is proposing a vacancy ordinance that would mandate the following:
• Building owners registering their vacant properties with the City within ten days. • City inspections for these buildings to determine code compliance. • Enforced renovations to meet code before re-occupancy. • Implementation of a $150 per week fine for failure to register a vacant building. • Potentially exempting buildings from the vacancy ordinance if delays were due to pending power restoration from PG&E.
ALTERNATIVES
Council may issue any direction that it desires relating to these first recommendations from the Downtown Committee.
FISCAL IMPACT/FUNDING SOURCE
No detailed financial impact analysis has been conducted. Depending upon the direction of Council, any future actions will have a fiscal impact determined as part of the agenda report for any such agenda item.
PUBLIC OUTREACH
The Downtown Committee has been holding public meetings, including posted agendas, on a monthly basis. This item was also included on the publicly posted agenda for this meeting.
NEXT STEPS
Staff will proceed towards implementing any Council issued direction and return to Council with updates to the department work plans to incorporate the direction and work received.
Attachments:
1. Plywood Removal Subcommittee Draft Conceptual Ordinance
2. Vacancy Ordinance Subcommittee Report
Agenda Item No. 11.2 Agenda Packet Page No. 127 of 144
5D.7 Window Displays and Plywood Store Fronts for Spaces not occupied for 90 Days
Whether or not a vacant commercial space is registered pursuant to this chapter, if any commercial space in the Downtown Historic District or Expansion District has been unoccupied for more than 90 consecutive days at the time this chapter becomes effective or any time thereafter, a code enforcement officer will send a certified letter to the responsible person(s) and the owner(s) shall immediately construct and/or install at least one of the following types of displays on or inside all ground-floor windows that face sidewalks, streets, alleys, or public open spaces:
(a) Faux window dressings containing goods or services with the visual characteristics of a vibrant business using background panels or other methods to screen views of the unoccupied space from the street, sidewalk and public areas.
(b) Works of art or other displays of cultural, historical, or educational value, using background panels or other methods to screen views of the unoccupied space from the street, sidewalk and public areas. (Community Development will provide examples of appropriate artwork.) (c) Window paintings featuring visually appealing scenes depicting or suggesting business or cultural activities.
(d) Drywall, sheeting, plastic, butcher paper, plain paper or other raw coverings are strictly prohibited.
All windows, openings, doors, facades, awnings, etc. must be finished in appearance or in compliance with one or more of the above methods.
Plywood Utilization: If the building façade needs to be removed, plywood may be utilized. Within 90 days of installation, plywood must be decorated following the above criteria. (Section B) If not, the building owner will be fined $500 per month to be placed on the property tax bill until the temporary front complies with this ordinance.
The temporary front needs to be removed after one year. No additional permits will be approved until the active permit is completed, the temporary front is removed and all applicable fines are paid.
After one year if the plywood is still in place, the building owner is subject to fines of up to $250 per month which will appear on the property tax bill. If there are extenuating circumstances why the temporary front has not met this deadline, the building owner will ask the community development director to grant a one year extension.
(e) Decorative artwork and mural proposal designs should be respectful and appropriate for all ages in the community. (Examples of artwork on file with Planning Dept.) (Ord. No. 2012-02, 1, 2-6-12)
Agenda Item No. 11.2 Agenda Packet Page No. 128 of 144
Agenda Item No. 11.2 Agenda Packet Page No. 129 of 144
Vacancy Ordinance:
The high number of vacant buildings can cause a major blight to our downtown area, cause real estate prices to drop and further suppress the economy of downtown. Furthermore, vacant buildings that are boarded up, or not maintained turn people away from enjoying downtown, or investing in it. The buildings encourage vandalism, breaking and entering, and misuse. Due to the longevity of vacancies, and the fact that many are owned by the same parties, a vacancy ordinance is long overdue to correct the growing problem in downtown.
Definition:
A vacant building is one where at least 35% or more of the building is unoccupied/not open for business or open to the public.
Vacant buildings will be required to register with the City of Gilroy within 10 days of becoming vacant. Once the building is registered, the City will review the condition of the building and assess if the building needs to be brought up to code. There will be a fine of $150 per week that will be assessed for buildings that are not registered after the 10th day of vacancy.
The registration will include an annual monitoring fee of $1,500. Contact information for the business owner, including name, address, and phone number, and the day the building became vacant will be collected, and this information will be posted in the window along with any codes that need to be brought up to date. The posted information will be known as the buildings’ Report Card.
Vacant buildings that remain vacant for longer than 60 days will incur a Vacancy Tax in addition to the annual Monitoring Fee. The tax and the fee will be an assessment on the building’s property tax, and will be the responsibility of the owner, whether or not the owner is responsible for the building not being open to the public.
The Vacancy Tax will be an additional $6,000 per year, the year starting on the 10th day of vacancy, or the date the building is registered, whichever is earliest.
Exemptions for the Vacancy Tax would need to be elaborated on, examples:
A building that is up to code, and actively for lease or sale has an exemption up to 180 days from the date of registration, or 10 days after vacancy, whichever comes first.
There is an active construction permit on the building with consistent and active construction on the premises. This allows a 180-day exemption from the Agenda Item No. 11.2 Agenda Packet Page No. 130 of 144
date of registration, or 10 days after vacancy, whichever comes first. If the construction is not complete within 180 days, the building owner may apply for one 90-day extension.
If the owner is active-duty military and deployed, died, or inherited the building, they qualify for a 180-day exemption, and can apply for an extension if needed.
In-Use Definition would need to be further developed, examples:
Any ground floor commercial space will not be considered in use unless either leased out to a bona fide tenant intending to use the space for a legal activity, or actually occupied, by an owner or some other party, for some substantially similar purpose
Examples of cities that have enforced a vacancy ordinance, and were used as reference in this write-up:
City of Sacramento - Ordinance 2007-060
City of Oakland - Exemptions Chapter 4.56 - VACANT PROPERTY TAX4.56.090 - Exemptions, 4.56.080 - "In use" determinations, City of Palm Springs
City of San Francisco
Agenda Item No. 11.2 Agenda Packet Page No. 131 of 144