The city has about 4,400 such structures, which are highly vulnerable during an earthquake because they have wood frames and weak ground floors that are usually used as garages or retail space.
The mandate would force building owners to complete the seismic upgrades but would also set aside bond money to help building owners finance the retrofits, Newsom said.
It would need to be approved by the Board of Supervisors and the voters and is expected to be on the November ballot.
"There's no doubt we're going to require retrofitting," he told an audience at the annual Earthquake Engineering Research Institute meeting. "It just has to happen."
The Department of Building Safety estimated that if a 7.3-magnitude earthquake were to hit the San Andreas fault, up to 850 soft-story buildings would collapse and up to 2,400 would be uninhabitable for months.
Although retrofitting all the buildings would cost about $260 million, the seismic upgrades would prevent about $1.5 billion worth of damage if a major earthquake hit, the department said.
Newsom's office has had a voluntary retrofitting program in place since before the financial crisis, but even after the city offered to waive fees and expedite the permits, few building owners stepped forward, he said. About a year ago, he announced that he supported mandatory retrofits.
Friday, he said a task force was tightening up a proposed ordinance that would help building owners finance the mandatory upgrades and assist displaced tenants and businesses while repairs are made.
Many of the soft-story buildings Newsom's proposed ordinance targets have residents on the upper levels and small businesses on the ground floor.
Although the individuals would probably be able to stay during retrofit construction, the businesses would have to move or close for two to four months.
Art Swanson, who is operations chief of the Lightner Property Group, president of the city's Small Business Network and a member of the Building Owners and Managers Association of San Francisco, said the retrofits are important, but acknowledged that they won't come cheap.
"It's the right thing to do," Swanson said. "I mean how could you possibly say creating a safer building is not the right thing to do? But it's a very expensive upgrade."
Construction costs alone range from about $60,000 to $120,000 per structure, according to the Department of Building Inspection.
Swanson said the city could do several things to make the process as painless as possible for building owners.
Providing building owners with low- or no-interest loans would help, he said, and making the money accessible would be an important component as well.
The ideal bill would "cut some of the red tape to expedite things" he said. "Here's the money, get it done, you're back in business. That will help more than anything I think."
Swanson said some businesses would probably close, but a retrofit wouldn't be more detrimental than anything else the city has proposed.
"I don't think this specific thing would drive someone out more than health benefits or any other particular thing they put before us," he said.
Janan New, director of the San Francisco Apartment Association, was less optimistic. She said many businesses would go under if they had to close for a couple of months.
"I think that a mandate is heavy handed," she said. "We haven't given the voluntary program enough time to work."
New said the Department of Building Inspection has not issued soft-story building standards, so building owners don't know what work they should do or if their repairs would even be approved by the city.
"There has been no outreach to the community on the voluntary measure," she added. "I don't think owners even know about the program."
Despite the depressed economy, Newsom said the task force was moving ahead because the retrofits would prevent billions of dollars worth of damage during an earthquake.
It's not a question of if there will be an earthquake in the area, he said, but when.
"It's never the right time," he said of the retrofits. "We just have to do it."