I'd prefer to charge both them and cars for parking actually, but if we're giving the space away for free to individuals and businesses for cars that cause congestion and pollution then we can let a business use the same space to serve meals to locals...

Sure, or come up with a reasonable per-foot of frontage rate that can be paid annually. But figuring out a new tax valuation seems a bit silly when the city will see benefits from increased economic activity, foot traffic, and payroll taxes. These spots were just going to be used to warehouse cars anyway.