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Developers spared from having to pay larger transit fees

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The Transportation Sustainability Fee, as currently proposed, would generate an extra $14 million annually for Muni by imposing a fee on residential devlopment. (Mike Koozmin/S.F. Examiner)
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San Francisco slightly increased the proposed transit impact free on development Monday while opposing more significant rate hikes amid opposition from developers that could have generated millions of more dollars for Muni.

As proposed, the Transportation Sustainability Fee would expand to impose a transit impact fee on residential development for the first time and generate $14 million annually more a year for Muni. But transit advocates and more progressive members of the Board of Supervisors say that’s not enough.

Last week, the board’s Land Use and Economic Development Committee postponed a vote on the proposal amid a debate over increasing the transit impact fee, among other changes. Amid those talks, developers warned the board that rate hikes in the impact fee could have a chilling effect on housing development.

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On Monday, the committee approved eight amendments to the legislation. When it came to increasing the fee rates, supervisors Scott Wiener and Malia Cohen opposed the rate hikes proposed by Supervisor John Avalos, instead supporting more modest ones.

“I feel like we left a lot of money on the table today,” Avalos said after the vote.

The difference in proposals was clear. Avalos’ proposed changes with the rate hikes would generate an additional $13.5 million annually and one-time revenue of $35 million in changes to grandfathering provisions.

What Wiener and Cohen supported would generate about $4 million annually with $7 million in one-time fees for grandfathering provision changes.

“The mayor cut a deal with developers, and now that we are in the public part of the legislative process, the developers are trying to protect the deal they made in his office,” Avalos said.

Wiener declined to comment on discussions he may have had with the Mayor’s Office. The Mayor’s Office did not respond to a request for comment.

Wiener said he was not bowing to the interests of developers. “The developers were very clear they did not want the fee to increase at all. I supported increasing it,” Wiener said. “We went against what the developers wanted on a number of these issues.”

The fee rate increase supported by the committee keeps the current proposed rate at $7.74 per square foot for residential developments under 99 units and increases it to $8.74 for every unit in excess of 99 units. The City’s nexus study found that transit impacts caused by development could legally justify a residential fee, for example, of $30.93.

“Someone can always come forward and say, “Make the fee higher,’” Wiener said. “The higher we make the fee it starts to impact the feasibility of the projects.”

Wiener also amended the proposal with the support of Cohen to increase the commercial rate for projects in excess of 100,000 square feet from the proposed $18.04 per square foot to $19.04. Avalos had proposed that rate to increase by $6 to $24.04.

“You can’t just keep raising it forever. We drew the line at the appropriate place,” Wiener said of the fee rates.

The committee also eliminated the exemption for nonprofit hospitals, added an exemption for post-secondary school student housing and eliminated a credit for area plans where impacts fees are higher than the rest of The City.

The committee is expected on Oct. 19 to vote to send the legislation to the full board, where additional debate is expected.

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