A proposal to hike fees on developments to help fund a nearly $22 billion backlog of transportation projects is winding its way through the Board of Supervisors this week, but is likely to meet opposition from business groups and developers.

The effort to raise what’s known as the transportation sustainability fee was unanimously recommended by a vote of the Planning Commission last Thursday, and is set to reach the Board of Supervisors’ Land Use and Transportation Committee Monday.

The transportation sustainability fee, established by the Board of Supervisors in 2015, requires most developers to pay for the increased transit use spurred by their projects. Now Supervisor Aaron Peskin is proposing to raise that fee by $5 per square foot on non-residential developments larger than 99,999 gross square feet, namely high-rises.

Proponents of the fee increase, which would generate around $12 million annually, say it’s necessary to begin addressing a $22 billion price tag on core transportation needs. That number only addresses the cost of keeping Muni and other transportation infrastructure intact in San Francisco, according to Peskin’s office.

J.R. Eppler, a representative of the Potrero Boosters Neighborhood Association, told the supervisors in public comment in early May that “while the (fee hike is) not a silver bullet to solve our needs, it’s a down payment.”

Peskin said new development downtown creates a strain on The City’s transportation system.

“The nut I’m trying to crack is to address the impacts these developments cost,” he told supervisors in a May board committee meeting.

Peskin’s proposal is not the first to attempt to increase the fee. Former supervisor John Avalos floated a proposal to increase that fee by $2 per square foot in 2016, only to see it vetoed by Mayor Ed Lee.

The latest effort is being met with the same concerns from business and development proponents. Planning Department staff have said they fear the fee will chill development in the Central South of Market neighborhood, and the San Francisco Chamber of Commerce has voiced opposition to the fee. Jim Lazarus, senior vice president of public policy at the Chamber of Commerce, said Peskin’s fee targeted “one type of development” and was developed at a “random” time. He urged the Planning Commission and Board of Supervisors to review the fees every five years or on some other “regular basis.”

Planning Department Legislative Analyst Diego Sanchez told the Planning Commission last Thursday that a staff analysis shows that development feasibility “is already waning,” as developers face dwindling profits. Increasing the transportation sustainability fee “could worsen the situation, and in certain instances make projects unfeasible.”

But Planning Commissioner Dennis Richards shot back that “this is one of the lowest fees we have.” The Planning Commission unanimously supported the fee.

Peskin addressed that concern at the May Board of Supervisors committee meeting.

“And yes that makes developers unhappy because they will realize less profits,” he said. But the transportation impacts from new developments “will be felt around The City.”

Advocacy groups Walk San Francisco and the San Francisco Bicycle Coalition support the fee hike. At the May meeting, Brian Wiedenmeier, the bike coalition’s executive director, decried the fee hike’s naysayers.

“If not this, then what?” he asked.

Joe Fitzgerald Rodriguez
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Joe Fitzgerald Rodriguez

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