After some last minute adjustments, the Board of Supervisors unanimously approved Tuesday a higher fee for developers of San Francisco office buildings that is expected to generate $400 million for affordable housing in under a decade.
Supervisor Matt Haney had spent the past five months pushing to raise the Jobs-Housing Linkage Fee, which dates back to 1996. The fee is meant to fund housing construction to offset the demand for housing that new office employment creates.
He initially proposed raising the fee from the current $28.57 per square foot to $69.60 per square foot.
Through negotiations, as labor unions and developers pushed back, Haney amended the rates and was able to secure broad support. Instead of charging the full $69.60 per square foot on all office projects, the fee will now gradually increase.
The new rates approved by the board impose a $52.20 fee for all projects that were approved by the Planning Department before Sept. 10. The fee is $60.90 for projects submitted for approval between Sept. 11 and Jan. 1, 2021. Come Jan. 1, 2021, the fee increases to $69.60.
The proposal has a lower rate for smaller projects under 50,000 square feet and it also raises the fee for laboratory development.
The board approved the legislation in an 11-0 vote, which came a day after the San Francisco Labor Council unanimously endorsed the proposal.
Haney said The City needs to grow “in a way that people who work here are able to live here.”
He referenced a recent city study that shows how in the past decade San Francisco has built only one unit of housing for every 8.5 jobs created. “It’s been a massive displacement of particularly low or moderate income households here in our city,” Haney said.
The new fee rates, he said, will result in “$400 million in increased investment in affordable housing over the next eight years alone.”
Supervisor Hillary Ronen praised the deal. She said that with the fee hike and the expected voter-approval of the $600 million housing bond next week, The City is “finally talking about numbers in the billion dollar range that will start to make a dent in this crisis that we have been struggling with in this city.”
“I am so sick of nibbling around the edges,” Ronen said.
To achieve the compromise, Haney said he took a lot of “feedback,” which included listening to concerns from the building trade unions over the impacts on the projects ready to break ground.
As of last week, Haney had seven votes for the legislation, which was one shy of blocking a possible mayoral veto. With the changes, he picked up the support of labor and more supervisors.
“We wanted to have at least eight votes because the mayor has been opposed to this and has put forward positions that are way far from what was acceptable to us,” Haney said.
Mayor London Breed’s spokesperson Jeff Cretan said after the vote that “Mayor Breed agrees that the Jobs Housing Linkage Fee should be increased, but in a way that is based on data and ensures ongoing economic feasibility of developments so that affordable housing continues to be funded and small businesses can locate and grow in San Francisco.”
He added, “She has shared these perspectives directly with members of the Board and we will review what comes out of the Board.”
The board takes a second and final vote on the legislation next week.