In an effort to spur housing development in The City, Mayor Gavin Newsom has introduced legislation that would curb a portion of the upfront fees builders have to pay.
The Examiner reported in June that city officials were looking for ways to cut costs for developments amid concerns from developers that the recession would sink planned projects without some financial relief. When building housing in The City, developers have the option of including on-site, below-market rate units in the development or paying an in-lieu fee to meet San Francisco’s affordable housing requirements.
Mayor Gavin Newsom has introduced legislation that would allow developers to cut affordable housing fees by 33 percent if they agree that when the property is first sold — and for each subsequent sale — 1 percent of the price is put in The City’s affordable housing fund.
The financial break for developers “will reduce upfront project costs and cash flow in such a way that should improve the financial viability of many projects,” according to the legislation. “By improving the financial viability of development on the margin, individual projects will be easier to finance when the overall market improves and construction lending is once again available.”
Newsom also said the proposal would “shorten the period of economic recovery within The City and spur job creation and tax revenues sooner than would otherwise be the case under existing rules,” according to the legislation.
Other benefits for offering this option, along with the existing ones, include “creating a long-term funding source for affordable housing that would provide more steady and consistent revenues over time and be less vulnerable to the swings in the real estate development cycle,” according to the legislation.
Supervisor Chris Daly, a staunch advocate for building more affordable housing, said, “It’s a question of math.” He said “cash in hand” is better, but that needs to be weighed with how much more The City could receive under the proposal. Daly also questioned whether there was a need for providing developers with relief and said there was a lot of ongoing development in The City.
The legislation could be heard by a Board of Supervisors committee after 30 days. It would require approval by the full board to take effect.