San Francisco approves transit fee on residential development

Amid San Francisco’s ongoing construction boom, a fee on residential development to fund Muni was approved Tuesday by the Board of Supervisors — but not without a heated debate.

The board’s more left-leaning board members had spent weeks arguing the fee rate was “leaving money on the table,” coming up with proposals that triggered warnings from developers that the rate would chill housing development.

The board ultimately approved unanimously the Transit Sustainability Fee, keeping the rates unchanged.

The fee is expected to generate nearly $20 million a year for the transit system. However, legally the city could have generated millions more based on the transit impacts caused by development, according to a city nexus study examining those impacts.

Supervisor Scott Wiener defended the proposed rates. The rates, he said, “appropriately balances our need for transit funding and for transit impact fees with making sure that we are actually having housing be built in San Francisco.”

But Supervisor John Avalos, who had unsuccessfully tried to raise the rates, said, “We need to be fighting for every dollar that we can find for transportation.” He noted “we actually have a lot of money left on the table.”

Supervisor David Campos went a step further and said the approved rates were tantamount to “a corporate giveaway” and a cave-in to the pressures of the real estate industry.

The per square feet fees approved include $7.74 for smaller residential projects, which is 25 percent of the total amount that could be legally charged, according to the nexus study.

The additional per square square feet fees approved include $8.74 fee on units exceeding 100 in larger projects, $18.04 for small commercial projects, which is 20.8 percent of the nexus study fee, and $19.04 for larger commercial projects, which is 20.6 percent of the nexus study fee.

One controversial element of the proposal will need to undergo a hearing before the board’s land use committee before returning to the full board for expected approval — the fee for non-profit hospitals. Discussions continued leading up to the vote but ultimately a deal, negotiated by Supervisor Malia Cohen, would impose an $18.74 fee per square foot on net new beds and $11 per square feet medical services use over 12,000 square feet.

Illustrating the political divide on the board, one amendment proposed by Avalos, to increase by 50 cents the $18.04 fee on small commercial development between 800 and 99,999 square feet was voted down in a 6-5 vote. Supervisors Wiener, Cohen London Breed, Katy Tang, Mark Farrell and Julie Christensen voted against the 50 cent bump. Supervisors Norman Yee, Jane Kim, David Campos, Eric Mar along with Avalos supported it.

In other transit related news, the board unanimously approved Wiener’s legislation requiring The City develop a subway master plan within one year.

“We know that our city is growing dramatically,” Wiener said. “Our streets are more and more congested. We need to move more of our transit system underground.” Wiener noted that the Central Subway, which opens in 2017, will be the first subway constructed in San Francisco since the Market Street subway opened in 1980.

In signaling her support, Breed said, “Make sure that Geary Boulevard is on the list.”

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