SoMa’s risky $34 million windfall

What we know about the South of Market neighborhood’s unprecedented high-rise developer “impact” fees is that during the next four years, a $34 million SoMa Community Stabilization Fund will flow to a brand-new advisory committee chosen from a pool of applicants and approved by the Board of Supervisors. What we don’t know yet is how wise the money distributions recommended by this committee — largely comprised of SoMa nonprofit representatives with a vested interest in obtaining some of the payouts — will be.

In exchange for The City lifting zoning height limits in 2005 to allow for 45- and 55-story private residential towers in the Rincon Hill area, developers agreed to pay $25 per square foot into a fund to help prevent longtime residents from being forced out of gentrifying SoMa. The arriving millions are supposed to provide services for those low-income residents most likely to be forced out of Rincon Hill by arrival of six new high-rises with units selling from $500,000 to $2 million.

The controversial plan was aggressively spearheaded by Supervisor Chris Daly, who attracted criticism from Mayor Gavin Newsom and others who suspect Daly might be leaning on developers to help fund organizations giving him dependable political support. That scenario hopefully becomes less likely with the establishment of a strong advisory committee as endorsed by Newsom and the full Board of Supervisors.

Also encouraging are early comments from committee appointees. A large percentage of funds should not go to any single organization, said San Francisco Soup Company co-founder Steve Sarver. Community development consultant Ada Chan warned against pressure from nonprofits eager “to fill their budget gaps” from the $7 million available to the fund during the upcoming budget deficit year.

Still, whenever a small and relatively little-known group is responsible for helping distribute large amounts of public money, the potential for abuse is inevitable. Strong, independent oversight of the Stabilization Fund is necessary because fair and open functioning of the advisory committee affects not only SoMa, but every downtown neighborhood where height-limit exemptions are being sought.

Supervisors are beginning to suggest that all future large-scale development projects will assess community-impact fees, although revenues could likely be reserved for more traditional needs such as public transit. The success of SoMa’s mitigation fund becomes a vital test for such future mitigations.

The City’s past was admittedly shameful in displacing minority residents of older neighborhoods slated for redevelopment and then never enabling many of the displaced to return. The Western Addition and the Fillmore quickly come to mind. Such abuses can never be allowed again, and the impact-fee goal of mitigating redevelopment’s negative impacts is worthwhile. SoMa’s $34 million windfall must be spent for broad public benefits and prevented from subsidizing any narrow political agenda.

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