San Francisco Chronicle, Saturday, February 6, 2010
It's not a cure-all for San Francisco's sputtering economy, but Mayor Gavin Newsom says his plan to let developers defer up-front fees owed to the city will jump-start major construction projects while creating at least 700 blue-collar jobs.
"This is a big deal," Newsom told a crowd of applauding construction trade unionists at a meeting hall in the Mission District Wednesday, some of whom have been out of work since last summer.
Skeptics, though, contend parts of the mayor's proposal could delay neighborhood improvements like parks near new homes and constrain the amount of new affordable housing.
Developers currently pay millions of dollars in up-front fees to the city to offset the impact their projects have on a neighborhood, from increased traffic to demand for parks and schools. They must also designate a portion of residential projects to affordable housing or pay a separate fee for the city to build that housing elsewhere.
The mayor's administration says the package of legislation, tentatively set to go before the Board of Supervisors' land use committee March 15, would cut up-front costs for developers, making it easier to get financing in this recession. Newsom said his proposals would speed up start times on four specific projects by as much as two years, including the second tower in the One Rincon Hill development. Work on the four projects could start in two months, he said.
Major Condo Projects
They include condominium and mixed-use developments at 201 Folsom St., 1998 Market St. and 2001 Market St., and represent 1,200 residential housing units - about one-quarter of the total units already approved but waiting to break ground for financial reasons, according to the mayor's office.
"We're not waiting around for the federal government and 'Stimulus II' or 'Job Programs II,' " Newsom said. "We've got to take responsibility locally."
The mayor's legislation contains three components. The first, which has broad support, would streamline and centralize the development impact fee process in one place, the Department of Building Inspection. Developers now have to go to various agencies like the school district or Municipal Transportation Agency.
The second component would allow developers to defer fees they now pay up-front and begin construction in exchange for an additional surcharge. The total would have to be paid and any agreed-upon improvements made, such a building a park or setting up a child care center, before anyone could move into the building.
Cut of Housing Fees
The third and most controversial element would give the developers the option to cut 33 percent off the affordable housing fee they normally have to pay in exchange for agreeing to a permanent 1 percent transfer fee on the property. That means every time the property is sold, the city would get 1 percent of the sales price for affordable housing.
A Controller's Office analysis projects that with a transfer fee, the city would recoup the original affordable housing amount in 18 years on a mid-rise condo project, and have a continuous flow of money into an affordable housing fund.
"It's not to give away something now and never get it back," said Michael Yarne in the mayor's economic development office. "It's to get more back in the future."
Yarne maintains the controller's projections are a worst-case scenario.
Critics, though, say affordable housing money will trickle in, and not come in chunks that can be easily used to create homes.
"It would take (almost) 20 years in their projections to get the number of units" that would have been funded up front, said Supervisor Chris Daly, an affordable housing advocate. "Why would I want to do that?"
The controller's analysis found the stimulus effect of deferring fees would be "fairly significant during the current recession" and create 20 to 25 housing units. Cutting a third off the affordable housing fee would create up to 50 units per year, the report said. Yarne said that's on top of more than 5,000 units already approved.
For Oscar Ramirez, a 50-year-old union laborer with four children who's been out of work since July, any new construction jobs would be welcome.
"It's hard even to pay the rent," Ramirez said outside the union hall where Newsom spoke. "There's like 400-something people here at the union without work. That's like 25 percent of the force."
E-mail John Coté at email@example.com.
This article appeared on page C - 1 of the San Francisco Chronicle