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How SF lets developers cheat Muni and affordable housing out of millions

November 23, 2014

By Zelda Bronstein : 48hills – excerpt

When the San Francisco Planning Department allows property zoned for Production, Distribution, and Repair – also known as PDR — to be converted illegally into offices, San Francisco loses more than precious light-industrial land. The city also forfeits hundreds of thousands, if not millions, of dollars that would have gone to Muni and affordable housing.

That’s because new development—not only new buildings but also development that involves a change from a lower intensity use, i.e., PDR, to a higher one, i.e., offices—is supposed to trigger development impact fees.

Impact fees are charged on new development to offset the costs of public infrastructure and services that are created by new workers in those buildings.

And there’s evidence that city planners are repeatedly letting developers off the hook for those costs.

Developers are also using a little-known provision in the planning code to get discounts on the fees they have to pay to convert industrial buildings to office – providing, critics say, an incentive to wipe out what’s left of the city’s workspace for blue-collar jobs…

Speaking at public comment, land use attorney Sue Hestor called the Planning Department’s disposal of TIDF and the Jobs-Housing fee a “farce.” Noting that she’d helped to formulate both programs in the course of a “long struggle in the early Eighties,” Hestor objected to reducing the impact fees by subtracting the PDR fees. That practice, she said, effectively gives property owners “credit for demolishing PDR.”…

Responding to the commissioners’ questions about the netting out of PDR fees, Sucré said, “It’s not a discount.” His boss, Planning Director John Rahaim, repeated that claim, adding that “if there’s an existing use, there are certain impacts associated with that use.” The fee “is simply addressing the additional impact” of the new use—in this case, the “net difference” between the higher impact of office and the lesser impact of PDR. This, Rahaim said, is “standard operating procedure.”

It’s also what’s mandated by Planning Code Section 411.3(c)(2):

When calculating the TIDF for a development project in which there is a change of use such that the rate charged for the new economic activity catgeory is higher than the rate charged for the existing economic activity category, the TIDF per square foot rate for the change of use shall be the differences between the rate charged for the new use and the existing use.

I can’t find a comparable passage in the Planning Code about the Jobs-Housing fees. But Tables 413.6A and 413.6B indicate (after a fashion) that with a change of use from PDR to office, PDR fees are to be subtracted from the office fees… (more)


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