Fee reforms to stimulate residential construction in San Fran

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California Construction News staff writer

San Francisco’s housing stimulus and fee reform is now law and will “unlock the housing pipeline and accelerate the planning, approval and construction of existing and new projects citywide,” according to Mayor London Breed.

The plan temporarily reduces inclusionary housing requirements on new and already approved development projects and reforms and defers development impact fees in order to spur development projects and economic activity.

“We are fundamentally transforming how we approve and build housing in San Francisco,” said Breed. “These new rules will spur new housing across the city and unlock projects that have been approved but are stuck because of how expensive it has become to build.

“We need more housing, and we need more changes to our laws so we can have more homes for kids who are growing up here, for working people who want to live here, and for our seniors who want to stay in the communities they know and love.”

It’s a time-certain incentive program that will jumpstart pipeline projects and entice new ones.

Mayor Breed signed the legislation at 395 3rd St., a parking lot which is slated for over 500 units of new housing in the South of Market area to be developed by Strada Investment Group, including approximately 80 affordable homes. The plan signed into law reently will help that project and others like it to move forward, where it was previously struggling to be feasible.

The new law has the potential to unlock almost 8,000 already approved but unbuilt units in the pipeline. For example, there are more than 2,500 units in the pipeline downtown that will accelerate the mixed-use vision set forth in the Mayor’s Downtown Roadmap.  There are over 10,000 units in proposed projects that are not yet approved that will be able to take advantage of the reduced inclusionary package, which will enable them to move more quickly from approval into construction.

A reduced percentage of inclusionary housing will go a long way in making housing a reality.

Group i is about to start construction on 62 homes at 770 Woolsey and 45 apartments in an office to residential conversion at 988 Market.

“I am encouraged to see the Mayor and Board of Supervisors working collaboratively with the development and affordable housing communities to create legislation that addresses today’s economic realities,” said Carl Shannon, Tishman Speyer. “While not a silver bullet, this legislation is an important step in the collective effort to restart housing production, which has essentially been frozen since the pandemic.”

Setting Inclusionary Housing Requirements Based on Data  San Francisco’s previous inclusionary housing requirements, which are what certain housing projects must set aside for affordable housing, were among the highest in the country and had not been reevaluated since 2017. An analysis conducted by the Controller showed that inclusionary housing levels set in 2017 made the current construction of new housing infeasible, and the TAC proposed reductions accordingly to spur new housing development.

Under the new rules, development projects can lock in the type and rate of impact fees they will need to pay at the time they are approved by the city – instead of continuing to increase the fee rates each year until a project is able to break ground. It also reinstates the fee deferral program so projects don’t have to pay development impact fees until after construction.

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