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San Francisco to more than double office construction fees

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Fee spike will pay for affordable housing in plan to offset effects of job growth

High-rise buildings and a very tall construction crane, photographed from below. Via Shutterstock

The San Francisco Board of Supervisors voted 11-0 on Tuesday to increase fees on new office construction in hopes of financing more affordable housing.

District Six Supervisor Matt Haney floated the increase to the city’s 23-year-old Jobs-Housing Linkage Fee earlier this year.

The existing fee charged builders $28.57 per square foot on office space and directed the money toward new housing. Haney’s proposal will more than double that fee, up to $69.60 by 2022.

The text of the legislation notes that “employees attracted to [office] developments are competing with present residents for scarce, vacant affordable housing units in the city” and that “competition for housing generates the greatest pressure on the supply of housing,” necessitating more development.

Before Tuesday’s vote, Haney announced some compromises on the plan, including a lower fee of $52.50 for projects already approved and “in the pipeline,” as well as a smaller fee for builds up to 50,000 square feet.

Haney cited a study showing that SF builds just one new home for every 8.5 jobs added.

“The result of that shouldn’t be that surprising; massive displacement, particularly of low and moderate income households,” the supervisor said, calling lopsided growth an “existential threat” to San Francisco’s future.

Supervisor Hillary Ronen praised the fee plan before the vote, noting that it would generate a projected $400 million based on projects already approved.

“We are finally talking about numbers that will make a dent in this crisis,” she said.

Board President Norman Yee, recalling when Haney first introduced the proposal, said, “It was one of the fastest conversations I’ve ever had saying yes.”

Mayor London Breed remains the Haney plan’s most prominent critic; mayoral spokesperson Jeff Cretan said Tuesday that Breed supports raising fees, but worries that the current plan might stifle office development and dry up incoming housing funds.

The fee proposal needs one more vote at the board before it passes into law. But given the unanimous outcome, it’s all but guaranteed a done deal. If Breed vetoes the ordinance, it will take eight votes at the board to override her.