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Mayor Breed refuses to sign law raising construction fees

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“I remain concerned that this legislation, while well intended, will not produce the revenue it promises for affordable housing”

Construction cranes hang over a building under construction. Photo by Justin Sullivan/Getty Images

Mayor London Breed has decided not to sign a piece of legislation the city passed in October that more than doubles fees on new office construction to pay for affordable housing, protesting that it will scare off development.

“She didn’t veto it,” Supervisor Matt Haney, who proposed the fee hike, said via Twitter on Monday. “But she expressed her opposition to it in a letter and returned it unsigned.”

Since the bill passed 11-0, the board would have been able to easily overcome a veto, and the new law will take effect even without Breed’s assent.

But the mayor’s letter, dated Friday, nevertheless pushes back on Haney’s plan, which increases fees on most new offices space from $28.57 per square foot to $69.60 by 2022 and puts the money toward housing development.

Breed told city lawmakers that she shared “a desire to generate revenue for affordable housing which is desperately needed,” saying she agrees that the fees should go up.

But the mayor also claims that the rates voted on by Haney and other lawmakers are too much. She predicted that the fee plan “will not produce the revenue it promises.”

The mayor fears that raising fees will scuttle construction plans and result in less funding overall. She also cites City Economist Ted Egan’s projections that the fee increase would mean up to 585 fewer new office jobs per year.

The board, however, persists that the new fee schedule will yield some $400 million over seven years, combining with the recently passed affordable housing bond to yield $1 billion in spending for new housing.

Haney protests that the SF Chamber of Commerce, Labor Council, and Planning Commission all backed the final version of the proposal, leaving Breed among only a handful of critics.

“I truly don’t understand this,” said Supervisor Hillary Ronen, another vocal backer of the new law.

In a longer official statement, Haney argued that “San Francisco has the worst jobs-housing ratio in the Bay Area” and cited “tremendous urgency” to offset the effects of new business development in the city.