New Impact Fees Near Approval in Oakland and San Francisco

​Maximum Impact Fees in Oakland Released; Fee Proposal Floated

With modern zoning mostly in place (with the exception of the Downtown Plan process) and with the real estate market showing signs of supporting new development, the biggest question in Oakland land use is what the soon-to-be-adopted impact fees will look like.  With the fee consultant’s release of its nexus study approaching in December, the city finally released details on how much these fees may be.  A powerpoint presentation provided to a stakeholder working group has been made public.  We now know the maximum legal amounts for the three fees have been determined as follows:

Affordable housing:

Applies to residential development only

$35,172 per unit (low-rise construction)

$39,887 per unit (mid-rise construction)

$50,804 per unit (high-rise construction) 

Combined Transportation/Capital Improvements Fees

$20,737 per unit of multi-family residential

$19.50/sf office use

$16.94/sf retail use

The powerpoint emphasizes throughout that the maximum legal fee amounts are higher than the maximum feasible fee amounts that would be supported by new development.  

The city has proposed to create three new zones for the residential affordable housing fee: generally, West Oakland, East Oakland, and everywhere else.  The fee for “everywhere else” has been proposed at a rate of $20,000 per new dwelling unit.  The fee is proposed to phase in, with a lesser fee going into effect on July 1, 2016 and the fee would increase up to $20,000 in one or more phases in the coming years.

The city has proposed the transportation/capital improvements fee for office use at $4/sf, with a lesser fee going into effect on July 1, 2016 and the fee would increase up to $4 in one or more phases in the coming years.

Whether these two fees will be the full extent of the impact fee program adopted next year is unclear.  The City Council’s Community and Economic Development Committee will hold a hearing on the nexus study and fee proposal on December 15, 2015, starting at 1:30 pm (City Hall, Hearing Room 1).

The powerpoint presentation can be found at:

Pending Approval of the Transportation Sustainability Fee 

Last week, the Board of Supervisors voted on legislation that would replace the existing Transit Impact Development Fee (TIDF) with a new citywide Transportation Sustainability Fee (TSF).  As we have reported before, the adoption of the TSF will result in several significant changes, including the expansion of the transportation impact fee to residential projects, which were exempt under the TIDF.  Several amendments to the TSF legislation were introduced and discussed at last week’s BOS hearing, and consequently the legislation was duplicated so that one part was approved by the BOS on November 3, 2015, and another part (with substantive amendments) was referred to the Land Use and Transportation Committee.  

The duplicated file that was referred to the Committee included two substantive amendments: 1) change to the grandfathering provision for non-residential projects so that all non-residential projects that were submitted after July 21, 2015 would be subject to the full TSF, and 2) change whereby the amount of the TSF for hospitals would be determined based on the number of net new beds along with few other changes related to hospital uses.  No Committee hearing has yet been scheduled for these substantive amendments. 

The portion of the proposed legislation that was voted on November 3rd was approved unanimously on the first reading, and is scheduled for the second and final reading for November 17th.  If passed on the second reading, the Mayor would have up to ten (10) days to sign the legislation, and the legislation would become effective thirty (30) days thereafter.  In other words, the new TSF legislation and fee is likely to become effective before the end of the current calendar year.  

If finally passed and adopted, the TSF will apply to all residential projects with more than twenty (20) units and to non-residential projects that propose an addition or new construction of more than 1,500 gsf of PDR use or more than 800 gsf of other non-residential use, or a change of use to a land use category that is subject to a higher fee rate.  The legislation was approved with some grandfathering provisions so that all projects which were approved prior to the effective date of the legislation will be subject to the prior TIDF.  With respect to pending projects, i.e. those that submitted a development or environmental review application on or prior to July 21, 2015, TSF will apply in reduced amounts so that pending residential projects will be subject to 50% of the applicable TSF rate, and pending PDR and non-residential projects will be subject to the prior TIDF.  As proposed, the initial rate schedules are as follows: $7.74/gsf for residential projects with 21-99 units; $8.74/gsf for residential projects with more than 99 units; $18.04/gsf for non-residential projects with more than 99,999 gsf; $19.04/gsf for non-residential projects with more than 99,999 gsf; and $7.61/gsf for PDR projects.  

Annual San Francisco Fee Increases 

Development impact fees for San Francisco projects are calculated based on the rate schedule in effect at the time the “first construction document” for the project is issued.  The issuance of the “first construction document” refers to either the first building permit for the project or, in the case of a site permit, the first addendum to the site permit that authorizes construction of the project.  Most of the impact fees are subject to annual, inflationary increases, and an updated rate schedule typically becomes effective as of January 1 of each year, including January 1, 2016. 

Those projects for which a site permit was issued recently, or is expected to be issued soon, should note that if the first construction document, i.e. typically the first addenda to the site permit, is not issued until after January 1, 2016, the Development Impact Fee Report (DFCU) issued by the Department of Building Inspection will be adjusted to reflect the fee rate schedule in effect on and after January 1, 2016 and the impact fees will be recalculated.  In other words, those projects that will obtain their first addenda to the site permit within the current calendar year will be able to pay the impact fees in accordance with the current rate schedule and avoid the fee increases that will become effective on the first of January.       

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben, Junius & Rose, LLP is a full service real estate law firm.  We specialize in land use, development and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision and condominium work.