This Week – SOMA Parking; Redevelopment; Incentives For Mid-Market

Changes in South of Market Parking Requirements Considered by Planning Commission, Board of Supervisors

For some time, San Francisco has been a national leader in urban planning. Over the past few years, the city has strived to maintain that role through promoting New Urbanism and “livable city” initiatives that make it a more comfortable place to work and live. City officials, planners and public policy advocates have been increasingly emphasizing the need for dense, transit-oriented development, more pedestrian- and bike-friendly streets, and reducing traffic congestion. To that end, one of the major evolutions in the city’s Planning Code has been to move away from requiring minimum levels of parking in new developments and instead setting maximum levels of parking that can be provided. This transition began with the Rincon Hill Area Plan and was vastly expanded with the Eastern Neighborhoods Area Plan. Parking maximums now also apply to C-3 (downtown) districts.

The city is now considering changing parking minimums to maximums in the South of Market area. New legislation being considered by the Planning Commission tomorrow would expand parking maximums to South of Market Mixed Use Districts, Mission Bay Districts, M-1 districts and C-M districts. The maximum parking levels would be similar to those in neighboring Eastern Neighborhood Mixed Use and C-3 districts. Street frontage design controls would also be expanded to cover these districts and parking fees intended to discourage long-term commuter parking would be required in these districts.

In the end, the real significance of these new controls may be minimal. The Eastern Neighborhoods Area Plan eliminated most of the remaining M-1 and C-M districts in the city. If the Western SoMa area plan is ever enacted, most of the remaining South of Market Mixed Use districts would be completely overwritten. However, the new legislation further cements the fact that, moving forward, parking will increasingly be controlled by maximum limits, rather than minimum requirements.

The Impacts of “Disestablishing” Redevelopment Agencies in San Francisco

It’s amazing how things can change in a month. As we signed off for 2010, Redevelopment Agencies throughout the state were able to celebrate the holidays, reflect on the past year, and plan for the year ahead without the slightest worry that California’s 65+ year-old Redevelopment Law could be erased from the books. Fast forward just one month, and Redevelopment Agencies are literally in the fight for their life, as Governor Brown as proposed to “disestablish” the agencies as of July 1, 2011.

The biggest change that would come from ending Redevelopment, beyond the loss of the Redevelopment Agencies that administer it, would be the loss of tax increment financing (TIF) to generate funds to be used for redevelopment activities, affordable housing and infrastructure improvements. Put simply, TIF allows redevelopment agencies to collect all property taxes that are generated in a redevelopment area above the baseline of existing property taxes that were collected when the area was established. Those new funds can be used directly to fund redevelopment activities or agencies can sell bonds that are repaid by future TIF funds. If Governor Brown’s proposal succeeds, these TIF funds would be redistributed to the state this year, and to local school districts and counties in future years.

Tomorrow the Planning Commission will hold a public hearing on what exactly the disestablishment of redevelopment agencies will mean to San Francisco. In a memo to the Commission, Planning Director John Rahaim outlines the likely ramifications. Rahaim states the city’s ability to carry out revitalization plans in Mission Bay, Hunters Point Shipyard, Treasure Island, and the Transbay District will be “severely affect[ed]” by the loss of TIF funds. As a regulatory matter, Rahaim states that it is unknown whether the changes would mean the redevelopment-area-specific zoning controls would continue to apply, or if they would revert to underlying city Planning Code controls. Finally, Rahaim cites that the Planning Department currently receives around $500,000 annually from the San Francisco Redevelopment Agency to assist with the administration of redevelopment areas in the city – money that the Department will not be able to rely on if Governor Brown’s proposal goes through.

San Francisco Redevelopment Agency Director Fred Blackwell has also been extremely active in fighting back against Governor Brown’s proposal. A memo provided by his agency cites some very compelling figures to support redevelopment’s positive impact on San Francisco. According to the memo, in 2010, redevelopment projects created 3,079 construction jobs – consisting of over $21.7 million in gross earnings. Over 1,400 affordable housing units in 11 projects are currently in the redevelopment pipeline and an additional 6,000 more affordable units are being planned in the Mission Bay, Transbay, Treasure Island and Hunters Point Shipyard redevelopment areas. The likelihood of all of these units being constructed drops precipitously if the redevelopment agency is eliminated. Finally, the memo states that more than $50 million in infrastructure improvements are planned for 2011 using TIF funds generated in redevelopment areas.

Add to the all of this the fact that Governor Brown has yet to make public the details of his plan. But that hasn’t stopped this ball from moving forward. State Senate and Assembly committees have already been holding hearings on the proposal. One major question regarding the future of this proposal is whether a constitutional amendment is required – which would need the approval of voters. Boy, July 1 doesn’t seem too far away, does it?

More Encouraging Signs from City Hall

Last week we reported to you the efforts new Supervisors Wiener and Farrell were making towards land use reform. These aren’t the only new residents of City Hall that we are seeing positive signs from.

Admittedly, Mayor Ed Lee has been in office for just a month now, but what we see so far we like. First, Mayor Lee joined a group of Mayor’s from California’s largest cities to defend Redevelopment Agencies from Governor Brown’s proposed axing. To be expected, we guess. However, in his first major policy initiative of his administration, Mayor Lee initiated a proposal, designed to keep social-media-giant Twitter from leaving South of Market for the Peninsula, which would give tax incentives to businesses that relocate to the Mid-Market area. The Chronicle reports the area will cover Market Street from 11th to almost 5th Street, in addition to an adjacent area in the Tenderloin. The legislation was originally discussed as a complete payroll tax exemption. After consulting with Supervisors Jane Kim and David Chiu, the proposal was modified to waive the payroll tax on net new jobs created by businesses located in this area for the next six years. And who introduced this business friendly tax-incentive, Mid-Market-revitalizing legislation? New Supervisor Jane Kim. Ms. Kim is showing early on that, while in our binary political world she is considered a “progressive,” she is taking early actions to spur job growth downtown that would benefit the entire City.

Prop. J Committee: Not So Fast Commissioner Johns….

In news that reads like it’s from 2010, the Prop. J Committee has sued the city over its confirmation of Richard Johns to the Historic Preservation Commission. The committee contends that Mr. Johns does not have the qualifications required by city charter to hold the seat. The charter requires that the seat be filled by “an historian meeting the Secretary of the Interior’s Professional Qualifications Standards for history with specialized training and/or demonstrable experience in North American or Bay Area history.” Mr. Johns has already sat on the Commission for one hearing last week.

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, 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.

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