This Week In Land Use – May 10, 2012

The Future of the Fee Deferral Program

On April 23, the Board of Supervisors’ Land Use and Economic Development Committee held a hearing to consider the impacts and future of the Fee Deferral Program. The Fee Deferral Program commenced on July 1, 2010 and is scheduled to expire on July 1, 2013. The hearing was primarily an information-gathering session, and the Committee plans to take these issues up again in approximately six months. As such, the next six months will be very important in determining the political future of the Fee Deferral Program.

Critics of the Fee Deferral Program point to the deferred fees and express concern that affordable housing and infrastructure needs are not being met. The Fee Deferral Program was originally designed as a financial incentive to make development more affordable and encourage new projects in bad economy, the Program arguably a better way for the City to do business in any economy. Under the Program, a developer that chooses to defer payment of fees still pays a 15 or 20 percent down payment on the fees, and then pays the remainder of the fees prior to the issuance of the first certificate of occupancy with interest generally ranging from 2-3 percent. This can be a significant amount of money for big projects that pay up to $20 million in impact fees – with a 20 percent down payment, 2.5 percent of $16 million is $400,000.

Moreover, the only perceived problem presented by the Fee Deferral Program for the provision of affordable housing and infrastructure was that a “lag time” resulted between the time when the City previously received fees and when the City now receives fees. But the April 23 Committee hearing revealed that the City is now catching up and will soon completely close this lag time, and the City will be budgeting for and receiving impact fees just as it was before.

The benefits of the Fee Deferral Program are that the City receives a bit more in revenues; developers no longer have to pay significant carrying costs on up-front money; if investment still is necessary to pay the deferred fees, that investment is more secure because the project is closer to completion; and the City significantly reduces its risk of having to reimburse fees for stalled or failed projects.

We will continue to monitor the progress of the Fee Deferral Program as it could have a significant effect on the future of development in San Francisco.

On the Horizon: Van Ness Bus Rapid Transit

The planning and construction of the Van Ness Bus Rapid Transit (BRT) Project is taking a significant step forward over the next few weeks as staff from the San Francisco County Transportation Authority (Authority) and San Francisco Municipal Transportation Agency (SFMTA) is recommending a Locally Preferred Alternative (LPA) for the Project. Construction of the BRT Project is significant not only because of the changes it will produce for public transit along Van Ness Avenue, but also because of its potential impacts on other construction projects along the Van Ness corridor.

According to the Project’s Draft EIS/EIR, the LPA recommended by staff has the longest construction schedule at an estimated 21 months. The Project will extend for two miles along Van Ness between Lombard and Mission Streets. Construction of the BRT stations, transit way, and medians would take place in an approximate 43-foot-wide area in the center of the roadway. Two traffic lanes would generally remain open on either side of the construction area. If necessary, the parking lane on both sides of the street would be closed during the construction work. When parking lanes or a second travel lane is closed, construction will be staged in three-block segments. Construction could begin in 2015.

The Draft EIS/EIR reviewed three build alternatives for consideration: one that had the transit line running along the outside lane (Alternative 2), and two center lane options (Alternatives 3 and 4). Staff’s LPA is a hybrid of Alternatives 3 and 4: a center-running line with right side boarding, a single median, and limited left turns. The BRT is intended as an affordable approach to creating rapid transit along Van Ness, and would incorporate the following features:

  • A dedicated bus lane separated from regular traffic;
  • All-door, level boarding, and proof of payment to promote faster boarding and de-boarding;
  • Shelters with seating;
  • Pedestrian safety enhancements;
  • Transit signal priority with traffic signals recognizing an approaching BRT vehicle; and
  • “Traffic signal optimization,” a timing technology for all traffic lights in the corridor.

The LPA recommendation is scheduled to be considered by the Authority Plans and Programs Committee on May 15, and by the Authority Board on May 22. It is also scheduled to be considered at the SFMTA Board on May 15. Once the LPA is selected, it will be analyzed in the Final EIS/EIR, which is scheduled to be completed this Summer. The Authority and Federal Transit Administration will certify the Final EIS/EIR in Fall 2012, and SFMTA ultimately has approval authority for the Project.

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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