To those who are not from here, San Francisco can sometimes seem a little backwards. It’s cloudy in the summer. We bike to work. Instead of confining our spices to one rack at the grocery store, we have entire shops devoted to spices. And we discourage new parking.
As avid readers of the R&J update know, San Francisco policymakers have been steering a significantly new course for transportation policy over the past few years. In the spirit of the City’s “Transit First” policy, zoning is generally not requiring parking anymore, denser development is being planned for near transit stops, and large investments are being made in upgrading our transit, pedestrian and bicycling systems. One thing that hasn’t caught up to this new wave of transportation policy is environmental review.
Currently, when new development projects undergo environmental review, transportation impacts are studied based on, for example, how new automobile traffic will affect nearby intersections. The problem with this narrow approach is that many intersections in the City are already overburdened, and new development easily triggers higher (costlier, more time-consuming) environmental review and preparation of many redundant transportation studies (TS). The City is now devising a way for virtually all projects to avoid heightened environmental review due to transportation: by using a new citywide fee that expands the existing Transit Impact Development Fee (“TIDF”).
TS Out – TSF In
This new Transportation Sustainability Fee (“TSF”) would expand the existing TIDF to apply to residential development. Single family homes and development of less than 800 square feet would be exempt from the fee. By paying the fee, a development project would be mitigating any potential adverse impacts it could have on transportation. Critically important for streamlining projects and avoiding redundant work: no transportation study would be required. Preparation of a negative declaration or EIR could be avoided for projects with potential adverse impacts limited to transportation.
In essence, the TSF would replace the TIDF. The City is currently estimating the following fee rates for the TSF:
- Residential: $5.53/sf
- Office: $12.64/sf
- Retail/Entertainment: $13.30/sf
- PDR: $6.80/sf
- Cultural/Institution/Education/Medical: $13.30/sf
- Visitors Services: $12.64
The residential fee is completely new. The fee rate for office, retail and institutional uses would increase slightly. PDR fees would drop significantly.
The City is also contemplating a TSF reduction for preferred-policy projects. Reduced fee rates would apply to space housing small businesses, projects proposing reduced parking, affordable housing projects, and residential projects of 20 units or less. Fee reductions may also be available in the Market/Octavia and Eastern Neighborhoods plan areas, where area-specific impact fees already apply.
The TSF must itself undergo environmental review, and will not be considered for passage for at least 18 months. In the meantime, the existing TIDF is being updated (yes, this generally just means increased). As currently written, the updated TIDF would apply to all new non-residential development of 800 square feet or more (instead of the current 3,000 square foot threshold) and the proposed non-residential fee rates listed above would go into effect. This updated TIDF is expected to go into effect this October.
We expect a lot of debate over transportation fee reform over the next few years. On one hand, the residential development community could take issue with a brand new fee that applies to development. On the other hand, all development (including residential) could see a huge benefit in simply avoiding environmental issues related to traffic. We will keep you posted as the TIDF update moves through the legislative process this year, and as the TSF ordinance is considered in a few years.
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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