New fee would push S.F. housing costs even higher

San Francisco wikimediaThe cost of housing in San Francisco and Silicon Valley has been a national news story throughout 2015. On Wednesday, for example, USA Today reported that teachers could no longer afford to live in San Francisco.

This has prompted hand-wringing from San Franciscans who worry that their city is well on its way to being a global symbol of income inequality. With the average home selling for more than $950,000 and average monthly apartment rent hitting $3,458 this year, with further increases expected in coming months, this fear seems well-founded.

Yet a proposed new fee on residential development that appears likely to be adopted would push housing costs even higher. This account is from the San Francisco Business Times:

The city hopes to quiet one roaring gripe in San Francisco: Cranes are in the air and housing is pouring into neighborhoods, so why haven’t public transit improvements kept up?

 

Well, those complaints may never dissipate. But the first citywide transit fee on market-rate residential development was introduced as legislation Tuesday to help the San Francisco Municipal Transportation Agency pay for $1.2 billion worth of upgrades over the next three decades. …

 

“When I tell people that commercial development is required to pay transit impact development fees but residential doesn’t pay a dime, their jaws typically drop,” Supervisor Scott Wiener, who sponsored the bill, told the Business Times. “It’s been a gaping hole.” …

 

Residential builders will pay $7.74 a square foot on new projects, with those already approved by the Planning Commission grandfathered in. Non-residential projects will pay $18.04 a square foot, and production, distribution and repair (PDR) buildings will pay $7.61.

 

Private, nonprofit universities that build new facilities will also have to pay fees for the first time, but other nonprofits would be exempt.

Affordable housing said top priority

The fee has been endorsed by San Francisco Planning Director John Rahaim. In a June interview, he said that improving public transit was his second most important priority — trailing only affordable housing, which he said “keeps him up at night.”

This isn’t just hollow rhetoric. San Francisco has added more than 6,100 housing units since 2012, and Rahaim has emerged as a key supporter of some big, bold projects — especially the construction of 12,000 homes at the abandoned naval base Hunters Point Shipyard and at adjacent Candlestick Point.

Rahaim has downplayed the effect of the new fees on further residential construction. They would add nearly $8,000 in cost to a 1,000 square-foot apartment.

But as the state Legislative Analyst’s Office pointed out in a March report, “California’s High Housing Costs: Causes and Consequences,” developers see government fees as a huge impediment to pursuing projects — especially along the coast:

A 2012 national survey found that the average development fee levied by California local governments (excluding water-related fees) was just over $22,000 per single-family home compared with about $6,000 per single-family home in the rest of the country. … Altogether, the cost of building a typical single-family home in California’s metros likely is between $50,000 and $75,000 higher than in the rest of the country. … Building costs account for around one-third of home prices in California’s coastal metros.

Competing interests, limited options

So San Francisco’s leaders — and voters — have difficult choices and limited options. The case for improving mass transportation is plain. According to Inrix, a transportation data and analysis company based in Washington state, San Francisco/San Jose were among the five worst metro areas in 2014 when it comes to time wasted because of traffic delays. Swapping stories about traffic nightmares — and anticipating new ones — is a San Francisco tradition.

But if mass transportation improvements add to housing costs and create disincentives to adding new housing stock, that makes it more likely that there will be still more sharp increases in rent and the cost of homes, which are already sky-high. That will mean more stories about Northern Californians with middle-class jobs being unable to live in one of America’s iconic cities.

10 comments

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  1. Richard Rider
    Richard Rider 7 August, 2015, 08:14

    Actually it IS delightful that Uber-liberals (yes, they DO like Uber) in SF are sticking it to themselves. Or are they?

    All the EXISTING homeowners will find their homes appreciating because of these additional housing fees put on the NEW homes and apartments. All will get windfall profits upon sale, and likely won’t pay more property taxes during the holding period (thanks to Prop 13, which liberals supposedly hate).

    That being said, I take perverse delight in progressives making their cosmopolitan berg a “gated” community — pricing homes and rents out of the reach of most people. Except, of course, those “poor” folks who win the lottery for heavily subsidized housing — and then carefully remain poor forever (negative incentives to improve their earning power).

    Screw the middle class. San Franciscans want only the rich and the poor residing in their town.

    Reply this comment
    • Ulysses Uhaul
      Ulysses Uhaul 7 August, 2015, 09:38

      Richie hit it. SF is a toilet, filthy, dangerous for respectable visitors, expensive, run down, a dump….so there.

      Reply this comment
      • JimmyDeeOC
        JimmyDeeOC 7 August, 2015, 11:17

        So Cal resident. havent been up there in a few years, but have many, many times in the past. Beautiful, expensive, never found it that filthy or dangerous. (Less so than some big cities)

        But I still HATE the place…….the sneering, smug, self-righteous uber-liberals that infest the place make me vomit.

        Reply this comment
  2. Fred Schnaubelt
    Fred Schnaubelt 7 August, 2015, 10:21

    Intentionally, or unintentionally this is just a clever way to force Blacks to leave San Francisco. http://www.nationalreview.com/article/262112/blacks-and-republicans-thomas-sowell

    Reply this comment
  3. mikey
    mikey 7 August, 2015, 12:02

    It’s the people of SF that are doing it themselves. As in all things… People are going to charge what they can get someone to pay.

    If people were not willing to buy or rent for those prices then they would HAVE to come down..

    Reply this comment
    • Richard Rider
      Richard Rider 7 August, 2015, 16:06

      Actually, it’s a win-win for existing homeowners. If fewer new homes are built, then the existing home prices will go even higher. For the “homesteaders,” it’s gold. Especially if they don’t have children — a common situation in San Francisco.

      It’s the ultimate “me” bill. Pure selfishness.

      Reply this comment
  4. Ultrawoman
    Ultrawoman 7 August, 2015, 15:37

    What will they do if driverless car technology makes all the mass transit projects obsolete in a very short time period?

    Reply this comment
    • Richard Rider
      Richard Rider 7 August, 2015, 16:02

      Solid point. Any rational review of per passenger mile costs indicates some form of transit (buses, Uber, jitneys, etc.) that uses the existing roads is FAR more cost effective than mass transit (a.k.a. rail).

      Moreover, rail is forever — it’s not flexible once the capital costs are sunk.

      To make such an expensive, inefficient, inflexible outlay in this constantly changing tech age is madness.

      Reply this comment
  5. Ken
    Ken 9 August, 2015, 01:01

    San Francisco is already a glaring symbol of income inequality. It also is not a shadow of its former magnificent self. And the natural beauty? That has nothing to do with the new hordes transmogrifying all they touch. The beauty is eternal. That’s not what we are talking about here. When the next bust comes the Newbees are going to be sucking air in this once quite lovely provincial city by the bay, my much loved home town, where everyone once knew everyone..The next bust won’t be pretty. SF is now living an illusion. Good luck. At least we know the beauty will survive.

    Reply this comment

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Chris Reed

Chris Reed

Chris Reed is a regular contributor to Cal Watchdog. Reed is an editorial writer for U-T San Diego. Before joining the U-T in July 2005, he was the opinion-page columns editor and wrote the featured weekly Unspin column for The Orange County Register. Reed was on the national board of the Association of Opinion Page Editors from 2003-2005. From 2000 to 2005, Reed made more than 100 appearances as a featured news analyst on Los Angeles-area National Public Radio affiliate KPCC-FM. From 1990 to 1998, Reed was an editor, metro columnist and film critic at the Inland Valley Daily Bulletin in Ontario. Reed has a political science degree from the University of Hawaii (Hilo campus), where he edited the student newspaper, the Vulcan News, his senior year. He is on Twitter: @chrisreed99.

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