Office Developer Fees Are Overdue to Fund Affordable Housing, Advocates Say

Each square foot of office space developed means more for affordable housing, but the limit is stunted by a 22-year-old study.

Funds for affordable housing is expected to get a boost with enough votes secured to pass a proposed fee increase imposed on developers of office construction.

Supervisor Matt Haney introduced legislation on Tuesday to increase what’s known as the jobs-housing linkage fee from roughly $28 per square foot to $38. The city has collected a yearly average of $7.5 million from these development fees to fund affordable housing projects, according to an analysis from the San Francisco Council of Community Housing Organizations (CCHO). 

“We can’t keep building more space for office jobs and not build enough housing, particularly affordable housing,” Haney says. “This strikes at the heart of the biggest challenge of San Francisco right now — a booming economy and tremendous job growth but a housing market that is unaffordable for most people who make less than $100,000.”

The updated fee accounts for increased construction costs based on what’s allowed under a 1997 Nexus study that was expected to release a long-awaited update in April. But Haney, who directed the City Attorney to begin drafting the legislation in April,  and affordable housing advocates who gathered on the steps of City Hall on Tuesday aren’t willing to wait much longer to begin the process.

“There’s just been a huge imbalance for a while and we’ve been waiting for this Nexus study so we can get an idea of how things have changed and how to put the right policies in place so we can offset the impact,” says CCHO spokesperson Maya Chupkov.

Demand for the updated report arose as the Central SoMa plan, which was approved in November, was being developed.  The South of Market Community Action Network (SOMCAN) is particularly focused on the plan, which is expected to bring 33,000 more jobs and 8,000 housing units to the neighborhood.

“It’s super critical right now,” says David Woo, SOMCAN’s community development coordinator. “We have this massive wave of new office development coming.  We really need private development to pay its rightful, fair share toward affordable housing to address the needs that development directly creates.”

While the city collected about $19 million from the jobs-housing linkage fee between June 2016 and June 2018 alone, most of those funds have already been spent. San Francisco collects other impacts fees that have contributed to 100-percent affordable housing projects at 88 Broadway, 490 S. Van Ness Ave., 1950 Mission St., and 2060 Folsom St., which cost more than $100 million in total.

The updated Nexus study will bring fresh data but beginning the process now its imperative if the city wants to collect more fees from Central SoMa development before it’s too late. After all, it has to go through the Planning Commission, undergo amendments, and implement it.

Supervisors Hillary Ronen, Sandra Lee Fewer, Gordon Mar, Shamann Walton, and Aaron Peskin are already cosponsors. Including Haney, it has the six votes needed to pass.

“We feel there needs to be a commensurate investment in housing,” Haney says. “This is the direct mechanism to do that.”

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