June 9, 2014, 48 hills
When the Planning Department allows property zoned for Production, Distribution, and Repair – also known as PDR — to be converted illegally into offices, San Francisco loses more than precious light-industrial land. The city also forfeits hundreds of thousands, if not millions, of dollars that would have gone to Muni and affordable housing.
That’s because new development—not only new buildings but also development that involves a change from a lower intensity use, i.e., PDR, to a higher one, i.e., offices—is supposed to trigger development impact fees.
Impact fees are charged on new development to offset the costs of public infrastructure and services that are created by new workers in those buildings.
And there’s evidence that city planners are repeatedly letting developers off the hook for those costs.
Developers are also using a little-known provision in the planning code to get discounts on the fees they have to pay to convert industrial buildings to office – providing, critics say, an incentive to wipe out what’s left of the city’s workspace for blue-collar jobs.
In three buildings alone, 48hills has found, the discounts and illegal conversions may have lost $1.7 million in Muni subsidies alone, and millions more in affordable housing money.
Impact fee rates are set differently for each land use type, based on the demand generated by that use. So for example, office development pays more than PDR, because it is a more intensive land use that attracts more people – and thus generates greater demand on housing and public infrastructure.
The two most important such fees are the Transportation Impact Development Fee and the Jobs-Housing Linkage Fee. The logic: New office buildings attract new employees who need Muni service – and put a heavy demand on the housing market, driving a need for more affordable housing.
Now questions are being raised about whether the Planning Department is discounting TIDF and Jobs-Housing impact fees when property owners seek to retroactively legalize an illicit PDR conversion into office or to legally demolish PDR space and build new offices. Continue reading