Misconceptions Fuel Non-Profit Opposition to Crucial Muni Funding Reform

The city's proposed reforms on transportation fees would end a non-profit exemption for major developments like hospitals and university campuses, but opposition is stirring from smaller organizations who seem to believe they'll be affected. Photo: ##http://www.flickr.com/photos/pfsullivan_1056/8023902617/in/photostream/##THE Holy Hand Grenade!/Flickr##

With any increase in the number of people living and working in San Francisco comes an added strain on the city’s streets and transit system. To account for that, San Francisco collects fees on new development — with an exception carved out for just about any non-profit organization. That means that even massive developments like hospitals, university campuses, or museums — which generate thousands of daily trips — may pay nothing to help the city’s transportation agencies accommodate them.

That would change under a city-led effort to reform the way San Francisco collects and distributes transportation revenue, but city officials say they’ve met with unexpected opposition from small non-profit organizations based on misconceptions about who would have to start paying fees. The fact is that most non-profits would not pay the one-time fee under the proposal.

The debate is expected to culminate at a Board of Supervisors hearing on December 4 on changes to the city’s Transit Impact Development Fee (TIDF). The board routinely approves TIDF updates, but this one is more significant because it would be used as a stepping stone toward the proposed Transportation Sustainability Fee (TSF). The TSF is expected to replace the TIDF in 2014 as part of the Transportation Sustainability Program (TSP), a broader effort to reform the way the city plans and funds transportation projects with a focus on improvements for transit, walking, and bicycling.

Championing the effort is Supervisor Scott Wiener, who says that the TIDF reform will provide crucial funding for Muni while leaving the vast majority of non-profits unaffected.

“City Hall rarely puts its money where its mouth is in terms of funding Muni, and we know that Muni has a $100 million annual operating structural deficit, and that leads to inadequate maintenance, not enough vehicles, and all of the other things that reduce Muni’s reliability,” Wiener told Streetsblog. “The updated TIDF, and ultimately the TSP, is going to be a critical stable source of funding. We have this broad non-profit exemption that was put into the original TIDF which is something of an anomaly because non-profits typically pay other impact fees, and I don’t think it makes any sense to exempt particularly larger non-profit projects like hospital projects and large private schools or university campuses from the fee.”

To help clear up any misconceptions circling around non-profit and housing organizations about who would pay the fee, Wiener’s office produced a Frequently Asked Questions sheet [PDF], which explains that the vast majority of non-profits would remain exempt:

Who will pay TIDF under these changes?

Anyone who:

– Has a non-residential development over 5,000 square feet AND
– Increases the net square footage of the current building by at least 800 square feet AND
– Doesn’t change the building use from a high-trip generating use (like retail) to a low-trip generating use (like industrial)

Who doesn’t have to pay the full TIDF?

Anyone who:

– Is a non-profit (proposed) or small business with a development under 5,000 square feet OR
– Is building affordable housing OR
– Is building a residential project of 20 units or less OR
– Doesn’t increase the square footage of the current building OR
– Doesn’t build the maximum allowable parking spots OR
– Changes the use from a high-trip generating use (like retail) to a low-trip generating use (like industrial)

Any one of the above factors will either exempt a project from TIDF or make them eligible for up to 100% in TIDF credits.

“We’ve met with a number of social service providers,” said Wiener, “who have been very pleased once we clear up the misconceptions and understand that when you do real estate development, whether it’s for-profit or not-for-profit, there are traffic impacts, there are transit impacts, and that an impact fee can be appropriate.”

Leading the opposition is Ron Smith, Senior Vice President for Advocacy for the Hospital Council of Northern and Central California, who says that 140 non-profit organizations have rallied against the proposal. Smith gave Streetsblog a list of talking points against the proposal that is being distributed by the San Francisco Human Services Network, an association of over 110 non-profits. The document claims that the amount of new revenue generated would “be burdensome on individual nonprofits, while providing just a drop in the Muni budget.” It does not include any information clarifying which organizations would be required to pay the fee.

“Why is transit more important than the medical, mental, spiritual, or educational needs of the city?” Smith said. “I don’t understand why the organizations that provide those services should be paying for transit.”

Without prompting, Smith denied that any of the hospitals he represents are currently planning any expansions in San Francisco that would be affected by the fee (California Pacific Medical Center, he noted, is negotiating a development deal with the city under which it’s likely to pay more for its planned expansions than the updated TIDF would require). “What we’re concerned about is the number of non-profit organizations that care for vulnerable San Franciscans after they leave the hospital,” he said. “I don’t think non-profits should be taxed, period.”

SF Transit Riders Union spokesperson Robert Boden said organizations that rely on Muni to bring a significant number of new riders to their institutions should pay for it. “Muni has served hospitals, universities, and private schools for 100 years,” he said. “It’s sad to see those institutions turn their back on Muni.”

Of the more than $630 million the TSF is expected to generate over 20 years, city staffers say 20 percent is expected to come from non-profit developments (half of which would come from hospitals, according to Smith), and that forfeiting that revenue could undermine the benefits of instituting the TSF.

Wiener said legislators are considering a compromise that would raise the exemption limit to include non-profit projects of up to 20,000 to 25,000 square feet. “Just to make clear that we’re not trying to impact smaller non-profit projects,” he said. The proposal already includes a grandfather clause for non-profit development projects until January 2014 to avoid charging developers who may already be planning projects without anticipating the fee. It’s also worth noting that the TSF, if instituted in 2014, would be expanded to cover large housing developments, but that housing would still be completely exempt from the updated TIDF until then.

“This is really a test for how committed we are to ensuring that Muni has enough stable funding to meet the needs of the city right now,” said Wiener. “We need to prioritize Muni’s reliability.”

  • Anonymous

    I think this is a huge waste if it is not used to clear the intersections and reduce the traffic congestion which delays MUNI’s buses downtown every weekday evening.  Adding more buses downtown is just adding more traffic congestion and the inherent problems of traffic congestion.  

  • Kevin

    Seems like a great idea. Many large non-profits seem to actually be money-making ventures despite this classification (like Kaiser) and they should be taxed based on the transit needed to service their workers. However, what separates large and small non-profits are square footage. What about a nonprofit afterschool program located in a K-12 school? Would they be taxed?

  • Mario Tanev

    Go Wiener! I’ve waited for Wiener to finally do something about Muni after all the promises and this is the first real step. This along with a local VLF can keep Muni maintained, and help fund TEP and BRT.

  • SF_Abe

    Muni serves more than just downtown commuters. Any added funding (not limited to this proposal, about which I am ambivalent) could greatly improve crosstown Muni service.

    That said, you are correct. “Blocking the box” is a huge problem for Muni downtown during commute hours. Very low hanging fruit that doesn’t require legislation to fix. It is a problem easily solved my enforcement.

  • SF_Abe

    My first impression was in favor of this, but I can’t help but second-guess myself when Scott Wiener and I are on the same side. There is some smart thinking in this legislation (exemptions based on trip-generating use) but…
    Are we committed to funding Muni? It sure looks like this will help SF MTA’s budget. But why go after non-profits? Sure there’s Kaiser, and CPMC, and probably a dozen more non-profit-in-name-only businesses that this is ostensibly targeting, but is this who needs to plug Muni’s budget hole? This looks like another politician claiming to save Muni without hurting any of his buddies– or, probably, actually helping Muni.It just seems to me that the knee-jerk reaction by non-profits against this legislation is justified. The vast majority on non-profits struggle to do good in this city while for-profit businesses reap the willing harvest of affluent San Franciscans. There’s a lot of money in this town– plenty to fund Muni– but we’re not tapping into it (probably because those with means have a lot of influence in City Hall and with the likes of Sup. Wiener– but that’s another argument).Why does Muni have a deficit? I know there are plenty of people who claim that any money sent to Muni disappears down the Union/Contractor/Bureaucrat hole– and they’re not entirely wrong. Muni needs to cut wasteful spending, but that’s not why its always broke.Muni is always broke because San Francisco refuses to pay for it, even though San Francisco needs it. Every single one of us uses Muni, whether we ride the bus or not. We’ve somehow agreed to pay for sewers in this town without abstract non-profit regulations. We’ve agreed to pay for sewers despite the fact that some money is wasted and we don’t have a perfect sewage system. Why not Muni?Supervisor Wiener’s rhetoric deserves real improvements in Muni’s funding (and, by extension, Muni’s expenses). Let’s substantially overhaul Muni’s funding so it matches its (our) needs. I don’t pretend to know what that overhaul will look like, but I’m positive it won’t mean arcane non-profit-exemption legislation.

  • mikesonn

    I’d venture a guess that 3/4 of Muni service touches downtown. You start speeding up those routes, now you have drivers/equipment to put on other routes. Add in some signal prioritization and bus lane enforcement, we might actually have a real transit system. Unreal that practically zero effort has been put towards this, but then again it doesn’t get you a nice photo-op in the paper for reelection.

  • EasternNeighborhooder

    The TIDF is an impact fee on developers. Only bigger non-profits (hospitals, museums, universities) can afford to build a new building or make their existing buildings bigger – and they put significant impact on the transportation network when they do. It is right that they pay their fair share. A blanket exemption for “non-profits” masks what happens in real life. Non-profit developers must pay water/sewer, childcare and street tree fees when they add square footage – why carve out transportation?

  • Read it again.

    The for profit businesses area already paying this fee. Non-profits aren’t being targeted, they were specifically “untargeted before”.

    That’s a problem because they impact the transit system the same as everyone else. If they can’t afford to mitigate their impacts, maybe the non-profit is not a good fit for SF.

  • This proposal (with the exemption of non-profits under 25,000 sq. ft) is simply the best compromise to change the status quo of funding streams for Muni. Muni can’t grow with the City with the ever reducing revenue streams it has been facing (especially the reduced amount of funding from the state and federal govt.). The declining state of maintenance and operations capacity is evidenced by delays, missed runs, switchbacks, etc.

    If the Supervisors really want to create a transit first City, and fund great ideas like the Nx Judah Express, TOD at Balboa Park, or Geary and Van Ness BRT, subsidizing low-income riders, or to run the Central Subway, etc., we’ve got to find creative new revenue streams, and this idea is a good one. What we have now isn’t enough to provide meet current needs, let alone future growth. That said, future growth should chip in when possible.

    Transit is key to what makes SF unique. I hope the Supervisors recognize this and not cave to the pressures being put on them by the mega-hospitals and private institutions stirring up so much commotion.

  • keenplanner

    Hospitals are huge trip generators, no matter who runs them.  It should make no difference that they’re a “non-profit”  

  • Sue

    People should read this legislation very carefully.  I did and found loopholes large enough to drive a Mac truck through, as the saying goes.  Exempted from the fees?  Huge former redevelopment projects such as Bayview Hunters Point, the Hunters Point Shipyard, and the Mission Bay projects as long as their sponsors apply for categorical exemptions by December 31, 2013.  Also automotive services enterprises that apply for categorical exemptions by 12-31-2013.  For real.  There are more.  Go and read it and then call your supervisors and tell them to send it back to the drawing board.

  • Sue

    And ‘vehicle storage areas’ are also exempted.  Doesn’t that sound like parking?

  • Guest

    If you read it you should know that most of what you read in this legislation is closing existing loopholes by ending them on December 31 2013.

  • HoJo

    Sue, storage is different from parking. Parking is typically short-term where the vehicle is ready for immediate use, and is usually in a publicly-accessible place like a street or car park. Whereas storage is longer-term, where the vehicle may not be used for some time, and is typically in a private location.

    So I might park my car in many different place while using it, but always store it when not in use in my garage, yard or warehouse.

  • @190a23607b3da763c40a5e46d493278e:disqus that is a semantic difference, and a negligible one at that. Parking == storage as the space occupied by your car is unusable for anything else until you remove it.

  • HoJo

    Sean, I’d categorize the distinction as subtle rather than semantic. Suppose I go to Trader Joe’s. I can park in the TJ car park, the Lucky Penny next door, or on Masonic, or on Wood, Geary, Lupine or Euclid behind. In each of those cases then, yes, I take away a street space temporarily. It’s not “my space”, but I can use it if nobody else is using it at the time. That should be regulated and priced as appropriate.

    But when I go home and “store” my vehicle until the next time I want to use it (hours, days, weeks, months) I am NOT depriving another of that space. It’s my private space to do with as I please. In any event you could not use my space, so you don’t have the same say in how it gets used.

    Or think of the PG&E service trucks. During the day they “park” wherever the job is. But at night they go back to their depot at Folson and 19th, and are “stored” there until used again. Their nighttime residence does not deprive others of the space.

  • Sue

    Here is the letter I have submitted to the Board of Supervisors regarding this legislation:

    Dear Supervisors:

    Transportation Impact Development fees (TIDF) are good in concept, but the legislation before you today leaves much to
    be desired.  All projects have an impact on the operation of the buses, light rail, and other vehicles that make up the San Francisco Municipal Transportation Agency (Muni), and thus I question a) exemptions added into the existing legislation and b) exemptions in the current legislation that have not been eliminated.

    In particular, I object to the new exemptions, added to the existing ordinance, for post-Redevelopment projects in cases where project sponsors apply for categorical exemptions before December 31, 2012. Included in these projects are
    those for the Bayview Hunters Point project, the Hunters Point Shipyard project, and the all Mission Bay projects. 
    These projects are massive and will undoubtedly create a huge impact on the operation of Muni and the expenses of the SFMTA – either through added vehicles on the streets contributing to congestion and/or through added
    passengers – when they are complete.

    The legislation also provides policy credits to small businesses that are fewer than 5,000 gross square feet and that are not formula retail, and to projects that provide fewer than the maximum number of parking spaces permitted. In some cases, the credits are ‘zero’ – though even a project with no parking at all has an impact on Muni in terms of increases riders.  I support credits – but not credits of zero.  Even small businesses can be assessed small fees to counter balance their impact on the SFMTA, and any project that provides any parking at all should be assessed fees, though ones that provide less parking could be assessed less.

    I am also concerned that exemptions in the existing ordinance have not been eliminated. All projects in the categories below could generate significant vehicle traffic and/or increase the number of Muni passengers. These include exemptions for:

    n  State and
    federal government projects that are solely for government purposes;

    n  Vehicle
    storage areas, which, according to Planning Code Sec. 209.7, can include “Community garage[s], confined to the storage of private passenger automobiles of residents of the immediate vicinity,” “Shared community garage[s], confined to the storage of private passenger automobiles of residents of the immediate vicinity,” and off-street parking facilities, including those for car-share;

    n  “Other uses”
    which, according to Planning Code Sec. 227 c-l, n-o, and q-r, include: mortuaries and related businesses; utility installation and public service facilities that we believe are not sufficiently defined; public transportation
    facilities that include those related to air transport and ferries; enterprises in C, M, and PDR districts; waterborne businesses and waterborne recreational activities; and Internet services exchanges; and,

    n  Automotive
    services enterprises, and wholesale materials and equipment storage enterprises, which apply for categorical exemptions before Dec. 31, 2013;

    To deliberately write exemptions into the new legislation for some very large projects, and to allow long-standing exemptions to remain, is contrary to the purpose of the TIDF, contrary to the long-standing transit-first policy of San Francisco, and contrary to the purpose of the Transportation Sustainability Project now undergoing environmental review.  I urge members of the Board of Supervisors to send this legislation back to committee for additional revisions.

  • Anonymous

    The irony of calling our hospitals “non-profit” is fairly obscene.

  • Anonymous

    Indeed: whether the institution as an entity generates profits, or those managing and working there generate profits for themselves is to a substantial degree semantic.  The term “non-profit” conjures the image of people volunteering their time for charitable purpose.  Anyone who’s gotten a bill for even the most basic service from a hospital has to laugh at the claim that it’s non-profit in any real sense.

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