SF’s New “Sustainability Fee” Set to Include a Big Incentive to Build Parking

The city’s proposed Transportation Sustainability Fee — which would be assessed on new development to speed up construction of walking, biking, and transit infrastructure — moved forward today with approval from the SF Planning Commission. The commission approved a maximum rate slightly higher than the city had initially proposed but far lower than what some livable streets advocates wanted.

The Transportation Sustainability Fee is part of a broader effort to bolster sustainable modes in SF, but it’s not structured in a way that aligns with that goal. Photo: Sergio Ruiz via SF Planning

In addition, square footage devoted to car parking won’t factor into the fee developers are expected to pay. No matter how much parking is included in a project, it won’t raise the fee. This runs in direct opposition to the purpose of the TSF, say advocates, which is supposed to be a key tool in the city’s efforts to generate revenue for safer streets and more effective transit.

Under the approved TSF rates, which must still be approved by the Board of Supervisors, developers would pay for 33 percent, at most, of the estimated costs associated with street infrastructure to accommodate people traveling to and from their projects, as determined by the Planning Department’s “Nexus Study” [PDF]. The default rate would remain the 25 percent initially proposed by the Planning Department.

In a joint letter, Livable City, the SF Bicycle Coalition, and Walk SF said developers should pay 100 percent of “the true cost that development has on our transportation system, as outlined in the SFMTA’s own transportation sustainability study”:

For far too long, the City has not asked developers to pay their fair share, resulting in unreliable service, and [an] inadequate system for all users and ultimately a huge economic burden for San Francisco residents and community members. The need to increase the TSF is particularly critical given that other development impact fees are being lowered as part of this legislation.

The default 25 percent rate is “nowhere near sufficient,” Supervisor John Avalos told the Planning Commission.

According to a study from the Planning Department [PDF], however, higher fees could result in less housing construction. The study concluded that asking developers to pay for about 40 percent of the costs “could significantly inhibit development feasibility.”

Other advocates saw 25 percent as too low but favored the 33 percent rate as a “middle ground,” including the SF Transit Riders Union, Urban Habitat, the Council of Community Housing Organizations, the Senior and Disability Action Network, and the Human Services Network.

“A more aggressive fee level is warranted in order for San Francisco to grow sustainability, including investments in an equitable transportation system,” the groups wrote in a letter, noting the $3.3 billion backlog of “unfunded capital needs through 2030” for transportation.

No commissioners proposed a rate over 33 percent. The commission did vote, however, to take several measures pushed by Avalos and others. The commission removed a TSF exemption for large hospitals, which hospital lobbyists pushed for when the TSF was originally proposed in 2012. The commission also recommended that the Board of Supervisors consider a “graduated fee” that varies by neighborhood, based on demand for development, and voted to require that the fee be reassessed every three years, instead of the original five.

But commissioners didn’t touch the fact that car parking would not be considered as part of the impact fee. That’s “a big hole,” said Avalos.

In fact, commissioner Michael Antonini explained his opposition to charging for parking spaces by saying that residents would “do us a favor” by driving, since they’re not crowding on to transit. No commissioners rebuffed him.

Livable City, the SFBC, and Walk SF wrote in their letter:

The amount of parking in a project is one of the most effective ways to influence travel behavior… The goal of the TSP is not only for developers to pay for their transportation impacts, it’s also to build the infrastructure needed to meet the City’s mode-shift goals. It is concerning that one of the most obvious facilitators of vehicle use will not be included in the current fee.

  • Can we just repeal Prop 13 already and forget about all of these weird extra fees?

  • I cant wait to spend $1,000 more every month in taxes when that happens

  • Flatlander

    Maybe it’s time for you to realize your capital gains and move away?

  • murphstahoe

    If California is presumably collecting enough money to pay its bills already, if your property tax goes up by $1000 you would presumably get money back by reductions in other taxes and fees we pay. And a bonus as our government spends less time doing this sort of crazy games trying to get the revenue in order.

    If California actually needs more money, then I don’t feel so bad for you.

  • Boo

    Imagine you bought a house here in 2011. At this point it’s safe to say that it has probably doubled in value. Your income is still roughly the same. Do you really think it’s fair that you now have to pay double your tax bill or else sell your house and leave?

  • Flatlander

    Yes

  • jonobate

    Yes, because your house has doubled in value.

  • HuckieCA

    Price have not doubled since 2011, unless you were in an area where prices fell by 50% in 2009. The real question is, is it fair for people who bought houses 20 or 30 years ago to be paying 1/10 or 1/20 of what they should be paying because their property has gone up 10-20x? I’d really like to see an analysis on just how much money CA could be bringing in if we eliminated Prop 13, AND how much we could reduce the tax rate for everyone if the burden wasn’t being mostly shouldered those who bought recently.

  • Eric

    If that’s the issue why is the focus not on lowering taxes, rather than having some people paying on their full value and some people getting arbitrarily huge discounts?

  • I don’t feel bad for me either. I will just raise my tenants rent.

  • yeah right, 1031 exchange.. duh..

  • Boo

    I’m actually referring to my personal experience and yes, our house actually doubled in price.

    One perk for many who are homeowners is being able to control for your housing costs. You don’t have to worry about someone raising your rent and if you’re on a 30 year fixed mortgage, you know what your payment is going to be and can budget accordingly. Changing Prop 13 in this way is a sure fire way to push more people out of the region who’s wages haven’t kept up with the increase in housing prices.

  • Boo

    Why not focus on closing loopholes? The biggest beneficiary to Prop 13 are corporations, who never die, and structure property sales so that the majority stake in the property doesn’t change and a reassessment isn’t triggered. We have corporations paying tax based on 1970’s valuations on skyscrapers and large office buildings. It doesn’t bother me that grandma is paying so little tax to be honest and one day, I will be just like her.

  • Boo

    I also think it’s fair because despite the taxes I pay now when I am a senior, I will probably be paying a lot less than new owners so I get mine at the end of the day.

  • Boo

    all that will do is push out people who’s wages haven’t kept up with housing prices. Has your wage doubled in 4 years?

    What if the value of your rental doubles in 4 years? Should you be forced to pay income tax on your rental subsidy?

  • Boo

    Property values are not real money. It’s not like when your house increases in value that you can in any way access that money. Most people in SF don’t have their wages in any way increase at the rate that property values have increased. Are are they supposed to afford a higher tax?

  • murphstahoe

    Feel free to give me your property that is not worth any real money.

    as to “It’s not like when your house increases in value that you can in any way access that money”. Interesting. Apparently you have never heard of this neat thing called “mortgage”

  • murphstahoe

    That’s great for you. But the seniors when you were a mere pup did not get this perk – they paid the taxes on their property to produce the infrastructure you built your life upon. Prop 13 is a way that the current crop is reneging on the social contract that we had prior to Prop 13.

    This is also known as a “pyramid scheme”

  • Boo

    I’m sorry that is BS. Prop 13 was passed by those seniors and if they passed on that property to their children, they are benefiting from the reduced tax rate on their property. Contributions made by newcomers to California (not saying I’m one of them) are in part responsible for the tremendous growth in our economy and property values also and those seniors have no doubt benefited from that.

  • Boo

    If your wages are not growing how are you meant to afford that higher mortgage? Just because you have a house doesn’t mean you are sitting on a pile of cash that you can access easily. If you sell it, you may get that money but you then have to buy a new house. If it’s not somewhere far away (from your job and source of wealth) you’re paying higher taxes anyway because of your new home’s assessed value.

  • jonobate

    I’m not concerned with homeowners being ‘pushed out’ due to their tax bill. Unless you own an extremely expensive property, the ~1% annual property tax is not going to break you financially. If you do own an extremely expensive property, you can sell it and purchase a cheaper property with a tax bill you can afford, and pocket as profit the hundreds of thousands of dollars you’ve made from sitting on your property for a few years. Either way, I’m not feeling too sorry for you.

    Renters should not be forced to pay more because their landlord’s property has increased in value, and if you have rent control, you won’t have to. The problem is that rent control does not extend to all renters, and that the rent returns to market rate with a change of tenant, thus creating a huge incentive for landlords to find shady ways of evicting rent-controlled tenants. The solution is to strengthen rent control by extending it to all renters, and forcing continuity of rents as tenants change. Yes, this will eat into the profits of landlords, and no, I’m not feeling sorry for them either.

  • Boo

    This makes no sense. I’m not sure where you live but here in SF, the median home price is in excess of $800k. Good luck finding many properties for less than that – there aren’t many – and for the ones that exist it can get quite competitive. Your proposal only makes sense if we sell and then leave the city which hardly seems fair and will only serve to further remove the middle class.

    Without Prop 13, how can you argue that rent control should still exist? How is a landlord going to afford ever increasing property taxes while still maintaining low rents for tenants? Prop 13 and rent control go hand in hand.

  • Boo

    Those are due to factors beyond my control. The house is still modest, my job pays the same, and it’s still on the lower end of what’s available. If I were a tenant, you would argue that my rent should not change for the same reasons.

  • jonobate

    We currently have a situation where prop 13 covers all property owners, including those not at risk of eviction, such as corporations, and landlords who don’t live in their property; yet rent control only covers renters who live in buildings built before 1979, and provides insufficient protection against no-fault evictions initiated by landlords hoping to re-rent their property at market rates.

    The first thing that should happen is that rent-control should be extended to all renters, and no-fault evictions eliminated.

    The second thing that should happen is that prop 13 should be eliminated. If this results in a situation where the increased tax paid by landlords is results in their rental properties becoming unprofitable as businesses, we can increase the annual allowed rent increase (e.g. we might increase the current 1.9% up to 5%).

    Doing some rough calculations – a typical one-bedroom in SF has increased in value from $500k to $800k over the last 5 years, which without prop 13 would increase the annual tax bill by roughly $3.5k. If that cost was passed on directly to the tenants, the increase in rent would be $300/month after 5 years. If that was the only increase in rent (which it would be with universal rent control) that would increase the rent from $1400 (which was the one-bedroom median in 2010) to $1700. That’s roughly a 4% annual increase, which I’ll take over the ~18% average annual increase in market-rate rent that has actually occurred during the same period.

    In short – the potential increase in rent due to increased property tax is minuscule compared to the actual increases in rent which are occurring due to lack of renter protection.

    Now, if you were an owner-occupier rather than a landlord, you would have to eat that $3.5k tax increase yourself. I don’t think that extra $3.5k/yr expense is going to result in many people being forced to leave the city, but if it does, you can sell your house at a $300k profit and I’m not feeling too sorry for you.

  • Boo

    As I mentioned elsewhere in this thread I think it’s unfair for corporations who never die to abuse Prop 13. Since Prop 13 was put in place, the tax burden of property owners has increased relative to the taxes that commercial property owners pay.

    Your plan is not means tested and simply rewards people for being renters vs owners. A couple making $300k per year could be living in this rent controlled unit at $1700 and invest all their extra money elsewhere.

    Someone else who inherited their home and makes $40k per year now has to uproot their entire life because they cannot afford property tax on a $1MM property.

    Taxes should be fair and not serve to promote your agenda to punish people who bought a place cheaper than what’s available now. Perhaps to you $3.5k a year is nothing but to me, an extra $300 a month in tax on top of the $700 I already pay would be a burden.

    Someone else mentioned that should Prop 13 be removed, the property tax rate would probably drop. Having bought in 2011, we’re already paying thousands more than our neighbors that bought their homes for under $100k. That might be more equatable but I can sympathize for people who wouldn’t have the means to stay in homes they’ve lived in for 30+ years so they can vacate for some nouveau riche asshole . I like the idea that I can pass something down and that there are incentives for people to build lives here rather than constantly have to keep moving as prices rise.

    You support that stability for renters but you don’t for owners.

  • jonobate

    Perhaps to you $3.5k a year is nothing but to me, an extra $300 a month in tax on top of the $700 I already pay would be a burden.

    The median monthly rent for a one-bedroom in SF has increased from $1400 to $3200 in the last 5 years. So, I should feel sorry for you because without prop 13 you would have to pay an extra $300/month, but I shouldn’t care about market-rate renters who now have to pay an extra $1800/month, on average? Please.

    I’m fortunate enough to live in a rent-controlled apartment, but I feel for those who don’t. And I’m very conscious about how vulnerable I am to my landlord finding a way to pull off a no-fault eviction, and how hard it would be for me to take the increase in rent for an equivalent apartment, which would be at least $1500/month.

    Renters are bearing the brunt of the increased cost of living in SF. I’m interested in making property owners pay more of the cost, and renters pay less, because right now the situation is so heavily skewed in favor of homeowners. You can call that unfair if you like, I see it more as leveling the playing field.

  • Boo

    This is not a zero sum game and homeowners are a different class than people who own multiple units. Landlords abusing the law to evict tenants has nothing to do with how much tax a homeowner pays. Just because you have an insecure situation doesn’t mean that you should impose that on other people. I don’t see how you can argue for more stability for one class of people at the expense of another.

    Admittedly Prop 13 has some loopholes and people abuse it (namely corporations or people in multimillion dollar mansions putting ownership in a trust rather than a person) but making seniors on a fixed income, for example, pay market rate taxes doesn’t seem right to me. Why should they have to leave their homes and their established communities? Why should middle class people have to leave so richer people can move here? Homeowners paying more taxes is not going to make housing cheaper or more stable for renters.

  • Boo

    If fairness is the main objective, why not decouple taxes from property altogether and levy a tax on income to all residents.

  • murphstahoe

    Home equity line of credit. Currently running in the 3.25% range. Take out a couple hundred thousand and pay only the interest – with money that you have taken out, and pay the property taxes with it. This beats having a property that has not increased in value with many many sticks.

  • murphstahoe

    “Your plan is not means tested and simply rewards people for being renters vs owners”
    Interesting. what is your take on the fact that mortgage interest is deductable, property taxes are deductable, if you are a landlord all sorts of improvements and expenses are deductable, but if you rent nothing is deductable?

  • Boo

    Over 30 years I will have paid over double the price of the house in interest. Having this deduction makes owning a home more affordable and anyone who purchases a property can access it. It is a privilege for sure but if it makes property more accessible to people, not sure why even a renter would want that gone. If it were gone, rents would not be impacted.

    Property taxes are deductible because otherwise you are paying tax on the same money twice – another privilege everyone has.

    A rental property is a business. They take the same deductions other business owners would take, depreciation, etc.

    Both of you are still failing to show how increasing property tax will make housing cheaper for people to rent or own.

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