SF transit impact fee update subject of great debate

Adopted in 1981, San Francisco has one of the longest standing transit impact fee policies in the United States (here's a handy primer). Developers of "large" for-profit commercial properties have paid a per-square foot fee that has been dedicated to operating and improving San Francisco's MUNI services. Over the summer, a proposal was put forward to expand the fee to encompass for-profit residential development in addition to commercial development.

A few years back, a proposal was killed that would have expanded the fee to hospitals and other land uses that generated significant transit usage. This time around, a coalition of developers argued that the fee would limit the supply of new housing in an already constrained market that's plagued with ever-rising prices.

The fee does impact real estate developer profits, which would be reflected in the price paid by developers to landowners. But what of the developers that have already purchased land at higher rates and would now be subject to an unexpected fee? Well, some developers with projects in the pipeline would be grandfathered in at lower impact fee rates. In addition, all developments have won a reprieve from the fees that were initially proposed, though they'll still have to pay something.

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The fee rate increase supported by the committee keeps the current proposed rate at $7.74 per square foot for residential developments under 99 units and increases it to $8.74 for every unit in excess of 99 units. The City’s nexus study found that transit impacts caused by development could legally justify a residential fee, for example, of $30.93.

​                    - Sabatini, SF Examiner, 10/6/15

As proposed, the fee revenue would be used to cover MUNI improvements, including more than $1 billion in planned capital improvements. As noted above, the fee was justified based on the cost imposed by new development on MUNI, which was found to be significantly higher than the fee that will be imposed. It is noteworthy that, though it does capture revenue, the justification does not reflect the value added by MUNI to new development.

The SF Board of Supervisors (=city council)​ will vote on the modified transit impact fee proposal on October 19th, 2015.