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Supervisors support fee deferment to encourage building in the city

SF Public Press
 — May 12 2010 - 3:57pm

In an effort to encourage more construction and economic growth, the city may offer developers an easier fee process, with many of the fees delayed until occupancy.

The Board of Supervisors passed two ordinances Tuesday, written by Mayor Gavin Newsom and Supervisor Bevan Dufty, which streamline the fee collection process and allow for deferral of some development fees.

The first ordinance, which passed unanimously on the first reading, allows the Department of Building Inspection to collect fees currently assessed by various agencies, including the Public Utilities Commission and the school district. The legislation is in response to a 2008 city study of San Francisco’s development impact fees, which identified the current decentralized process as a problem with the system.

The second ordinance allows developers to defer certain fees associated with construction until the first certificate of occupancy. Instead, developers would pay a deferral fee equal to the interest that the city would have earned had the fees been paid at the earlier date. This ordinance was approved by all supervisors except for Supervisor Chris Daly.

Currently, development impact and in lieu fees, which are intended to offset the additional costs that new developments have on public services, must be collected by the first building permit.

The goal of these ordinances, according to city officials, is to create incentives for developers to build in San Francisco, thus creating more jobs and spurring on the economy. By making the businesses pay a fee equal to the money that the city would have gained in interest, these incentives do not come at the price of current public services, said Supervisor Sophie Maxwell. She is also chairperson of the Land Use and Economic Development Committee, which recommended the ordinances.

Additionally, the city will not lose out on funds that could be used now, according to city documents, which assert that the city cannot “safely” spend development impact fees collected early because the monies would need to be refunded if the project is never built or occupied.

Collecting the funds by the first building permit still makes them available for their intended purpose.

“We must ensure that we do not jeopardize other objectives held dearly by many in the community, namely that public benefits are delivered in tandem with new development,” she said.

But Daly said in an interview with San Francisco Public Press that he questions if the ordinance will provide the stated incentive to encourage more building in the city.

“I’m not sold that these fees are what actually what’s holding up this development,” he said. “If that’s the case, we’re actually getting nothing in terms of jobs and economic impact.”

Daly added that by deferring payment of fees, the city will not be able to access money it can use. The city currently faces a deficit of $522 million.

“A bird in the hand is better than two in the bush, and certainly better than one in the bush, which is what this proposal is,” he said.

In order to go into effect, the ordinances must be passed a second time by the Board of Supervisors and then approved by Newsom.

Also Tuesday, the Board of Supervisors approved a non-binding resolution calling, but not requiring, a boycott on Arizona and Arizona-based businesses in response to that state’s controversial immigration regulation bill. Critics say the bill will legalize, if not require, racial profiling by police.