South City pushes for linkage fees

But commissioners offered divergent opinions on the costs developers should pay, as some suggest the recommended fee levels are too low while others are reticent to push them higher for fear of discouraging future development.

City staffers are recommending the City Council approve charging builders $5 per square foot of new hotel space; $2.50 for restaurant or retail square footage and $15 for the same amount of office, medical or research and development space.

Commission Chair Mark Nagales advocated for seeking higher fees in an effort to generate more revenue for the city’s fund which could be applied to facilitating construction of more affordable units.

“We need to step up. So this is a perfect opportunity for us to show our residents that we do care about what is happening here. And that we want them to stay,” he said, according to video of the meeting. “So I feel like we should be aggressive about this.”

No decision was made at the commission’s meeting, and the issue will continue onto the City Council for further consideration next month.

Vice Chair JulieAnn Murphy suggested she supported Nagales, and pointed to the hotel industry as one which could perhaps endure facing higher fee rates.

“The hotel fee seems pretty low, especially given our proximity to the airport and the opportunities we have to potentially have more hotels in South San Francisco,” she said.

Other commissioners help opposing perspectives on the matter though, suggesting the rates should be limited in recognition of the burden already placed on builders through a slate of previously established fees.

“I would just like to caution that we don’t fee our developers to death,” said Commissioner Michelle Evans. “Even if it’s a small amount in our mind, the perception out there for a developer may be that this is the last straw of fees. So you need to kind of balance that.”

She noted South San Francisco already charges builders fees for child care and other public services, which are not established in other nearby cities.

Commissioner Alan Wong shared a similar perspective.

“We have additional fees that other cities don’t have, so that could be why we have a tradeoff,” he said.

Linkage fees have grown increasingly popular along the Peninsula as officials aim to generate funds for offsetting the housing crisis by asking builders for additional contributions.

For context, developers in Redwood City are required to pay $5 per square foot of hotel, retail and restaurant space and $20 for the same amount of office or research and development space. In Foster City, it is $12.50 for hotel square footage, $6.25 for a square foot of retail and restaurant space and $27.50 for office or research and development space. Menlo Park charges no additional fee for hotel, restaurant or retail space and $16.90 per square foot of office or research and development space.

Nell Selander, the city’s Economic and Community Development deputy director, said South San Francisco officials should keep an eye to the fees charged in nearby cities so as to remain competitive for local development.

“Cities need to strike a balance between levying a fee that is high enough to mitigate demand without setting fees so high that it impedes new investment,” she said.

In South San Francisco, officials expect establishing the fees could generated between $5 million and $15 million over the coming years, which could be allocated toward helping build affordable housing units, or preserve existing units. The fees could work in tandem with the city’s affordable housing fund plus revenue generated by city property to address the issue.

In all, Selander suggested the fees could work toward improving the quality of life in South San Francisco while simultaneously leveraging its reputation as a lucrative place to do business.

“This will assist our effort to be business friendly while assuring our affordable housing goals will be met,” she said.

austin@smdailyjournal.com

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