In the effort to cut the cost of living in South San Francisco, officials discussed hiking the fees builders must pay when constructing new commercial projects with hopes of generating more funding for affordable housing.
The South San Francisco City Council discussed during a study session Tuesday, April 27, a proposal to hike commercial linkage fees alongside hopes to purchase more land officials could use to build below-market-rate developments.
The discussion arrives as officials examine ways to leverage limited resources in the most efficient fashion that will yield construction of additional rental units and ownership opportunities for South San Francisco residents.
Agreeing financial contributions from commercial developers comprise the most significant source of income which can be used for constructing affordable units, officials looked for ways to build the linkage fund.
As it stands, the city expects to bring is as much as $68 million in linkage fees by 2029, according to a city report, which notes sweeping commercial projects near the San Bruno border and along the Bayshore will make significant contributions.
“That’s a game changer for us,” said Vice Mayor Mark Nagales, regarding the opportunity to take in such a sizable chunk of revenue over the coming decade.
Lane Partners, which is planning an almost 2-million-square-foot office and retail development over 25 acres at the city’s southern border, could be obligated to pay about $35 million in fees. And Genentech, which is looking to expand its headquarters along Oyster Point, may pay roughly $30 million.
Noting that the funds are an essential resource for affordable housing construction, Nagales questioned whether officials could look to raise the fees developers must pay when proposing commercial projects.
He justified his request by noting that commercial development has only slowed marginally despite the economic interruption brought by the pandemic, which indicated the industry would tolerate paying more in fees without stunting growth.
His fellow councilmembers seemingly concurred, and City Manager Mike Futrell said officials have already started laying the groundwork of determining whether the fees could be raised to levels competitive with surrounding cities.
Should the city expand its funds addressing housing affordability, Nagales said he favored examining opportunities to acquire new properties which South San Francisco could use to partner with nonprofit builders.
As it stands, he said city officials seeking affordable units are largely at the mercy of private builders who are reticent to build them for fear of diminishing profits. But if the city acquired more land, officials would have greater authority over determining how the property could be redeveloped.
“If we are able to control the land, we are dictating our terms,” he said. “And I would like to see us do that more often.”
ROEM Development Company constructing an entirely affordable building with 37 units after South San Francisco donated the land at 418 Linden Ave. was acknowledged as a model partnership officials hoped to replicate if they controlled more land.
Additionally, Nagales said officials are compelled to try and lead the process of building new affordable housing because no new large developments have been proposed in South San Francisco since councilmembers hiked the city’s below-market-rate mandate.
He said there have been no substantial building proposals since officials required builders set aside 15% of their projects at an affordable rate — an increase of 5% from the previous policy. While acknowledging technically he is correct, officials suggested the economic disruption brought by the pandemic likely contributed to that outcome as well.
Chief Planner Tony Rozzi added that some large projects entitled prior to the increase have sought a series of legislative actions that would expose them to further negotiations with officials, which can reopen the affordable housing conversation.
For his part, Nagales said he is committed to following the issue he considers critical for the community’s growth.
“That is something we really need to focus on if you really want to make sure our residents who are the most vulnerable are able to stay here,” he said.