Insights
Publications

Housing Fee Reform Legislation

June 30, 2023 Articles

San Francisco officials have introduced a number of new policies they hope will jump start the construction of new housing in San Francisco, which has largely stalled due to high construction costs, rising interest rates, and general economic uncertainty.

Mayor London Breed and Board of Supervisors President Aaron Peskin have introduced a package of ordinances called the “Housing Fee Reform Plan” to reduce inclusionary housing requirements and reform development impact fees. The move comes with a rare acknowledgment from leaders across the political spectrum that the City’s notoriously onerous fee- and regulatory- regimes are at least partially responsible for making housing development infeasible.

The first ordinance would reduce inclusionary housing requirements that currently require (in most cases) developers to set-aside 22 percent of new housing units in a project as deed-restricted, permanently affordable units, or else provide 30 percent off-site affordable units. Developers also currently have the option to pay an in-lieu fee for 30 percent of their total housing units.

For already approved projects, the measure proposes to lower these rates to 12 percent of on-site units or 16 percent if provided off-site or via an in-lieu fee. For new housing projects, the affordable set-aside would reduce to 15 percent for on-site units or 21 percent for off-site or in-lieu fee. This legislation also would reduce all other development impact fees by 33 percent. These reduced inclusionary housing set-asides and impact fees would remain available for the next three years, when market conditions will be re-evaluated and, at least in theory, the rates will be recalibrated.

The second piece of legislation focuses on reforming the way development impact fees are calculated and collected to make them more predictable and stable over time. Instead of being tied to construction cost estimates, the fees will simply increase by a fixed-rate of 2 percent each year. Impact fee amounts will also be assessed upon project approval instead of when the project begins construction to avoid unexpected fee increases. In addition, the ordinance would allow developers to defer the payment of up to 85 percent of impact fees – excluding any inclusionary housing fees – until project completion, rather than the current practice of paying all fees upon issuance of a building permit.

These bills are based on the recommendations of the Affordable Housing Technical Advisory Committee assembled by the Controller’s Office. If approved by the Board of Supervisors, this legislation could go into effect as early as November 1, 2023.

Firm Highlights

News

Lawdragon Names 7 Farella Lawyers Among “Leaders in Environmental Law”

Northern California legal powerhouse Farella Braun + Martel is pleased to announce that seven lawyers were selected to The Lawdragon Green 500: 2024 Leaders in Environmental Law . Farella lawyers selected for inclusion: Sarah...

Read More
Publication

California Court Issues First Decision Addressing Builder’s Remedy; Decision on Related Lawsuit Pending

The first California court decision to issue declaratory relief to a developer under the “builder’s remedy” appears to be on the horizon. The builder’s remedy has garnered significant attention over the past two years...

Read More
News

Burdened by Debt, Savvy SF Office Owners Get Creative

Restructuring, insolvency, and creditors rights partner Gary Kaplan provided expert commentary in The San Francisco Standard article, "Burdened by Debt, Savvy SF Office Owners Get Creative." In the article, Gary explained that in most cases...

Read More
Publication

Downtown San Francisco Adaptive Reuse Legislation Slated To Go Into Effect

As we alerted you on May 9 , legislation to incentivize office and commercial building conversions to housing had begun working its way through the Board of Supervisors after approval by the San Francisco...

Read More
Publication

AB 1633: The Housing Accountability Act

The Housing Accountability Act (HAA) requires local agencies to approve housing projects that meet objective zoning, general plan, subdivision, and design standards unless there is a specific, adverse impact upon public health and safety...

Read More
Publication

Add Value to Your Winery by Monetizing Land Use Entitlements

With today’s emphasis on increasing the bottom line of winery businesses, winery owners often overlook a simple strategy for increasing their revenue and the value of their investment: the land use entitlements process. Wineries...

Read More
Publication

Achieving Compatibility Between Solar Project Developers and Mineral Estate Holders

By Dirk R. Mueller , Alyssa Netto , and Will Russ Texas and California lead the country in terms of solar energy generating capacity while also maintaining major oil and gas production operations, which...

Read More
Publication

San Francisco Board of Supervisors Passes Housing Fee Reform Legislation

The San Francisco Board of Supervisors took the first of two votes to approve housing fee reform legislation last week. The legislation reduces by as much as a third the affordable housing fees and...

Read More
News

Ashley Breakfield Elected 2024 President of CREW SF

Farella Braun + Martel is proud to announce that real estate and land use partner Ashley E. Breakfield has been elected president of the Commercial Real Estate Women of San Francisco (CREW SF) Board...

Read More
News

Affordable Housing Outlook: What Challenges Will 2024 Pose?

Real estate partner CJ Higley provided expert commentary in the Multi-Housing News article "Affordable Housing Outlook: What Challenges Will 2024 Pose?" The article is available here .

Read More