Transcripts For SFGTV Government Access Programming 20240713

It is economics. I apologize for the wonky notes. When we had the consultants look at the occurrence, the way they started, they looked at wetland costs today. They looked at what Construction Costs today which is astronomically going up between 515 per year. And they looked at what rents are today. That is how you start one of these things. They came back and they said, office space doesnt work. And we said, that is not a good answer because they are trying to build it. What did you do wrong . They said, what we think we did wrong is we need to understand that these projects have been in the pipeline for a while. What that means is they probably got their land for a little bit less. We know it they bought their land for. They may or may not have contract guaranteed minimum contract with a contractor that gives them some shielding, probably not too much. The last piece is that we are looking at todays rents, as high as they are. They came back to us on what they said is, obviously empirically we need to fix this because projects are trying to build today. We did another run that we think is more real that assumed that rents would up, that land cost went down. Theyve owned their land for a few years. We left Construction Costs a lot because we do that these people dont have a deal with a general contractor yet. That is what made it work, okay . The baseline was this pipeline scenario where they adjusted prices. Obviously we you do a study like this if it doesnt reflect reality as a baseline, its not going to give you a good estimate of what happens when you change it. As i. Courtney, thank you for sticking around. Do you have any reason to doubt, the supervisors internally doubt the 89 milliondollar estimate that would be raised . Yes. The Economic Impact report assumes that our baseline growth is 430,000 square feet per year. We know our pipeline is much more robust than that. It is more like 700,000 square feet. With that being said, the revenues would be much greater and that would be an increase over the current fee that we arty have. We are estimating about 400 million over the next seven years. Just to be clear, when talking to the developers who are in the pipeline what we hear from them is look, we dont like this, this doesnt make us infeasible. That is what we are hearing directly from these developers. From which a developers . Developers who have already submitted their applications. Can you give me a size range of a typical developer . These are large up projects who are telling us this. Just to be clear. Large up projects are not frankly part of my purview here. Our constituents is Small Business, of which i am a member. Have you heard from any smallcap developers that feel this fee is sustainable infeasible . To my knowledge, we have not heard from any smallcap developers about anything about this legislation. Okay. How many smallcap developers or even in the works . There is 700,000 square feet of smallcap in the pipeline that has either submitted an Office Allocation application, or another pre application of the Planning Department. So, uh, your feeling is that it will generate 400 million in revenue over seven years . Roughly what 60 million per year . 57 million. Thank you. I mean, thats a remarkable discrepancy between what the controller report has found. The folks that are tasked with analyzing this. Who on the Supervisors Office can return to to find out about their expertise and learn how they arrived at this number . Share. Those calculations were done by me. The Controllers Office has been very clear that the estimates are based on what has been done in the past. It is not meant to be a look forward it is a look back. I would be happy to produce data for you around the pipeline projects, just how many square feet are going to be generated over the next ten years. Great. I happy to be talking to the source. That is helpful. Your projections of 400 million is based on what is currently in the pipeline right now not any new additions to the pipeline . That is correct. Say some of these other folks are right, maybe they are right, maybe they are wrong. I dont have a crystal ball. If any of them are right, and the number has a detrimental impact on development, have you modeled that . First of all i would say that the projections are not showing detrimental impact. They are showing about a. 1 Slower Growth year over year. We are not losing office space. We are not dramatically slowing it down. Im sorry, just to be clear. What is your projections are the controllers projections . The controllers projections. Want to make sure. What were your projections . Sure. We have not projected what a potentially looks like to have Slower Growth. What we have been told directly from developers in the pipeline is that they will continue on with their projects. Largecap, not smallcap. Correct. I think we have identified there is a voice missing from this. Sure. That is the vast majority of the development that is happening. Right. Again, what comes to mind is survivor bias. What we are seeing is the ones that can afford to develop, in part because of how this has been laid out. I just want to point out, sorry to interrupt you, commissioner, i listed out a lot of the smallcap projects and who the tenants are. Small businesses are also ending largecap process. Development is 100,000 or million square feet those could be multitenant spaces as well. The kinds of small tenants that can afford to pay 100 per square foot, i think it was 89, that is a very different Small Business from the kinds of Small Businesses that is not what i think most of us typically think of Small Business and dont typically have your typical restaurant, or sure. The nexus looks at her, i believe it is seven different kinds of commercial development. I withdrawal restaurant. I understand. Office space is what we occupy and i can assure you we cannot afford 89 per square foot. If i could quickly comment on the staff report that you all have that listed out to a number of different types of Small Businesses that i think are really important to maintain a level of affordability in the city. Not all of them fall under office use. We in this legislation are only focused on office use and laboratory use. Understood. Those will not be impacted by this legislation. I understand they are very important type of use. Let me ask you, in your analysis did you look out or consider the impact on revenue on the city side . In terms of . Tax revenue, fee revenue, payroll taxes . No. Did you consider the impact on jobs, construction jobs, office jobs . Did you arrive at a number . We did not do that analysis. Typically that is what our city departments will come up with. You rely on the city departments to help you figure out what the impact on the jobs are . For the most part. Typically we take in what city departments say. We take into account feedback and we hear directly from constituents and stakeholders only make a policy decision. Our policy decision was that we want to make sure that folks who are working in our Small Businesses and offices can afford to stay and live here in the city. I respect that. Let me add, i respect the challenges and offering any sort of policy suggestion, or trying to put forth anything, its always a difficult road. Hopefully there is communication and people listen to each other and Work Together and try to build consensus and consider all of the different points of view. That is our role appeared to try to encourage legislators to consider the points of view of Small Businesses like the kinds we all run. I dont think its a mystery that we are all concerned. We are concerned that the fee is a hundred 42 increase and it is dramatic and sudden. We are concerned that there is a feeling i will have an impact on our businesses, as well. I dont get, you know, i think my largest concern, frankly, is in your analysis you havent looked at the other side of the Balance Sheet here which is the cost to the city, and the impact on jobs. Im sorry yeah, im sorry, you just said you did not do an analysis of the job impact. The Economic Impact looks at the job impact. Then you disputed whether the Economic Impact report, i just asked you if you supported that, and you said, seem like you didnt. But you do . To clarify. Our issue with the Economic Impact report is the projection on office growth. We know there is a much more robust pipeline that is indicated in the report. In terms of the job numbers i dont have any specific data like i do on the pipeline to dispute that. Our take on its and what the controllers is that it is a very small slow down in job growth. Overall, and i think think another piece that is missing from it what does the Economic Impact of keeping in the city and building Affordable Housing . We know that generates a lot of jobs, too. Right. I would agree with keeping workers in the city. I think the only kinds of workers that can stay in the city would be the largecap workers if there is not any smallcap development. My biggest concern here is that this seems to take a one size fits all approach to the fee. Certainly, i think, there is room you mentioned earlier that the 25,000 squarefoot delineate or just appears to be a legacy carryover because that is the way we used to do it. I would encourage the supervisors to consider raising that. I would consider raising that quite a bit. While there may be the cloud fairs in the world that may be the beneficiaries of that, i think there is a lot of non cloud flares that would in this particular economic activity. If we cant, perhaps our business is one of them. We hear that. We have heard from the chamber, which i know there are some folks here today that are very seriously considering a smaller fee for the smallcap projects. We have been asking, and im sure you all would love to see this too, what really is the data that places Small Business with smallcap . We do think it is an important policy to objectively worth considering. I think, one of the concerns i have is when i ask about the data that would support, or not support moving in that direction, it seems like there is a shortage of that data. That has been our frustration, too. You know, perhaps in the absence of data, it doesnt seem insurmountable to get that data. It doesnt seem spending the time gathering the data would materially affect the viability, or the effectiveness of the proposed legislation. I dont think another couple of months, you know, take the time to do it correctly and in a well thought out necessarily be a bad thing to do. There seems to be calm on the one hand, an analysis that was done, by you, and on the other hand an analysis that was done by these other folks. Some analysis on what the impact might be. When they are such a difference by everyone involved may need to tread slower and more cautiously. Just on the off chance and the assumptions here about the pipeline are wrong, or fatally flawed in some way, or something youre not seeing. Generally, in my business, when i get really strong advice to not do something maybe i might still choose to do it, but i might not do it quite so aggressively. I may back off a little bit. Just to make sure i have hedged my vets as it were. My core concern, not my core concern, but a core concern goes to the heart of the proposed legislation which is if there there assumptions are correct and there is a 300 milliondollar hit to our gdp and 1500 jobs lost and there is no analysis yet on what the impact on revenue may be, it seems conceivable just looking at what is being presented to me. It seems conceivable that there is an outcome here where the money that is being generated to Affordable Housing is offset, and then some by lost economic output. We would have been better off just air marking, if the additional money raised would have that material difference, it would have been better off just air marking in the budget, instead of trying to raise it through external. We would love to earmark it in the budget. We want to remind the commission that those projections are a. 1 flow of growth. It sounds to me like is that your goal to slow job growth a little bit . No. Our goal is to keep workers in the city housed. Presumably we, i dont want to repeat myself, but presumably that extends to the people that already currently work here and already have middleclass jobs and lower middleclass jobs . Having to move further and further out of the city in order to stay afloat. At a certain foz, if office rents get too expensive, then those companies have to consider, you know, locating some else. Ive been on loop net looking in South San Francisco for some place to park our vehicles more times and i can count. Its very difficult. Apparently stripe found a way. I have not been as successful. Its actually really hard at the small sized stage. There is a point, and its not all that dramatically far off where we can continue. If the rents go up, even 510 more. That might just be what finally breaks my back in terms of being able to sustain our employees at a living wage, at a wage i feel responsible paying. We have other responsibilities there, too, of course. It is challenging. I think going to marks statement about the numbers. All of these expenses have a disproportionate impact on smaller operators when they are fixed and a flat. In other words, paying 100 per square foot matters a lot more if you are developing a 10,000 squarefoot facility, sorry 25,000 squarefoot facility than if you are developing a 250,00t vent development. That cost dont scale down, there are thick start up costs, their opportunity costs. There is a certain amount that you have to get over just to make the project even able to get started in the first place. I think that is one, if not, among many that we are not seen those smallmarket developments developments smallcap developments. Thank you for your time. I know i kept you here for an awful long time. Thank you to my colleagues, as well. Any other questions . We have some more. If only it were so easy to change and president s. [laughter] thank you for your presentation. Most of my concerns and questions are covered by commissioner laguana. This increase of 142 affects not just the downtown area, it is citywide. You may know, a lot of the Small Business owners are in the other areas like sunset, richmond. I know my dentist, my accounta accountant, you know, theyre all in the sunset and richmond outside of the downtown area. So, they may or may not be able to afford the higher rent because of this fee. Those two uses would not be impacted by this legislation. But there are others that would occupy office space and i can think of anything right now. Would you consider imposing this fee based on zoning . When you say zoning, are you referring to the size of the development, or actually the type of zoning in each neighborhood . May be, director, you can help . I think from what commissioner yee is attempting to communicate is that the economics i just want to go back. The examples i gave in terms of psychotherapist, doctors offic offices, those are in Office Buildings right now, they are located in Office Buildings right now in the c3 district. It is not just the classic office space that occupies these buildings. I think what commissioner yee is attempting to say, as the pressure rose, in the downtown area in terms of those rents, it spreads. Those small offices that might be currently occupying, in the smallcap Office Spaces that are more affordable they then may have to move more west, or south and occupy those Office Spaces and those rents go up which then mean those who are currently there may not be able to afford those rent increases. Is that how i understand . Yes. Whether or not you are a smallcap or largecap you have to pay the same 142 increase fee. Also, the graph clearly shows that all rents are rising. They track one another. To say that this only affects the large up renters is not true. The rent on my unimproved warehouse has tracked the market, percentagewise. My rent went up, it has gone up 1518 per year over the last five years. Averaging about 10 per year. I am tracking. If you change the slope of that curve, my rent is going to change exactly on that same slow. That is what the historic data. I hear that. I dont mean to belabor this. , fees have been constant and our rents are rising, some of the fastest in the country. There is a lot of other things going into this. Just to your point about what is actually in an office space. Talking to the zoning director, or the Zoning Administration administrator at the Planning Department a doctors or office, for example, it might look or feel like an office, it is still considered a different use and would be considered retail use and for purposes of how impact fees are assessed. When it is being developed that may not be known who are the tenants. Because it may not be a full medical building. Many of these Office Buildings downtown have multi different types of tenants. Kind of using that analogy means it is already preestablished who are the tenants. We just had this conversation with ken, we cannot say, you know, you preestablished for your tenants are so we can make this space, you know, this fee, and this space this fee. It gets spread. The cost of building it is just going to be the cost of building it without office fee, jobs housing linkage fee. Share. That was my understanding from the zoning administrator. Perhaps that is a conversation we can take off line to make sure we are assessing the correct fee on the correct type of uses that we are billing. Commissioner ortizcartagena . Im definitely with the spirit of the legislation. I have multiple hats that i wear, one is housing in the mission. I cant attest how much mpeg dollars go to our new developments for Affordable Housing. Meta is just one developer, nonprofit developer we have contributed to over 550 new units directly associated with impact fees, bonds, or anything. The bucket for Affordable Housing is always dry. We, at meta, could do a lot more with a lot more money. There is no more money. I definitely agree with the spirit. However, like some of my commissioners have said, i dont agree with being punitive retroactively. Anything in the pipeline, i definitely do not agree. They have budgeted and ideal was a deal like commissioner dwight said. I believe we have not increase the fee. There has to be a fee. I do respect, though, the nexis study. I think the nexus study has a sweet spot of a 10dollar increase if i read it correctly. That is our recommendation. They are getting the intent of trying to text of elements especially those that are housing. If you can see that, you rented to Small Businesses, nonprofits or what have you. If they have a trajectory of housing Small Businesses. You cant just throw it out the wall and hey, your developer, its a whole ecosystem. I know what you want to do, you want to tax the people that can be taxed. Small business we get caught up. We Small Businesses are always at the blonde at the expense of our businesses. That is not fair either. That is my recommendation. Thank you, commissioner. This item did go to the Planning Commission about 1. 5 months ago. There were no recommendations made at that time around treatment of Small Businesses, or smallcap differently. I really appreciate the comments from you all. Like i said, it is something we are scarcely considering. Also weighing how we continue to generate the revenue that we desperately need for Affordable Housing. Lastly, i just want to address this question of if this is punitive . The way that these impact fees are assessed is when a project gets a site permit, you are told this is how much you are going to pay, right . The project, for the most part, that we are effecting have not been told that this is how much you are going to pay. We are not telling them one thing, then going back and saying, actually, we changed our mind. It is very reflective of the current process of what we have of how we are assessing. One last thing. Also in recognition there are projects in the pipeline, as the Land Use Committee last week, they put forward an amendment that does phase in the fee. Rather than treating everybody at 69. 60, if you had cemented for a certain point, you would pay a fee that is about 12 le less. Thank you so much for your presentation. To echo sentiments, the Small Site Program has been very effective. I really liked oewd look at the cumulative context of fees. I would like oewd to do that more often when we have laws in front of us. There can be resolved with a compromise which i see is moving to midlevel level under 70,000 square feet tier, possibly be less per square foot. It is my understanding that if gets reassessed every year. I see there is an assessment that happens annually. How do we know that you guys are not going to come back to the table next year and increase this . Well, first i can say, theres a process we will not be going there again next year. That is a good question. With any policy there is no guarantee that the policies will be changed. We did want to make sure that the fee is indexed every year. We will also be asking with a Feasibility Study that happens every five years, that we conduct a new nexus study. So we can periodically evaluate what is the need, and what and end up somewhere in the middle. That is the goal to have it reevaluated every five years. Its already meant to be a common practice in our planning code that every development mpeg fee be evaluated every five years. This one has been missed for the past 25 years. Moving forward, we want to make sure theres a regular look at it. I have seen fees that were indicated for a specific purpose and then went under the radar and kept increasing without an excess study a nexis study. My concern is just, are we raising it an amount that we think we want to leave it out for x amount of years. The calculation for the first raising of the fee. I can understand why your projections are so different than the controllers. The controllers. I would love to see that data, the pipeline but data. I want to thank you for all of the work you have done on this. I work at a number of industries that have Small Businesses. We are at the point where we can no longer keep employees, because they cant be paid 100 per hour. Im seeing that every day, the loss of jobs in for middle income or lower income people. In that spirit, i do agree with you. I mean, we are just losing them every single day. However, we raise the smallcap up to 50,000 square feet so that would have less impact. For me, im seeing people that have one shot, you know, maybe 1,000 square feet and they are just desperate now because they cannot hire any employees. You cant expect people to come from 100 miles away even to take a lowwage job. Those lowwage jobs are the way that many people work their way up the higher wage jobs. I would just suggest raising the tap up to 50,000. I do support that we are in trouble in this town with housing. It is just out of control. Thank you. Commissioners, any other questions . Okay. We will open it up to Public Comment. Any members of the public that would like to comment on this item . E. Public comment is limited to three minutes. It is not because we are being rude, everybody gets exactly three minutes, no more. Thank you, commissioners. My name is jay chang, i represent the San Francisco Chamber Chamber of commerce who represents over 1,000 businesses in tribe are both large and small. We want to thank supervisor haney for starting this important conversation and this overdue evaluation of the job housing linkage. We want to thank his office and the legislative aide, mcdonald for working with us on the Laboratory Fee and providing a strong and number for the Laboratory Fee so companies can move forward in the state. We are advocating for a smaller fee tier, for smallcap, or developments with 50,000 gross square feet or less. We advocating for the smaller tier. Those are the kind of developments specifically support Small Businesses that rely on a officeone traveler. This doesnt only include accountants, architects, designers. In the office space, that is attached to westfield mall, you will find people like costume designers, and several other, people who have converted office space uses to their Small Businesses. The economic nexis and the Feasibility Study offered, ignored Small Businesses. The fees that the Feasibility Study puts forward, sorry, the rental increased at the assumes that everyone can afford a 12 rental increase on their real estate costs. That assumes almost every company is like a giant tech company can absorb that office space increase. The economic nexis study only assumed economic nexis for buildings with 100,000 square feet, or more. It doesnt assume for anything with 50,000 or less. That is why i believe the fee that is being put forward, that overall number, is not accurate to Small Business or Small Office Space development. We strongly urge of the supervisor create a tier that is meaningful to them. The vacancy rate, in San Francisco, is 4 for office space. The sublease vacancy rate is. 9 . For us, this suggests while large employers do face a very tight office space markets, the Small Businesses that rely on that sublease vacancy space have a tighter market. We need to be able to protect them. We encourage you to consider and recommend the tier for smallcap development so we thank you. Next. Good afternoon, commissioners. I am a male the San Francisco chamber, as well. I represent our Small Business members and speak with them closely. I think you for your time digging into this topic as deeply and thoroughly as you have. That is why this commission is here to take a closer look at the issues that might otherwise not be fully considered. Just a couple of things that stood out to me here, you know, if we are looking at an 89 milliondollar increase in jobs housing linkage fee, over time, we talked about 700,000 as the cost that we put in towards each unit, that gives us around 12 units annually perhaps, that might change over time. We have prop a that is coming forward on the ballot. Which is set to raise around 600 million versus 9 million that might be a little bit of a difference model we should be looking at wilmer not sure the overall cost of the city for this type of legislation. We appreciate the work that supervisor haneys office has done in making those deep considerations and having these conversations with Community Stakeholders to understand better what the implications of the legislation will be. Really considering not just the people at the top of the Office Building but where that trickles down to route the rest of the building. I think commissioner yeeriley made a great point about other uses. When you build an Office Building you dont just build one big Office Building. When you have an increase in the cost of building the office space its not like you can just chunk it out for that office space. That applies for the whole building. I havent seen many Office Spaces that do not have retail spaces downstairs, or maybe that is where the doctors offices located on the third floor in the back corner. When you increase the cost of a building, it increases the cost of the entire building. It might be naive to not think that fee will pass through to the tenants. Its important that the Small Businesses are really being heard. We want to look at this over time. Lets look at the impact to. Lets look at the feasibility studies. Lets look at what it is going to do to the jobs in our economy. Now we have a study that is showing us that maybe this isnt the best idea. We want to urge the supervisor to take a look at that. Thank you. Next. Hello. I am emily abraham, i am representing the chamber of commerce. Thank you all for your time today. Here at the chamber, we appreciate supervisor haneys leadership in strengthening the linkage between jobs and housing. We absolutely agree that San Francisco needs more Affordable Housing to support our growing economy. However, this legislation would have Significant Impact on our local economy with the supply of Small Business commercial space and our ability to find a portal housing. The citys Feasibility Study has warned that increasing the fee to dramatically would postpone and essentially stopped construction of commercial space in San Francisco it also pointed to the fact that limiting development could lead to an ever tightening market of office space resulting in only topping companies being able to afford new officeone San Francisco. This could inevitably push out small home growth businesses that rely on Affordable Office space. We propose that irregular economic and Feasibility Analysis, and adjustment is needed. This being at three years. Many of the citys Major Economic policies such as inclusionary housing requirements require the city controller and the board of supervisors to review Economic Feasibility every three years, and give the board of supervisors an opportunity to adjust the policy. This would allow for the city to adapt and reflect on changes in the local economy. We recommend including the same regular Feasibility Analysis and adjustment language for the jobs housing linkage fee ordinance. We believe including this amendment, in the ordinance, would allow many stakeholders to support a rate hold. Thank you for your consideration. Thank you. Good afternoon, commissioners. Corey smith on behalf of the San Francisco Housing Action coalition. We are a nonprofit at all levels of affordability. The money for the housing part impacts our members in these situations. Obviously we want as much money for subsidized Affordable Housing as possible. That is our goal. That is our mission. Back in 2016, they had a situation where the increased inclusionary San Francisco up to 25 . All mixed income projects had to provide 25 inclusionary. But that resulted in was a bunch of projects that were not economically feasible trade as a result, the Mayors Office of housing and Community Development ended up with i believe around 100 million fewer dollars in 2018 that they were expecting. We are getting to a situation where we know that asking for too much, in certain situations will increase the overall money that we get. That is where our concern comes from. Every home does matter. The people that do get housing, from this potential subsequent fee. It will make a difference. We also want to acknowledge as mentioned by previous speaker that we are talking maybe 1015 total homes that will be built at this increase. We care about the small or mediumsize businesses because when the San Francisco bay area. I again want to echo that is not a question that we need more Affordable Housing for the low and middle income folks have in the region. This is not a question that we need to adjust the rates. The question is are we looking at the unintended consequences. Just echoing the speaker before me, 69 of zero square feet is 0. How is that going to impact Overall Community and those who are really struggling to stay and permanently support Affordable Housing. At the last committee meeting, and a presentation i remember seeing 20152016 fiscal year there was 20 with this higher number, that is more had double and triple even. Maybe another 8 9 million. There are factors that are not being dragged into at this point. I think we just really need to recognize that we are overlooking a Bigger Picture if we want to address this problem. We need to look at creative financing. When you look at streamlining you cut the red tape as mentioned earlier. Im also concerned again in terms of housing aspects for the mixed use projects. Those coming to the pipeline lean heavily on office development. That can compromise thousands of housing units. We are concerned of things not being looked at closely enough. What can we come up with a fee that is fair for everyone . Especially for smaller and thank you. Next speaker. My name is hans hansen, commercial Real Estate Broker herein San Francisco. I have been involved in some of the Larger Development projects that have turned past industrial type buildings into mixture used residential process projects. Right now, San Francisco has the highest cost of construction anywhere in the world, as of last week. You are starting to see projects now that were approved that are not going to get built. Case in point, i sold 1601 mission street, the car wash that was going to have over 200 units in their. It took four years to get approved. When we first went into contra contract, the project made sense. By the time i got through the approval process it did not make sense. Theyre trying to resell it, no buyers. I can tell you other projects like that that are coming down the line, and you are seeing more and more properties being put on the market either titled her and entitled because numbers dont make any sense. That is where your housing problem is. We have a delay in the way that we approve our projects. It takes if you allow supply and demand to work, you provide the necessary supply, demand will take care of itself, and youll start getting lower rents. That has been the problem all along. To put an impact fee to try to solve a problem, it is putting a very small bandaid on a big problem. The big problem is, lets expedite the process to get these projects approved. That will lower costs and therefore you will get more housing. Thank you. Any other Public Comment on this item . Seeing none. Public comment is closed. Any other comments, commissioners . Recology last comment. I did like the part of this ordinance that is amending the current procedures. Dot developments cant put the fee money or the city cant designate that to a separate fund, or to offset with another project that it has to be that it is earmarked. That is one thing we should take into account is a good piece. I hope that we can move forward with a recommendation that, you know, takes into account everything we have heard on the compromise i think we are all looking towards as a middle ground for the increase. I am encouraging that discussion. What is our desired outcome today . I think it makes sense to raise the Square Footage affected. I dont think the building that we occupy is 56,000 square feet. I dont think it would ever be mistaken as a large building, or a large group of tenants as it were. I think if they would consider raising the threshold and also consider perhaps between 50000100,000, having a lower rate establishing some tears so the smaller developments are not caught up because one this. I think that would be wise. My understanding, from talking to a lot of folks affected by this issue is there is some willingness to pay increased costs, that is not wrong to say. Increasing it in a more tier fashion would be wise. I think there is always the opportunity, if it really has a marginal impact and it really does bring theres nothing stopping them from coming back next year, and making further adjustments. My way of looking out at 146 increase over night, particularly on existing projects, i really struggle with that. Does anyone want to craft a motion . I want to ask a question. Now that you have heard what we have to say, and also some recommendations and suggestions from speakers, the meeting is tomorrow, will you be able to include of some of our recommendations and suggestions prior to the meeting . Sure. If i can just repeat back what im hearing is that there is a desire to have a lower fee for 50,000 square feet. I think i would like to see currently the up does affect anyone below 25,000 square feet. That number appears to be harmonizing with other caps that exist elsewhere in the code. This is an extraordinary increase. What i would recommend, pending what everyone else thinks of course, is number one increasing the threshold to 50,000 feet, instead of 25,000, and number two consider having a tier rate to skip the middle on the sub 50100. I am amenable to the input that you guys have on that, but that is certainly my thinking. Raise the threshold here a little bit and slow the role a little bit on the sub 100,000. There should still be plenty of revenue generated. I would imagine. Can i make a motion . Do we need a motion or are we just delivering i think there is an open question from commissioner riley about if we make a motion, i mean, im trying to find the appropriate analogy, are we wasting our time . Is our opportunity for us to have input . Yes, there is. Like i mentioned, we are open to having a smaller fee for smallcap projects. We would not be open to expanding the exemption for new construction up to 50,000 square feet. Out of curiosity, not trying to bug you on this. Why wouldnt you be open to increasing the threshold . That would be getting rid of the fee entirely for a whole set of projects. One thing i did not get you a chance to ask about. Oewd had a recommendation for a fee, right . The tendo increase. Yeah. Obviously your increase is quite a bit more. Is not solely based on this nexus study that appears. Obviously you feel when 93 is not wise. It is not legal. You chose the highest legal number, right tier now, 193 would be legal. The 38dollar recommendation that came from oewd would be legal under the nexus study we did 25 years ago. To us, that is wildly inaccurate. I totally get that. Im totally im trying to figure out, i think you explain this during your presentation, but if you can repeat it one more time. On average. There is no hard and fast rule here, on average our Development Impact fees are set at 36 of the nexus level. Some are a lot higher. Our inclusionary rates are a lot higher than 36 of the nexus study. To have some level of consistency, we think meeting a big need. We settled on this number that is close to 70. Traditionally it has been 36 of nexus on average . Okay. How was 36 arrived at . It was the rationale based on historic impact fees. I get that part. I dont want to divert you and i dont want to keep us here forever. Maybe we can add that as an amendment that we want to see the data, the Pipeline Data used to get to that. Exactly what commissioner zouzounis said. The prior historical incidences of percentage of nexus were arrived at based on upon criteria. It wasnt just, you know, 36 wasnt the number when San Francisco was founded and we just kept it going in perpetuity. Somebody, somewhere, did analysis and now we are just continuing because that is what happens. Asking for data on the eve of about a vote to pay what happened here today as you have recommendations you can affect legislation that can be voted on tomorrow. You requesting data and things like that i strongly feel that the threshold should be higher. I dont necessarily feel that because some projects are not included, i mean, there are projects and sub 25,000 that are not going to be included either. I dont find that data point itself particularly moving unless you feel what percentage of the project lie between 2550,000 that are in the pipeline right now. About, well, 700,000 out of 7 million. 1 of the projects are in the 2550 range and youre worried about losing the Affordable Housing revenue on that 1 . I think it is an important source of revenue. Yes. I mean, we have laws that have been on the books for years and years like our prop m allocations that used this threshold of 25 25,000 square feet. We are not