Board passes transit sustainability fee on first reading after heated debate, refers hospital and commercial-grandfathering amendments back to committee

The San Francisco Board of Supervisors on Nov. 3, 2015 passed, on first reading and by unanimous vote, an ordinance establishing a Transportation Sustainability Fee (TSF) that extends San Francisco's long-standing transit impact development fee to residential projects and makes other changes to how the city charges new development for transportation impacts.

The ordinance, introduced by Supervisor Scott Wiener, replaces the Transit Impact Development Fee (TIDF) — which for 35 years had applied only to commercial development — by creating a citywide TSF that applies to residential development as well. Wiener said the change "takes a huge step forward" and will "generate hundreds of millions of dollars for transportation improvements over the next 15 years." He called it a critical measure to help expand capacity for Muni, Caltrain and BART.

Why it matters: San Francisco has added population and housing while transit capacity has lagged. Supporters said extending the fee to residential development is a major source of new, dedicated local funding for transit, while critics and some board members pressed for higher fees, altered grandfathering rules for projects already in the planning pipeline, and special handling for hospitals.

What the board debated and decided - Scope and rates: Committee work had amended the original proposal to add residential charges (bringing residential fees from $0 to nearly $8 per square foot in the draft discussed at the meeting) and to adjust commercial rates for larger projects. Supervisors debated whether the fee levels matched the nexus and feasibility studies and whether they left “money on the table.” - Grandfathering for pipeline projects: Supervisor John Avalos proposed a package of substantive amendments to raise commercial fees for large projects and to change grandfathering so many projects in the pipeline would pay a larger share of the new fee. Avalos’s first numeric amendment (raising certain nonresidential tiers by $0.50 and $4.00) failed on a 5-6 vote. A subsequent amendment to increase grandfathering tiers and tiers for residential and nonresidential projects also failed 4-7. Avalos made additional attempts; several failed in roll-call votes. - Commercial projects submitted after the ordinance’s introduction date: Board members debated whether nonresidential projects submitted after July 21, 2015 (the ordinance introduction date) should pay the full TSF rather than remaining under the prior TIDF treatment. Because that issue was raised for the first time on the floor, the board agreed to duplicate the file and send an amended duplicate to the Land Use and Transportation Committee for additional public hearing and deliberation. - Hospitals and medical services: Supervisor London Breed (through Supervisor Jane Kim and Supervisor Malia Cohen’s work) negotiated an agreement with nonprofit hospitals and hospital representatives to create a fee structure for hospital uses. Supervisor Cohen moved, and the board approved, duplication of the file and an amendment in the duplicated file that would subject net new hospital beds to an $18.74 charge (calculated per net new bed and effective immediately) and a $11 fee on new medical service uses over 12,000 square feet. The board voted to duplicate that amended file and refer it to committee for further hearings.

Department and staff input - Planning department staff (John Ram) and Lisa Chen presented feasibility modeling to board members. Chen told the board that for four of six prototypical project types in the city’s growth areas the combined TSF plus a proposed childcare fee remained within feasibility; two prototypes triggered the planning department’s 10% residual land value threshold used as an indicator of feasibility. - Ed Riskin (director of transportation in the transcript) and Tilly Chang (Executive Director, Transportation Authority) spoke in support of the legislation and thanked the board for the multi-year effort. - Deputy City Attorney John Gibner clarified legal and implementation points, including which portions of the committee changes affected residential versus nonresidential projects and the implications for grandfathering.

Motions, referrals, and final action - Multiple on-the-floor amendments by Supervisor Avalos were considered and defeated in roll-call votes (5–6 and 4–7 in two recorded attempts). Those recorded failures are part of the meeting record. - The board voted unanimously to pass the main TSF ordinance on first reading (11–0). - The board also voted unanimously to duplicate the file, incorporate hospital and other amendments in the duplicated file, and refer the duplicated file to the Land Use and Transportation Committee for additional public hearings and findings.

Quotes - "This is a very exciting day. This has been in the works for years now," Supervisor Scott Wiener said in introducing the ordinance. - "We are finally gaining momentum in San Francisco, to fund the modern and reliable, transit system that we all need," Wiener said. - "These funds not only benefit all of our city's transit riders, but especially the patients, and the employees of the hospitals who often heavily rely on public transportation to access healthcare services," Supervisor Malia Cohen said after negotiating hospital provisions.

What was not decided today - The duplicated file contains new hospital-specific findings and fee formulas and a proposal to change grandfathering treatment for some nonresidential projects; those items will return to the Land Use and Transportation Committee for further public comment and a committee vote.

Context and next steps - The ordinance passed first reading and will return for final passage at a later meeting after the required referral and any committee work on the duplicated file. Officials said the TSF will be combined with other city transit funding measures to expand capacity and service.

Provenance: Transcript passages introducing Item 22 and the final vote on the ordinance are in the meeting record and cited below.