Board adopts updated jobs-housing linkage fee, phasing increases and new affordability commitments

Supervisor Matt Haney introduced an ordinance updating San Francisco’s jobs-housing linkage fee and urged colleagues to approve the amended measure that phases in higher fees for new developments and directs revenue to affordable and supportive housing.

The ordinance, passed as amended on Oct. 29, 2019, phases in fee increases so projects already in the pipeline pay a lower initial rate, raises laboratory and larger-office rates, and requires a new nexus and feasibility study every five years. "This legislation will lead, estimated, dollars 400,000,000 of increased investment in affordable housing, over the next 8 years alone," Supervisor Matt Haney said while presenting the proposal.

The fee update aims to better align job growth with housing production, particularly for low- and moderate-income workers, after a city analysis found housing supply lagged job growth. Haney told the board a Nexus study showed that many jobs created by large office projects will be filled by workers who cannot afford housing in the city and that the fee increase is intended to require developments to contribute more to affordable housing.

Key provisions and amendments adopted at the meeting include a phased schedule in which pipeline projects initially pay $52.20 per square foot and later move to $69.60; an updated laboratory rate that begins at $31.43 and phases to $38.37; reduced rates for smaller projects under 75,000 square feet; and a requirement that the city conduct a nexus and feasibility study every five years to reassess rates and market impacts. The sponsor said the package passed the Planning Commission unanimously and cleared the Board’s land use committee after negotiations with labor, business and community groups.

Supervisor Preston criticized the tone of questioning by the Small Business Commission at an earlier hearing and said city appointees should not mistreat legislative staff. Other supervisors praised Haney and staff, including Courtney McDonald, for negotiating the measure with stakeholders. Supervisor Aaron Peskin and other colleagues emphasized the need for revenue to fund new affordable housing as office-driven job growth continues.

Haney moved the ordinance and amendments; the motion was seconded and adopted. The board took a roll-call vote on the final ordinance as amended; Supervisors Yee, Brown, Feuer, Haney, Mandelman, Mar, Peskin, Ronan, Safaie, Stefani and Walton voted yes, and the ordinance passed unanimously.

The sponsor’s office and supporters said the updated fee is expected to generate roughly $400 million for affordable housing over eight years and would be paired with other funding (including a planned housing bond) to increase the city’s capacity to build permanent supportive housing and preserve existing affordable units. Opponents (including some small-business representatives at earlier hearings) argued for additional mitigations for smaller projects; the board adopted adjustments for smaller-scale developments.

Implementation steps include city departments updating fee schedules and the planning department initiating the five-year nexus and feasibility review called for in the ordinance. The ordinance passed on Oct. 29 and will follow the city’s normal enactment and implementation processes.