Agenda - Planning Commission - 07/09/2015

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20TH STREET QQ ; Twenty percent of the 196 loft units at Potrero Launch in, San Francisco are affordable to households making between 3o and 5o percent of the area median income. The higher affordability levels were in part the result of the rezoning change from industrial to mixed use, which, under the city's Eastern Neighborhoods Plan, calls for higher inclusionary requirements. The EN plan's main task was to identify the areas that could be changed from "gray" industrial areas to mixed use or residential, and those areas where industrial uses, mainly production, distribution, and repair uses (PDR) would remain. The plan provided additional benefits to land owners and developers, including height increases and removal of conditional use per- mits for residential uses in all areas—except for PDR preservation districts—and changes in land -use designations from industrial in some areas to residential uses. In order to learn more about how much these changes enhanced land values, the city hired a consultant to prepare a residual land value analysis to estimate the enhanced value from height increases and land -use changes. The analysis showed that residual land values and profitability were generally higher under proposed zonings and requirements than under current zoning. The question remained as to how, and how much of, this value could be recaptured for public benefits. The city had two choices: (1) to recap- ture land values through individual project "deals," ,utilizing development agreements or similar instruments or (2) to establish a priori the level of public benefit to be ex- pected, proportional to the benefit received, exercised through a system of fees on top of baseline impact fees. To reflect the relation- ship between higher densities and increased value for land and development, the city es- tablished a tiered approach to baseline and public benefit fees (Table 1). TABLE 1. FEE SCHEDULE FOR EASTERN NEIGHBORHOODS PLAN AREAS To fulfill the goal of increased affordable housing production in the ENs, the plan also requires more affordable housing than is re- quired under the city's inclusionary program. Santa Monica—A Flexible, Tiered Approach Santa Monica has a long-standing tradition of achieving community benefits through de- velopment agreements, including parks and park improvements, and child care centers with subsidies for low-income families. In 2010, after many years of extensive community engagement, the city adopted the Land Use and Circulation Element (LUCE). A fundamental tenet of the LUCE program was that future de- velopment should fund a range of measurable public benefits, from open spaces and parks to affordable housing. As part of the LUCE preparation, prelimi- nary economic studies analyzed the extent of "enhanced land value" resulting from higher densities. These analyses indicated that projects that would provide community benefits under LUCE were able to achieve financial feasibility. For individual projects the enhanced value is arrived at through economic analyses and pro formas that identify developers' profit. Consultants em- ployed by the developer prepare this analysis, which is then reviewed by consultants to the city in a give-and-take process referred to as a "peer review." The process ends when both consul- tants agree on the soundness of the analyses. LUCE established a tiered community benefits structure for projects requesting an increase in the base height of 32 feet. There are three tiers. Tier 1 establishes the base height and FAR. No community benefits in addition to the existing ones are required, and the approval process is ministerial. Three to seven extra feet are allowed if affordable housing is provided on-site or close to transit corridors. Tier Description Residential Commercial 1 Projects that remain at current height. Projects under increased housing requirements, affordable housing, or other "protected" develop- ment types. $8/GSF $16/GSF 2 Projects rezoned with minimal (1-2 story) increase in height. $12/GSF $zo/GSF 3 Projects rezoned with significant (3 or more story) increase in height; other designated districts. $16/GSF $24/GSF ZONINGPRACTICE 6.15 AMERICAN PLANNING ASSOCIATION I page 6