San Francisco, CA – Today Mayor London N. Breed announced new legislation to waive development impact fees and inclusionary housing requirements for office to housing projects as part of her plan to revitalize Downtown.
This is part of a series of new policies and milestones that advance her “30 x 30” initiative, which sets a bold goal to bring at least 30,000 residents and students Downtown by 2030. Read more about it here.
Current economic conditions make conversion projects challenging to finance, and the City’s impact fees, and inclusionary housing requirements are the largest source of City-imposed costs on these projects, typically amounting to between $70,000 to $90,000 per unit in additional project development cost. The legislation, introduced along with Supervisor Matt Dorsey this week, will waive these fees for all commercial-to-residential conversion projects Downtown.
The new ordinance would build on a waiver of real estate transfer taxes for conversion projects that Mayor Breed placed on the ballot and was passed by voters in March.
“San Francisco is changing to a City of Yes where we remove all the barriers and obstructions that get in the way of what’s possible,” said Mayor London Breed. “By eliminating these fees we are saying yes to change, yes to housing, and yes to turning Downtown into a 24/7 neighborhood. With 30 x 30, we have a plan to make Downtown a more dynamic place that mixes our world-class innovative spirit with students learning alongside the growth of AI and residents enjoying a beautiful neighborhood filled with restaurants, shops, and small businesses.”
"Mayor Breed and I are working side-by-side to accomplish her ambitious 30 x 30 initiative, and I applaud her bold vision to transform downtown into a 24/7 neighborhood with vibrant businesses and more residents" said District 6 Supervisor Matt Dorsey. "Much of my district showcases the potential of a thriving downtown where people live, work, and play. This is a tremendous opportunity to make progress on our housing element goals, and I am thrilled at the opportunity to unlock more projects and welcome new neighbors into Downtown."
The ordinance would also indefinitely extend the Commercial-to-Residential Adaptive Reuse Program, a package of zoning waivers and permit streamlining for conversion projects that was established last year and currently is set to sunset in 2028. This week, the Department of Building Inspection took the latest step in advancing that program by publishing an Adaptive Reuse Information Sheet that clarifies Building and Fire Code requirements and alternative methods of compliance for conversion projects. This critical guidance enables these projects to proceed.
The Adaptive Reuse Program has already allowed for two conversion projects, the Warfield Building at 988 Market and the Humbolt Bank Building at 785 Market, to be approved quickly, and the ordinance announced today is another key step in helping projects like these moves forward to construction.
Last week, Governor Gavin Newsom also signed AB 2488 (Ting), a bill championed by Mayor Breed that will allow San Francisco to establish a special financing district to support commercial-to-residential conversion projects in Downtown, starting next year.
“This legislation — along with the Mayor’s March ballot measure and the recently-passed AB 2488 — would provide the financial tools needed to convert zombie office buildings into much-needed housing,” said Jesse Blout, Founding Partner of Strada Investment Group. “No other U.S. city is tackling this problem as aggressively as San Francisco and we have an opportunity to show the rest of the country how to transform struggling downtown office districts into vibrant, mixed-use communities.”
Making Progress on Transforming Downtown
Announced during the Mayor’s State of the City address as part of her Roadmap to San Francisco’s Future, the “30 x 30” initiative aims to transform Downtown into a diverse, mixed-use, 24/7 destination and neighborhood. The plan includes four key strategies:
- Convert underutilized office space into at least 5,000 new units of housing
- Build at least 5,000 units of housing in new residential developments
- Attract universities and colleges to bring 10,000 students and educators Downtown
- Transform Downtown’s public spaces to support residents and visitors
Allowing More Housing Downtown
The Mayor also highlighted progress on her latest effort to allow for more housing in new residential projects Downtown. Last week, the Planning Commission advanced an ordinance that the Mayor and Supervisor Dorsey introduced in July to increase capacity for residential development in the Central SoMa and Transbay Plan Areas by eliminating outdated zoning provisions that currently require a minimum amount of commercial space in mixed-use projects on large sites.
The zoning change has the potential to allow for thousands more units of housing Downtown over the coming years, boosting the City’s efforts to meet the goals of San Francisco’s 2023 Housing Element that calls for the creation of 82,000 new residential units citywide by 2031. This ordinance will build on the momentum of the Mayor’s Housing for All Plan to streamline housing approvals that has already significantly shortened approval times. Projects like the 670-unit development at 530 Howard was approved in just six months, for example, compared to years-long entitlement processes that were typical in prior years.
According to Planning Director Rich Hillis, “Last year, the City passed legislation to streamline the development process for adaptive reuse projects in Downtown San Francisco. This legislation takes those efforts a step further by waiving fees and development requirements. By removing key financial barriers, we are making it easier to bring housing to Downtown, accelerating the adaptive reuse of existing buildings and supporting the City’s broader housing and economic goals.”
Attracting Universities and Colleges to Locate or Grow Their Presence Downtown
A key component of Mayor Breed’s “30 x 30” vision is to attract universities and colleges to bring 10,000 students and educators Downtown. OEWD is devising economic development strategies to recruit higher education institutions with tailored incentives and meeting with local university partners to forge partnerships within the academic sector and with industry leaders. To strengthen San Francisco’s position as an ideal location for higher education, the Mayor announced that, in October, the Planning Department will launch priority permit processing for student housing development to streamline approvals for student residential projects.
“As the tech and AI capital of the world, San Francisco is a prime location for any university or college that wants to provide their students with unparalleled access to the trailblazing leaders and companies that are shaping our future,” said Sarah Dennis Phillips, Executive Director, OEWD. “Now, is a great time to establish a foothold and become part of San Francisco’s legacy of groundbreaking innovation and entrepreneurship, and the Office of Economic and Workforce Development is ready to help make it happen.”
Reimagining Embarcadero Plaza
The Mayor also announced that the City, through the Recreation and Parks Department (RPD), is negotiating with BXP, the owners of the adjacent Embarcadero Center, to establish a public-private partnership that will redevelop Embarcadero Plaza into a Downtown “living room” and hope to take an agreement to the Recreation and Park Commission and Board of Supervisors for approval this fall. The project will overhaul the currently underutilized public plaza to include amenities for residents and visitors such as spaces for entertainment and marketplaces and other park features to be determined through a public outreach process.
If passed by voters in November, Proposition B, the Healthy, Safe, and Vibrant San Francisco Bond, that Mayor Breed placed on the ballot would include $41 million in funding to improve and modernize public spaces in Downtown.
"Reimagining Embarcadero Plaza is a bold step toward redefining the public realm in the heart of our City,” said San Francisco Recreation and Park Department General Manager Phil Ginsburg. “This is about creating spaces where our residents and visitors can come together to enjoy healthy recreation, vibrant culture, and exciting performing arts. We are thrilled to partner with BXP and the community to bring this vision of a welcoming and dynamic Embarcadero Plaza to life.”
"We are excited about the potential partnership with SF Recreation and Parks, the Office of Economic and Workforce Development, and the community on the redevelopment of Embarcadero Plaza," said Rod Diehl, Executive Vice President, West Coast Regions, with BXP. "The Plaza is one of the City's most underutilized public assets, presenting an incredible opportunity to reactivate the public space as a central gateway to Downtown San Francisco. With its prime location on the waterfront and abundant access to multiple modes of public transportation, the Plaza has the potential to become a world-class destination for residents, office workers, and visitors alike to embrace San Francisco's iconic views and take part in the City's ongoing revitalization”
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