Development Impact Fees

San Francisco must expand its infrastructure to manage the impacts of a growing population as more residents utilize transportation networks, streets, parks, utilities, and other public assets. A large proportion of this new growth is concentrated in a few specific areas, which include Eastern Neighborhoods, Market & Octavia, Visitacion Valley, Balboa Park, Rincon Hill, Transit Center, and most recently approved, Central SoMa. The City established development impact fees, which are paid by developers, to fund the services that are required by new residents of these areas. The City’s Planning Department has created specific Area Plans to focus new capital investments in those neighborhoods.

Development impact fees for the Plan Areas are programmed by the City’s Interagency Plan Implementation Committee (IPIC), which is chaired by the Planning Department. Each year, IPIC develops an expenditure plan for projects to be funded by impact fees with input from each Plan Area’s respective Citizen Advisory Committee. Funding for the expenditure plan is appropriated through the capital budget process each year. While impact fees are collected by the Planning Department, funds are transferred to the departments implementing those projects, such as Public Works, Recreation and Parks, or SFMTA.

The City estimates it will raise approximately $558.2 million in Plan Area impact fees over the next 10 years. Table 5.4 shows that estimate by program area. Not adopted at the time of publication but raised in the Economic Recovery Task Force was the possibility of reviving the impact fee deferral program, which San Francisco offered during the last recession.

Table 5.4

Whenever they are received, the revenues projected from fees, though significant, are insufficient to cover all of the growth-related needs of the Plan Areas. The City will continue to seek opportunities to leverage these impact fees and identify complementary funding.

There are also impact development fees that apply to building projects citywide. Of these, the most relevant for capital is the Transportation Sustainability Fee (TSF), which replaced the Transit Impact Development Fee (TIDF) in 2015. The TSF Expenditure Program agreed to at that time assigned 63% of TSF revenue to transit capital maintenance, 30% to Muni transit service improvements, 3% to complete streets (bicycle and pedestrian infrastructure in this context), 2% to regional transit improvements, and 2% to program administration. The Planning Department prepares annual TSF revenue projections, and the Mayor's Office determines the budget and projects to be funded to regional transit providers, including BART. Approximately $380 million is projected in TSF revenue from FY2022-30, plus about $20 million more in that timeframe from grandfathered TIDF projects.