February 2014

Development Sparks Debate on Funding for Infrastructure

Keith Burbank

Eastern neighborhoods residents are calling on the City to fill a $134 million to $274 million gap in needed public infrastructure in their communities. The deficit was recently estimated by the San Francisco Planning Department, and includes insufficient public transportation, open space and other amenities to serve the existing population in East South-of-Market, the Mission, Central Waterfront, Potrero Hill, Dogpatch and Showplace Square. And with an estimated citywide gap of $6.3 billion in needed transportation funds over the next 15 years, fast-emerging infrastructure requirements in the eastern neighborhoods are even larger .

“We are deeply concerned about the cumulative impact of thousands of new residents on our already overburdened parks, transit and other infrastructure,” said Alison Heath, a member of the advocacy group Grow Potrero Responsibly.

Heath made her comments at a San Francisco Board of Supervisors, Government Audit and Oversight Committee meeting held late last year. District 10 Supervisor Malia Cohen, committee chair, called the hearing to discuss the City’s strategy for funding the eastern neighborhoods’ infrastructure needs.

“The Eastern Neighborhoods Plans propose to provide a full array of public benefits to ensure the development of complete neighborhoods, including open space, improved public transit, transportation, streetscape improvements, community facilities, and affordable housing,” Heath said, quoting the Planning Department’s website. She asked the City to deliver on its promises before approving any additional developments to get underway.

At the hearing, Cohen seemed to agree with Heath’s concerns, asking City officials how they were going to keep their infrastructure promises. John Rahaim, the Planning Department’s director, asserted that with the fees generated by developments the City is “fairly confident” it can provide some of the amenities identified in the Eastern Neighborhoods Plans, particularly with respect to open space and public facilities. But he stressed that all the infrastructure requirements reflected in the Plan weren’t supposed to be paid for with impact fees. Instead, the City typically leverages impact fees to secure money from other sources, such as state and federal grants.

According to the planning director, transportation and streetscape improvements “have a very high price tag,” but the Mayor’s Transportation Task Force has some ideas that may address those needs. However, Monique Zmuda, deputy City Controller and Task Force co-chair, provided details primarily on initiatives pertaining to the City as a whole, rather than focusing on the eastern neighborhoods. Zmuda indicated that San Francisco will have to spend $10.1 billion between now and 2030 to fund needed improvements to the City’s transportation infrastructure. If fully funded, some of the money would be allocated to meet the needs of the eastern neighborhoods. Of the $10.1 billion, the City currently has only secured $3.7 billion, from such sources as local sales taxes, federal funds, and monies from the Metropolitan Transportation Commission.

Both Potrero Boosters representative John deCastro and Keith Goldstein, an Eastern Neighborhoods Citizens Advisory Committee (ENCAC) member, told hearing attendees that the City has no clear plan on how to fill the infrastructure funding gap. “Hope is not a strategy,” deCastro said. “And I heard that a lot this morning from a lot of the presenters from the City departments.” As an example, deCastro said that the City has identified only one percent of the funding for needed San Francisco Municipal Transportation Agency equipment. He added that the City keeps saying it’ll get federal grants, but officials haven’t identified which grants; a critique Cohen echoed during Zmuda’s presentation.

During public comment, District 10 Supervisor candidate Tony Kelly suggested using property tax revenue to fund the infrastructure gap. Kelly calculated that more property taxes will be generated than estimated by the Planning Department. According to his estimates, 8,858 housing units are currently in the Planning Department’s project pipeline for the eastern neighborhoods, while the City expected only 9,000 units to be built by 2040. Kelly said that the nearly 9,000 housing units will generate $44.6 million in property tax revenue annually, compared with a Planning Department estimate of $8 million. In 15 years, that difference will add up to more than $500 million in anticipated revenue for the City’s general fund.

“That’s a half a billion dollars that nobody planned to get. Why can’t we say to the City, ‘why can’t we split it?’” asked Kelly. Kelly predicted ‘no’ will be the City’s answer, but he said that’s when the neighborhoods need to stand up. “That’s our only way out,” he said.

Chris Block, chair of ENCAC, a committee that advises the City on the use of impact fees, also expressed concerns about the infrastructure deficit. His solution would steer the unanticipated impact fees generated through accelerated development to the neighborhoods’ infrastructure requirements. He said the communities need the additional infrastructure to be fully functional. The current situation is like baking a cake, he said. If a cook leaves out ingredients, “it will be a lousy cake. That’s the risk we run in the eastern neighborhoods.”

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