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John Petro

San Francisco’s Big Plan: The Eastern Neighborhoods

San Francisco is in the midst of rezoning a huge swath of the eastern portion of the city, a whopping 2,200 acres of land. That’s the size of two Central Parks plus one Prospect Park. That’s seven percent of the City’s 47 square miles of land. That’s a pretty big deal – enormous, some might say.

The San Francisco Planning Department recently passed the Eastern Neighborhoods Plan which will guide land use and new development in four neighborhoods – The Mission, Showplace Square/Portero Hill, East SoMa, and the Central Waterfront – for the next 20 years. The Plan will now head to the City’s Board of Supervisors for approval in what is anticipated to be an all-out battle over conflicting interests and priorities for the area and its future.

In order for the Plan to be successful it must achieve a delicate balance between competing priorities. First, the Plan must balance the city’s dire need for housing with the need to preserve jobs.

A majority of the City’s industrial land is located in the Eastern Neighborhoods. These areas are zoned for light-industrial uses, or what is known as Production, Distribution, and Repair (PDR) services. PDR land covers a wide range of uses, from auto-repair, printing, storage, shipping, and transportation to other “hybrid” uses such as furniture manufacturing, food production and catering, floral design, performance spaces for the arts, audio/visual production, and digital media.

PDR jobs are a vital component to the economy of San Francisco. They provide goods and services to other sectors of the economy – such as warehousing, courier and delivery services, and printing – and provide goods and services to residents. Additionally, PDR businesses tend to provide stable, well-paying jobs for the 50 percent of San Franciscans that do not have a college education.

But the City is losing PDR jobs. In 2004 there were about 45,000 PDR jobs in San Francisco, down 21 percent from 1999. This is due in part to the decline of large-scale manufacturing, not just in San Francisco but for the US as a whole. Mostly the loss of PDR jobs is due to competition for land. Residential uses and commercial office space, which generate higher rents, have been pushing out PDR business. For instance, since the 1990’s the SoMa neighborhood has transformed from industrial uses to live-work lofts and dot-com offices. The Planning Department identified a need to preserve land for PDR uses as the demand for light-industrial land remains high; vacancy rates for industrially-zoned land are less than one percent in the city.

Land for PDR businesses isn’t the only thing in demand in San Francisco. There is also a need for housing – lots of it. In 2004 the Planning Department estimated that San Francisco would have to add about 2,800 units a year through 2006 to keep up with demand. According to the City’s Housing Inventory, the City only added an average of 1,752 units annually between 2004 and 2006, leaving a 3,144 unit deficit over the three-year period. The pace of housing construction appears to be increasing, however, with an addition of 2,567 units in 2007.

By rezoning industrial land into residential land, the Eastern Neighborhoods Plan is expected to add between 7,500 and 10,000 new housing units in the next 20 years. The amount of PDR land will be cut in half by the Plan. The remaining PDR land will be protected and no other uses will be allowed. With this amount of land available to PDR uses, it is estimated that 44,000 PDR jobs will be located in the Eastern Neighborhoods in 2030.

Besides increasing the amount of land available for residential development, the Plan will also increase the amount of housing stock in these neighborhoods by relaxing some density controls and increasing the building height limit in some areas.

The Plan also creates mixed-use zones that will support a variety of uses. These include neighborhood commercial zones, which call for a mix of residences and retail. Other zones will include PDR, residential, retail, and commercial office space. The goal is to create vibrant, varied mixed-use neighborhoods.

In addition to land-use questions, the Plan must also address the city’s affordable housing crisis.

As acute as the housing shortage is in San Francisco, it is even more severe for low-income and moderate-income individuals. In 2007, median income for a family of four in San Francisco was $86,000. Unfortunately, a family of four would need to earn twice that amount in order to afford an appropriately-sized home in San Francisco. Using the guideline that a family should spend no more than 30 percent of their income on housing, only 10 percent of households in the city can afford a median-priced home.

The Plan provides opportunities for market-rate and affordable housing. New residential development within the Eastern Neighborhoods will be required to rent or sell at least 15 percent of the new units at affordable levels. For residential developments located on formally industrial land, the requirement is 18 percent. Additionally, developers are given the option of increasing building heights if they include higher percentages of affordable units, an option known as density bonuses.

The City estimates that under these rules approximately 28 percent of the new units will be built at affordable rates. However, there are those that argue that this percentage is not enough. The Board of Supervisors passed a non-binding resolution in January of 2007 stating that 64 percent of the units in new housing developments in the Eastern Neighborhoods should be affordably priced.

The Planning Department says that 64 percent affordability is not achievable. Ken Rich, planner in charge of the new zoning for the City’s Planning Department, said the city has conducted an “exhaustive financial analysis” of affordability requirements and that to require more low- and moderately-priced units would cause potential developers to walk away from new housing projects. Affordable housing units sell or rent for less than the amount required to cover costs. In order to be induced to build on a parcel, a developer needs to be able to guarantee a certain return on their investment. And without demonstrating that a development will be profitable, a developer would be unable to secure financing for the project. No financing, no development, no new housing units.

That’s why the Plan offers density bonuses – to offset the costs of including affordable units. The Plan also removes parking minimums in certain areas and replaces them with parking maximums. A parking space adds $20,000 to $30,000 to the cost of building a unit of housing and can cost upwards of $50,000 in some parts of the city. This cost is passed along to the renter or homeowner. Removing parking minimums has other benefits, such as reducing automobile independence and encouraging the use of mass transit.

The Plan defines affordable housing as units that are priced to be affordable to those earning between 30 percent and 120 percent of the city average. The wide range in income affordability balances the need to provide low-income housing while stemming the exodus of middle-class families from San Francisco.

Finally, the Plan will address the need for public benefits and community improvements.

The Plan requires developers to pay community improvement fees of $8 a square foot for residential and $6 a square foot for all other uses. These fees will be used to pay for community benefits such as a new park in every neighborhood, streetscape improvements, new schools, transit improvements such as trolley line extensions, child care facilities, and library services.

The Planning Department estimates that $300 million will be needed for community improvements, and only half of that amount will be paid by the community improvement fees. To secure the rest of the needed funds, the city will look at funding mechanisms such as Tax-Increment Financing.

The Plan also includes some very commendable urban design elements, such as reducing the size of large parcels by adding new mid-block passages, thereby increasing the walkability of the neighborhoods. Streetscape design is also included in the plan.

“The Area Plans propose an open space network of ‘Green Connector’ streets, with wider sidewalks, places to sit and enjoy, significant landscaping and gracious street trees… In addition to Green Connector streets, smaller streets and alleys are proposed to be converted into ‘living streets,’ where through-traffic is calmed and paving and landscaping are designed to reflect what is envisioned as the pedestrian primacy of these streets.”

Overall, the Plan in its current form does a tremendous job of balancing the varying needs of San Francisco. Hopefully the Plan will not be substantially changed during the Board of Supervisors approval process.

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Posted at 8:00 AM, Aug 15, 2008 in Cities | Employment | Housing | Urban Affairs
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