Will the crane once again prove to be San Francisco's 'official bird'? Photo by Mimi Chakarova

The holidays are over, 2020 is — blessedly — nearly over, and, based on what people are saying on social media, it’s time to lose some weight to fit into the clothes they’ve largely eschewed in favor of loungewear. 

Well, good luck with that. Perhaps the maniacal look on the face of the woman in last year’s Peleton commercial was due to her ability to peer into the future. Thankfully, there are other weight-loss options. But one method even less sound than spending $1,895 on a goddamn exercise bike (plus monthly membership costs! Jesus!) is to simply redefine how much a pound weighs. Problem solved! 

By now, you’ll not be surprised to learn that San Francisco officials are pushing for a version of this. Except in the far weightier field of capital planning. 

Capital planning is, in word, important. Among the litany of problems with the Transbay Transit Center — sold as the Grand Central Station of the West — is that, for years, the massively over-budget, behind-schedule, glorified bus stop with structural deficiencies carried artificially low estimates of construction cost inflation. This gave it the appearance of being on budget, when, in point of fact, it was very, very not on budget. 

So, it’s important to factor construction cost inflation into your budgeting when you’re making big plans for years and years down the road. The city now does this. It will have to find creative and new methods of going massively over-budget and under-delivering on its future projects. 

By now, you’ll again not be surprised to learn we’re working on that. 

The city’s yearly estimates for construction cost inflation, going back a recession or two

Every year, San Francisco crafts a construction-cost inflation estimate based on extensive research and analysis across both the public and private sector. You can read the PowerPoint here

This year’s estimate is a 3.5 percent inflation, based on a variety of Covid-19-related factors driving construction costs. This is a figure far lower than past years in good times — and also far higher than the artificially low rates at the Transbay Center that helped to ensure a disastrous budget shortfall.  

In this city, however, this figure — which nobody objects to when it comes to long-term planning or budgeting, and nobody has knocked methodologically — is also coupled to the litany of impact fees charged of private developers building large projects.  

In essence, the proposition being bandied about was to ignore the city’s extensive and methodologically derived estimates and simply set the rates at a politically palatable level. 

And that makes things political. Not merely limited to boring ol’ prudent planning, this estimate controls how many millions of dollars major developers pay to the city — or keep for themselves.  

And when politics is injected into ostensibly non-political activities reached by scientific or methodological consensus (another example might be wearing a mask during a pandemic), then odd things happen. 

That’s how it went down when the innocuously named Capital Planning Committee met earlier this month to vote on the innocuously named Annual Infrastructure Construction Cost Inflation Estimate. In most years, as you’d expect, this is an innocuous vote. 

This isn’t most years.

Again, nobody objected to using the 3.5 percent figure for planning and budgeting purposes. 

But three department heads — Port Director Elaine Forbes, Recreation and Park General Manager Phil Ginsburg, and Planning Department Director Rich Hillis — pushed back regarding the using that figure to increase the fees charged to developers. 

“Hypothetically, what if we had a zero percent or 1 percent assumed increase?” asked Ginsburg at one point. Hillis pointed to a huge drop in building applications in his department, and a commensurate loss of revenue. “Given the unprecedented nature of the drop and slowdown, what if we set the [inflation] rate  lower and in six months come back…” he asked. 

It’s hard to gauge whether the blank expressions in the now-ubiquitous Brady Bunch tableau of web meetings derived from Zoom fatigue or genuine shock. But this is shocking. In essence, the proposition being bandied about was to ignore the city’s extensive and methodologically derived estimates and simply set the rates at a politically palatable level. 

Acting City Administrator Ken Bukowski calmly replied to Hillis: “I guess the problem is that doesn’t match up with the information we have in our review.” 

Bukowski spoke in a monotone. This was a staid and bureaucratic process; nobody was waving their arms around or being powerbombed through a folding table. But Bukowski’s was a weighty statement: The data says what it says. Altering it or ignoring it so as to reach a more preferable outcome is a hell of an ask and a hell of a thing to do. 

There are lots of terms for this sort of thing. “Good government” is not one of them. 

A project rises in the Mission, November 2016.

With that said, Hillis’ concerns are not ill-founded. Applications to build are down. The approved projects in our pipeline are hardly guaranteed to move forward. And the burdensome nature of the San Francisco development process and the significant fees we extract from developers are a matter that should be discussed and revisited, especially in light of a coming economic reckoning. 

Attempting to address these concerns, however, by ignoring or even altering the city’s data to produce a desired result takes us into the realm of weight loss via changing the concept of weight. 

This is a questionable thing to do, and it’s further questionable to do it in a little-watched, obscure committee with minimal input from elected officials. 

The data says what it says. Altering it or ignoring it so as to reach a more preferable outcome is a hell of an ask and a hell of a thing to do. 

More subtly, Forbes suggested decoupling the inflation rate San Francisco uses to budget for the future from the rates it charges private developers for impact fees. 

That’s a rich and worthy matter for discussion — but also a potential legal and interdepartmental minefield. It also would appear to undermine the rationale for San Francisco charging impact fees in the first place. If developers are paying for affordable housing or parks or transit mitigations to offset the impacts of their developments, and construction costs are going up on those things — by an estimated 3.5 percent, the study says — the city is going to get less of all that if it fails to commensurately raise the fees. 

Construction at Mission and 22nd, September 2016. Photo by Lola M. Chavez

Fundamentally, however, it’s worth asking whether knocking off impact fees would lead to a boom or even a hefty increase in building applications. Development professionals tell me they don’t think it would.  

The reason for the slowdown, one tells me, is simple: “We’re in a global fucking pandemic.” 

The city struggles with the inflation rates on that one, too. But, absent that little situation being remedied, lowering fees is an afterthought. “The fee is not going to make the difference,” the longtime city player continues. “The fee will not be what stops the project.” 

Lowering the fees, however, could be a big deal for a developer who’s already started his or her project, and has advanced to the point of pulling site permits.

Your humble narrator last week filed a public records request with the Department of Building Inspection, requesting the list of every project over 50,000 square feet in which DBI is currently processing its site permit. 

The department promptly responded that “our search for records are address specific, however, our Management Information Systems Division can run a customized report at the cost of $212.” 

Wow! What a bargain! Only one-ninth the cost of a Peloton (not factoring in the monthly fees. Jesus!). 

To make things perfectly clear: I will be elected Pope before I hand over this money. I do expect to receive these records, however. This was, after all, a public records request. 

Because it would be interesting to see who might stand to benefit from a fee reduction. And it also might be interesting to see who their people have been talking to around the city. 

The Capital Planning Committee punted this matter into January. So, when it next meets in early 2021 — that’ll be interesting too. 

SUPPORT MISSION LOCAL

Joe Eskenazi

Joe was born in San Francisco, raised in the Bay Area, and attended U.C. Berkeley. He never left. “Your humble narrator” was a writer and columnist for SF Weekly from 2007 to 2015, and a senior...

Join the Conversation

36 Comments

  1. When did this begin? Seems like standard operating procedure in SF or anywhere, really. Is it just a bit more visible in this instance?

  2. Dear Joe. Thank you for shining light on this esoteric topic. Realistic cost forecasting is critically important to taxpayer and public accountability. Perhaps you would provide you insight into Van Ness Ave surface construction disfunction. An important artery languishes in a messy half completed state for years. I miss Willie Brown’s ability to drive good projects to completion- without getting indicted ala Chicago.

  3. The title caught my eye, and the article that followed was equally interesting and informative. Well done. 🙂

  4. Thanks for facts collected article. San Francisco needs more transparency and costs effective for the on going projects.

  5. Why does the planning department even want to increase applications? They have a months long backlog and cannot handle the applications they already have. If they are looking for a reason for their budget shortfall perhaps they should start there.

    1. They want applications because:
      THEY WANT THE MONEY!

      Actually doing the work and providing the results they exist to do is about #15 on their list of 12 things to do.

  6. The destruction of San Francisco.is heartbreaking to watch/read about is painful to say the least. The most civilized city on the west coast as millions knew it and loved gone.

      1. Grow up, Doug. This sort of knee-jerk response to every issue — blame the libs, blame the Trumpers — is useful to NO ONE. Keeping developers in the city by offering them deals isn’t a party issue, or even a partisan issue. It’s a capitalism & an urban planning issue: how to make The City an economically viable place for development, create housing so those not part of an elite tech industry caste (teachers, firefighters, grocery clerks) can afford to live here, find managers who can actually manage projects to completion.

    1. Sorry Jesse, but this is not that new, and certainly has nothing to do with “liberalism”. The old boondoggles of Christoper, two terms of Alioto, a sold-out Labor Council and San Francisco’s own Margaret Thatcher (Lady DiFi) have mostly defined the City for much of the post-WWII years. The City, in my opinion, is still the most civilized on the West Coast (or East and everywhere between), but that’s relative and has to do with the fog, the hills, and an weird bunch of people. Thanks Joe. Great piece.

  7. There needs to be qualification standards for elected officials, standards relevant to their authority. Most Corporations do it this way. The price for allowing ignorant people to reign at the top of the food chain is too high.

  8. A well-illustrated example of what happens constantly with urbanization and redevelopment. Lived in Oakland for 20 years and am now in Portland, OR metro where it’s all exactly the same story. Everything is bent completely out of shape to cater to developers’ bottom line while burdening existing residents with development fees and degraded quality of life. Just one simple example? Reduced on-site parking requirements result in streets becoming parked car swamps (just like in Bay Area). The first question was, “How do we make it cost less for developers to build (ie. maximize their profit)?” The new question is, “What’s great about streets becoming giant parking lots?” Answer is: streets parked end to end with cars calms traffic. We are living in such extra twisted times when we bend over backwards to give developers a minimum guaranteed 18% profit (that’s the goal here in Milwaukie on the southeast border of Portland) and reframe the questions for political palatability. Everyone else loses as the developers take all.

  9. There is no place in NYC called Grand Central Station. It is, and has always been, Grand Central Terminal. Ask any
    native NYer, that is a big difference.

  10. Planning around the fact that we “are in a global fucking pandemic” is so short sighted. The vaccine might take 3, 6, 9, 12 (let’s hope not) months to roll out. Pretty much anything in the pipeline isn’t going to break ground until after that, at which point the pandemic will be a repressed memory for many.

    If the city makes long term decisions on what’s a massive but ultimately a short-term disruption in the grand scheme of history…

  11. How cheap is the writer? He’s asking the City for a report outside its normal business, and refuses to pay? Somehow in arguing for something “extensive and methodologically derived,” he forgets that politics can absolutely be part of the methodology, and he forgets the taxpayers still pay the City to do work for them and he’s asking them for a report in addition to their regular work.

    1. Greg — 

      Disclosing public records is part of what the city does. If a journalist — or any member of the general public — asks for the materials, then it’s not “outside its normal business.”

      Your belief that it’s good and normal to subject a member of the public to a $212 fee to find out what permits are being processed for a limited number of major projects is both an indicator of your level of familiarity with this city’s government and the value of your commentary.

      Best,

      JE

  12. What is this shitty snarky bullshit writing? What are we in the 80s? Is reagan writing from beyond the grave? Why in gods name are we expected to accept the basic premise that government sucks at doing things and is by default wasteful? Should we just privatize everything and magically things will get better. What a waste of time this article is.

    1. Dylan — 

      Thanks for wasting my time with that incoherent and inane comment. Guess we’re even.

      JE

  13. “Hillis pointed to a huge drop in building applications in his department, and a commensurate loss of revenue. ”

    The ethical toilet of having revenue that funds the Planning Department dependent upon Planning approving projects to keep revenue up.

  14. Joe you’re the ‘bomb’, you get to the nitty gritty. Even, google put your story at the top of their newsfeed! Colin

  15. Developers had Planning pull this nonsense in 2008, during the finance meltdown, when the Market Octavia and Eastern Neighborhoods plans were nearing completion. Fees were set low because of the crash, and as the economy roared back, they were never raised to claw back housing inflation gains. The word they used was “practicable.” The YOY ROI for higher rise condo buildings in 2007 was 27%. That’s what lenders demanded.

    Real estate development is one of those areas of policy, finance, military and policing, that are systemically kept immune to the threarts democratic politics.

    1. All areas you cite improve the common good at the expense of a concentrated group of stakeholders. Without some level of government shielding those interest groups would hurt the broader population. Comments at Wednesday afternoon community meetings are not indicative of what most residents think about an issue

      1. Given the failure of community plans, outcomes look nothing like what was planned, it is evident that the costs for this development give away were outsourced to existing SF residents in the form of less livability, poorer quality of life, while the profits from those plans were privatized.

        This accounting is evident to all but the market addled YIMBY. It has nothing to do with who shows up at meetings and everything to do with a sectoral accounting fleecing.

  16. This cap planning road will go back to the SFPUC, Harlan, Kathy etc. Think SSIP. Just last week, commissioners were told explicitly, at the public meeting, by Kathy How & her staff that they were sending $200k of ratepayer funds to Dwayne Jones under SSIP. (SFPUC Finance will rubber stamp of course.) After Commissioner Maxwell told Commissioner Paulson “f—- you” for asking about the $200K – each commissioner STILL VOTED YES. Harrington. Moran. Paulson. Maxwell.

    What is the point of the SFPUC Commission, exactly?

  17. I always have my eyes out for any info like this regardig absurd or shady things going on in the city regarding it’s future. Born and raised and currently living San Francisco. Really appreciate this kind of writing with concrete details and solid points that were made. Thanks Joe.

  18. Joe, you need to figure out who to bribe for the information you need.
    Seriously, this is typical of the leadership at SF Silly Hall. In addition to spelling out the incompetence at Silly Hall, you should explain the need for the voters to elect people who know how to manage and solve problems. SF media never mentions that. As long as the media only talks about the problem without meeting the lack of management experience of the radicle left-winge know nothing officials, nothing will change.

  19. Joe, I’m just about to drop $700 for a computerized diagrams of house plans for a 1600 sqr ft single family home. The money transfer didn’t go thru using zelle so I’m up at 3am wondering if I’m making the right decision to build at all. My house burned down in the Lightening fire in August 2020 and my homeowners insurance is housing me in Napa and the FEMA cleanup just took place allowing me to imagine living there again. My decision to build in Winters CA was a spontaneous response when offered the idea of finding a foreclosure and NOT rebuilding in a FIRE zone. As an average citizen elder hoping to be a beacon of stability for my adult child who reasonably questions the financial risks I am faced with, your article was exactly what I needed to hear. So many breaks in the chain of project vision to completion are patched with bandaids and cannot stem the bleeding. In my case should I continue my quest for professional drawings at a cost of $700 by sending a real check? Im in California, the designer is in Arizona and the developer in Oregon. I’ve contacted the engineer who will provide blueprints for $5,200 codified for the permitting people who have the authority to deny me a permit should they choose. Oh yeah and the engineer explained I need to contract a local builder to actually assemble my new home on the ground. There are so many dots to connect for my insurance loss rebuild. Of course I could engage a developer who will take 19% of my insurance claim so the dots are taken care off. Is the price worth it?

  20. Can you believe that government makes scense? A writer trying to make scence? Both trying to anticipate what the people want or need and both trying to act like Burgerking when it comes to handing out information. No perfect science in my book. Harlan Kelly and wife were too trusting to a seedy permit expeditor who also corrupted director of D P W Mohamed. Mohamed was given too much power by the city”s charter, and abused it. The City only changes when something is too much to pay for then does something about it but a writer never stops complaining about a special ordered report then believes there should be no charge. This is from a city worker

  21. $212 for a subset of the the report? Fine, have them provide you the report for every property, I’ll be happy to sort it for you.

    They think they can stymie the public through obfuscation and obstructionism, as if this is an issue to just one pesky reporter.

    What morons.

Leave a comment

Your email address will not be published. Required fields are marked *