The Planning Commission agreed last week to waive almost $2 million in development fees for two mixed-use projects being constructed in San Francisco’s Eastern Neighborhoods.
In exchange, the developer, Martin Building Company, will use the money to construct the bricks and mortar of a childcare facility for roughly 50 children in one of the two projects at 2235 Third Street in the Dogpatch neighborhood near Mission Bay.
The unprecedented, 55-year agreement with the city stipulates that the developer must rent a portion of its property to a childcare provider for free. The provider has to operate the facility without profit. The money it saves on rent will reduce childcare fees at the facility.
The contract, called an “in kind agreement,” requires childcare providers to compete to occupy the facility. The process for choosing an operator for the facility is supposed to consider affordability, but only 10 percent of the provider’s slots have to go to low-income children.
Mardi Lucich, childcare administrator for the San Francisco Department of Children, Youth, and Their Families, spoke in support of the agreement at the Planning Commission meeting April 15, testifying that the city is in desperate need of more quality, affordable childcare.
While rent-free childcare facilities already exist in San Francisco – funded through other mechanisms – this particular agreement is unique because it essentially subsidizes childcare for any family, rather than only low-income families.
Furthermore, it’s unusual because the developer – not the city – came up with the idea to redistribute fees in this particular manner.
The city’s position is any increase in quality childcare is good. At a previous meeting on the project, Lucich said childcare for families that don’t qualify for low-income childcare face even longer waitlists than people who are low-income. Sixty-five percent of the San Francisco workforce has children under 6 years old, according to Lucich.
The University of California, San Francisco’s Mission Bay campus childcare is a few blocks from the Martin Building’s construction site. It’s full and has hundreds of kids on its waitlist for only 84 spots.
To qualify for any form of childcare subsidy, a family of four must earn less than about $4200 per month. However, subsidies are in limited supply and given according to need rather than by a waitlist, and the rates families pay are on a sliding scale.
Market-rate infant care in San Francisco can exceed $1,300 per month, and the average cost of toddler day care is around $1,000 per month, estimated Melanie Chew, a family service special at the Children’s Council of San Francisco.
Lucich said that after analyzing the project, her department found that San Francisco can’t build a similar-sized facility for less money than Martin Building.
“The need to expand the supply of child care could not be more pressing today for both our economic viability and the viability of tomorrow,” Lucich said at the Planning Commission meeting.
Opponents of the agreement worry that it might start a trend, undermining city planning that turns fees into public benefits according to set rules.
“I don’t like the idea of each individual developer trying to strike their own deal with the city,” said Keith Goldstein, a committee member of the Eastern Neighborhoods Citizens Advisory Committee, appointed for District 10.
Goldstein was torn about supporting the “in kind agreement” when the committee discussed the project in February. He abstained from voting then, but he acknowledged that it was entirely possible that Martin Building Company may be able to build a better childcare center than the city.
“I don’t think we have anything to guide us on what is a good in kind alternative and what’s a bad in kind alternative,” said Peter Cohen, a member of the Market and Octavia Citizens Advisory Committee, at the Planning Commission meeting last week. “Is there a limit? Should it be 100 percent of somebody’s fee? Should it be 50 percent?”
The city defined planning code in the Eastern Neighborhoods – Mission, Potrero, East South of Market, Showplace Square, and the Central Waterfront, including the Dogpatch – with the goals of generating more affordable housing and protecting blue-collar jobs.
One result of all that planning is developers have to pay fees based on project details such as what was on the land before, what the new building will be used for, and its proposed height.
Today the city takes in all those development fees and doles them out to parks, transportation, and childcare according to new city policies.
The fees – now destined to construct the facility – would have been levied on 2235 Third Street and another Martin mixed-use project at 178 Townsend. The Planning Commission waived $$997,000 in fees for 2235 Third Street and $917,952 for 178 Townsend. Martin Building will still have to pay about $300,000.