By Todd Swindell and Michael Petrelis
Thanks to information from John Updike who is head of the San Francisco Department of Real Estate, we've received a great lesson in potential development of the space above City property. We asked him to explain if City Hall is cataloging and evaluating such space over fire, health, police, etc, departmental property. Updike said:
"Some departments have opportunities to facilitate development above their lower level public use (such as a fire station in the financial district, for instance) through the sale and development of 'air rights', which usually require a redevelopment of the lower level public use in concert with the new vertical development."
"Other departments have an opportunity to offer something called Transferable Development Rights (TDR). TDR is available on city-owned historic properties that are under-utilized, and in such cases, if there is market demand, TDR can be sold to a developer of property of a small footprint but with allowances for great height under existing zoning (mostly in the Financial District or Civic Center Center areas)."
In January, Supervisors David Chiu and Scott Wiener introduced a resolution (http://tinyurl.com/BOS-TDR-reso), outlining the current state of TDRs, as part of a plan to sell the air rights over the Veterans Building at 401 Van Ness Avenue:
"On July 1, 2013, the City began renovation of the War Memorial Veterans Building, including seismic upgrades, accessibility, life safety and building code improvements, and replacement or improvements to building systems, at a current projected budget of $154.3 million. [...]
"Net proceeds from the sale of up to 1,100,000 TDRs would be used for the War Memorial renovation project, which is currently projected to have a $14.5 million funding shortfall. [...]
"In the mid-1980s, the City established the Transfer of Development Rights program to allow the sale of unused development potential from preservation properties. The goal was to generate income for the maintenance and preservation of historic buildings while allowing the developments to build higher. [...]
"Based on a recent study, the City has certified approximately 5.3 million square feet of TDR originating from 112 buildings downtown. [...]
"Mr. Updike also notes that the market conditions are very favorable now given the current real estate market. [...]
"Such additional TDRs are potentially available from City Hall, Asian Art Museum, Bill Graham Auditorium and 101 Grove Street (Public Health Building)."
The Chiu and Wiener resolution was unanimously passed by the board in late January (http://tinyurl.com/BOS-passes-TDR-reso).
What all this means is that we could see new developments built over City real estate in the coming years, the process for doing so is quite complex and involves many stakeholders, and the only current project slated for sale of air rights is the Veterans Building.
Still, we're nervous about City Hall leaders, who are too friendly in our opinion with the developers and tech firms looking for more construction projects, considering selling precious air rights over our iconic public buildings.
We need to keep our eyes on the TDRs and how they will impact San Francisco's landscape, along with the changes that will trickle down to ordinary citizens and potentially negatively impact low and moderate income renters.
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