Petrelis Files

City Hall Workgroup Looking at Selling SF Municipal Air Rights

When I attended the October 23 fire commission meeting I learned that the City is evaluating selling air rights over municipal buildings, which was news to me. I received information from John Updike, the head of the Department of Real Estate, that more than a million square feet of air rights above the Veterans Building are in the process of being sold.

Thanks to a public records request, I've received transcripts from that meeting which provide greater transparency about where the City is in terms of potentially selling off air rights over public properties. If the Board of Supervisors would pressure the fire department, whose current budget is $86 million, to air the commission meetings on SF GovTV, it wouldn't take public records requests to fully learn all that is discussed at the meetings.

First, let me explain that fire commission member Ken Cleaveland is the vice president of the Building Owners and Managers Association of San Francisco and their primary purpose is "advancing the commercial real estate industry through advocacy, professional development and information exchange."

It's no surprise that Cleaveland is urging movement on selling air rights, after all, it would be a financial boon to his association and its members. At the July 10 commission meeting, he made an initial inquiry:

Commissioner Cleaveland asked if the Department has ever looked at the value of any air rights they may have above fire stations and suggested deputizing someone to look into this possibility. Chief Hayes-White thought that would be a good idea and explained air right proposals were looked at in 2008, specifically to Station 13 on Sansome Street.

(Click to enlarge. Page 1 of excerpted transcripts.)

Here are excerpts of the October 23 transcripts that were provided to me by the commission's secretary:

COMMISSIONER CLEVELAND: And know what the status is of all of our -- of all of our properties, if you will. And the other thing was had we made any progress on determining if we have any transferable developmental rights, air rights above any of our fire stations? Have we done anything to determine or quantify or monetize that value? We might be able to sell. It's a very hot real estate market in order to get more money for the department.

(Page 2.)

MARK CORSO, Chief Financial Officer for SFFD, bolding added: Specifically we looked at it when it was first brought up with the Commission a few months ago, I believe. That comes up every now and then, and we discussed it with the Department of Real Estate and we are not the only department to discuss it with them. So there is a workgroup city wide looking at that. They've hired some consultants with regard utilities pricing and inventory. I believe there is a demand for, or there's actually a large want amongst many city departments to sell it so there is an issue of over saturating the market with those real estate options. And so that's one of the things with regards to timing that the Department of Real Estate is looking at. So they are working on it in conjunction with capital planning, the city's capital planning department.

(Page 3.)

COMMISSIONER COVINGTON: Thank you, Mr. President. Every time my fellow Commissioner Cleveland talks about air rights I want to bring up the fact that I would like to have us to continue to investigate the ability to build workforce housing for firefighters, police officers, and teachers.

Since developers are running out of land to build on and they can't very well construct new properties in the San Francisco Bay, it makes sense that they would look to purchase air rights for future projects. At the same time, can you blame the City for considering how to sell those air rights and produce more revenue for municipal coffers?

Now is a good time for historic building preservationists, affordable housing advocates, progressive social and urban planners, to demand more transparency from the City's workgroup looking air rights.

Since there's a workgroup and consultants have been hired, selling air rights is far enough in development to demand greater public scrutiny.