UPDATE: ParkMerced Redevelopment

BOMA San Francisco Members:

As we mentioned in our previous blog post, BOMA San Francisco supports the ParkMerced Redevelopment project.  There has been a measure introduced at the Board of Supervisors recently that, if enacted, would effectively stop the project from moving forward.  

The Prohibition of Demolition of Large Residential Buildings Ordinance is a measure that would (from the Controller's Office Economic Impact report on the ordinance):

• Prohibit the demolition of any residential property containing 50 or more units on the same lot, unless the building(s) required substantial rehabilitation.
• Under the Rent Ordinance, if an owner wishes to evict tenants to demolish a rent controlled building, he or she must pay relocation benefits, in amounts specified in the Ordinance.
• However, because rent control limits annual rent increases, long-term tenants of rent controlled units would likely face rent increase if they were forced to move. The mandated relocation benefits would not make up the full difference in most cases.
• Rental properties with greater than 50 units comprise approximately 18% of all rental units in the city, but only about 1% of all rental properties.

The economic impacts of the legislation (as listed in the report):

• Would protect long-term tenants in affected buildings from financial disadvantage in the event of an eviction for demolition.
• However, by prohibiting the demolition of larger residential buildings in most circumstances, the legislation would prevent the development of higher-density housing on those sites.
• It is unclear what the current development potential in such sites is, although the legislation would prevent the City from ever using re-zoning to effect redevelopment on such sites in the future.
• The legislation could therefore inhibit future housing development, which would contribute to higher housing prices in San Francisco over the long term.
• Higher housing prices harm the economy by lowering household disposable incomes, raising labor costs, and slowing job growth.

Please click here to download and review the report.  Please email Ken Cleaveland at kenc@boma.com and John Bozeman at johnb@boma.com with your comments.

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Original Post - May 25, 2011

Please take a moment to review BOMA San Francisco's support letter for the ParkMerced Redevelopment by clicking here.  We applaud the Board of Supervisors for approving the plans on the first reading for the redevelopment yesterday.  The final vote should take place in two weeks.

The Controller's Office economic impact report on the proposed ParkMerced Redevelopment can be reviewed by clicking here.

Main Conclusions

The ParkMerced Development Agreement and associated rezoning will permit the construction of approximately 5,700 new housing units in a redesigned ParkMerced neighborhood.

The anticipated redevelopment will have a positive citywide economic impact, because of:

1. Greater economic activity from construction and demolition.

2. Downward pressure on citywide housing prices resulting from expanded housing supply in the neighborhood.

3. Downward pressure on citywide commercial rents, by expanded retail and office space.

The combined impact of the construction activity, reduced housing prices, and reduced commercial rent will be to increase employment in San Francisco by nearly 2,000 jobs by 2032, and to increase the size of the City’s economy by $400 million. Most of this growth will not occur in the ParkMerced area.

In the early years of the project, the bulk of the jobs benefit will be created by the construction itself. Over time, however, the expansion of housing supply will be the most important impact to the city’s economy. The impact of the non-residential construction is comparatively small, in the context of the city as a whole.

The redevelopment of the neighborhood, and its economic impacts, will also expand the property, payroll, and sales tax revenues of the city over the long term.