SAN FRANCISCO
PLANNING DEPARTMENT
Letter of Determination
February 15, 2013
1650 Mission St.
Suite 400
San Francisco,
CA 94103-2479
Reception:
415.558.6378
Steve Atkinson
McKenna Long & Aldridge LLP
121 Spear Street, Suite 200
San Francisco CA 94105
415.356.4600
Site Address:
Assessor’s Block/Lot:
Zoning District:
Staff Contact:
Fax:
415.558.6409
Planning
Information:
415.558.6377
325 Fremont Street
3747/012
Rincon Hill Downtown Residential Mixed Use
(RH DTR) District
Ben Fu, (415) 558-6613 or ben.fu@sfgov.org
Dear Mr. Atkinson:
This letter is in response to your request for a Letter of Determination to verify the effect of the Rincon
Hill Infrastructure Fee and the SoMa Stabilization Fund on the subject property in question. The
Planning Commission first approved 325 Fremont Street (the "Project") on June 08, 2000. On January 27,
2005, the Planning Commission approved the amended Conditional Use (CU) authorization to increase
the number of market rate dwelling units from 51 to 70 and the number of Below Market Rate (BMR)
units from five to eight. Per Planning Code Section 418, both the Rincon Hill Infrastructure Fee and the
SoMa Stabilization Fund were effective on August 19, 2005. The fee ordinance was approved
approximately five and a half years after the original project approval and approximately seven months
after the amended project.
A Letter of Determination issued on June 16, 2006, specified that if a revised or new project was
proposed, said project would then be subject to the impact fees as described per Planning Code Section
418. Building permits were issued for the original Project (Building Permit No. 9913300 for the new
construction was issued on June 23, 2004, and Building Permit No. 2005.07.20.8180 for the amended
project was issued on March 27, 2008). The current project as reviewed under Preliminary Project
Assessment (PPA) is a new project. The new project utilizes the height increase in the approved Rincon
Hill Plan from 200 to 250 feet to accommodate additional units (70 to 119 units), additional building
height (200 to 250 feet), new building faade design, and a larger overall building envelope (96,000 to
160,000 gross square feet). Therefore, it is my determination that the project as reviewed under PPA is a
different project than approved in 2000 and 2005 and the impact fees as mandated by Planning Code
Section 418 would apply.
APPEAL: If you believe this determination represents an error in interpretation of the Planning Code or
abuse in discretion by the Zoning Administrator, an appeal may be filed with the Board of Appeals
www.sfplanning.org
Steve Atkinson
McKenna Long & Aldridge LLP
121 Spear Street, Suite 200
San Francisco CA 94105
February 15, 2013
Letter of Determination
325 Fremont Street
within 15 days of the date of this letter. For information regarding the appeals process, please contact the
Board of Appeals located at 1650 Mission Street, Room 304, San Francisco, or call (415) 575-6880.
Sincerely,
Scott F. Sanchez
Zoning Administrator
cc:
Ben Fu, Planner
Property Owner
Neighborhood Groups
G \ DOCUMENTS\Ietters\letter_of_determination\Fremont_325_021113.doc
SAN FRANCISCO
PLANNING DEPARTMENT
McKenna Long
’S11 J\..lcEl.ricE[geLLP
Albany
Atlanta
Orange County
Rancho Santa Fe
Brussels
San Diego
121 Spear Street Suite 200
San Francisco, CA 94105
Tel: 415.356.4600
mckennalong.com
Denver
Los Angeles
New York
STEVE ATKINSON
415.356.4617
1
San Francisco
Washington, DC
EMAILADDRESS
,iA/(Z..atkinson@mckennaIong.com
Cc)oq/
November 27, 2012
1358 12.00014
Scott Sanchez
Zoning Administrator
Planning Department
1650 Mission Street, Suite 400
San Francisco, CA 94104
Re:
Request for Determination Regarding Application of Rincon Hill Impact Fees to
Proposed Modified Project at 325 Fremont (3 T?f 7/
0 /2>)
Dear Scott:
We represent Fremont 325 Development LLC ("Fremont 325"), which purchased the 325
Fremont site and entitlements in late 2011. In August 2012, Fremont 325 submitted a PPA
application for a possible revision of the project approved in 2005 ("Approved Project") to
increase the height to 250 feet and make certain other changes. On October 2, the Planning
Department issued its Preliminary Project Assessment ("PPA") which, among other things,
indicated that entire gross floor area of the modified 250 foot high project ("Modified Project")
would be subject to the Rincon Hill Infrastructure Impact Fee and the SOMA Stabilization Fee.
While Fremont 325 recognizes that the Modified Project would be benefitted by the Rincon Hill
Plan and zoning adopted in 2005 - most particularly by the increase of the site’s height limit
from 200 to 250 feet - and thus would expect to pay the Rincon Hill impact fees for the
additional levels that the increased height limit would permit. However, Fremont 325 does not
believe the Rincon Hill impact fees should apply to the entire Modified Project. Therefore, for
the legal and policy reasons set forth below, we are requesting a determination that the Rincon
Hill impact fees only apply to the additional height/area that the Rincon Hill Plan and zoning
would permit for the Modified Project as compared to the Approved Project.
Background
The original project for the 325 Fremont site was approved in June, 2000 as set forth in Planning
Commission Motion 15086. That original project included up to 54 residential units, and 54
parking spaces, in a building with a height of 200 feet ("Original Project’). Subsequently, the
then-owners sought approval of project modifications, which were approved on January 27, 2005
pursuant to Motion 16935. That Approved Project included up to 70 units and 5 1-70 parking
spaces, also in a 200 foot tall building.
802126432.1
Scott Sanchez
November 27, 2012
Page 2
Seven months after the Commission’s approval of the Approved Project, the City adopted the
Rincon Hill Plan and associated Code amendments, which changed the height limit for the 325
Fremont site to 250 feet, and made other changes to the Planning Code, including the adoption of
the Rincon Hill Infrastructure Fee and the SOMA Stabilization Fee. The Rincon Hill Plan and
zoning amendments do not specify how those impact fees would apply to either a project such as
the Approved Project that was approved prior to the Rincon Hill Plan or to any modification of
such an Approved Project.
In June 2006, the Zoning Administrator issued a determination that the Approved Project would
not be subject to the requirements of the Downtown Residential Community Improvements Fund
(now know as the Rincon Hill Infrastructure Fund) or the SOMA Stabilization Fund. The
determination went on to state "However, if the Project [Approved Project] were to apply for a
revised or new CU, the new application would then be subject to the impact fees as described in
Planning Code Section 318" (subsequently re-codified as Planning Code Section 418). No
authority or rationale was cited for applying these impact fees to any revision or modified project
on the 325 Fremont site, nor did this determination address exactly how these impact fees might
apply to a revision of the Approved Project. (We also note that the Modified Project in fact
would not require a CU under the Rincon Hill Plan, but instead would be reviewed under section
309.1)
In 2008, within the three year time limit, the site permit was issued for the Approved Project.
That site permit, and thus the entitlements granted to the Approved Project, remain in effect
today. Therefore, the owner of the 325 Fremont site has the right to proceed with construction of
the Approved Project (200 feet, 70 units, 51-70 parking spaces) without any further approval by
the Planning Commission. (In addition, the project sponsor would have the opportunity to make
certain modifications to that Approved Project without Planning Commission approval, so long
as the changes were determined by Planning staff to be substantially consistent with the
Approved Project, including some increase in the unit count.)
In late 2011, Fremont 325 purchased the 325 Fremont site, with the entitlements for the
Approved Project. Because of the height limit increase allowed for this site under the Rincon
Hill Plan/zoning, Fremont 325 wished to evaluate the feasibility of modifying the Approved
Project, including increasing the height to the 250 feet permitted under the 2005 Rincon Hill
Plan. A PPA application was submitted in early August 2012 for a project with up to 119 units
and 61 off street parking spaces, in a building with a height of 250 feet ("Modified Project").
The PPA was issued on October 2, 2012. Among the many comments in the PPA letter were
statements that the Modified Project would be subject to payment of the Rincon Hill
Infrastructure Fee and the SOMA Stabilization Fee, and that for the proposed 160,300 sf
structure, those fees would be $1,378,580.00 and $1,755,285.00 respectfully. These statements
indicated that the Planning staff believed that the impact fees would be calculated based on the
802126432.1
Scott Sanchez
November 27, 2012
Page 3
entire gross floor area of the Modified Project, not just the area by which the Modified Project
would exceed the Approved Project.
(The PPA letter’s use of 160,300 feet for gross floor area of the Modified Project is somewhat
incorrect in any event, as that 160,300 gsf area includes parking which is not subject to the
impact fees.)
As noted above, there is an Approved Project, 70 units within a 200 foot high envelope, that
Fremont 325 could construct if it wished, based on the active site permit. If the Approved
Project is constructed, benefits to the City would include 8 on site BMR units, but no Rincon Hill
impact fees.
If the Modified Project is approved, it will provide either 14 on site BMR units, or more likely
Fremont 325 would satisfy the BMR requirements by paying the fees for 20 units, which could
result in payment of approximately $5.3 million of fees into the City’s affordable housing fund.
Under the PPA letter, the project sponsor would also be subject to payment of Infrastructure and
SOMA Stabilization Fees totaling approximately $3.1 million. Because the Modified Project
would only be about 30,000 sf larger than the Approved Project (based on the area of the 5 levels
that would be added above the original 200 foot height limit), the effective fee rate for that
additional area would be in the range of $100 for each additional sf. Based on the impact fee
burden that would be imposed to achieve that added area, if the impact fees were payable on the
entire area of the Modified Project as the PPA letter suggests, Fremont 325 probably would
decide to build the Approved Project, rather than the Modified Project, unless market conditions
were so extraordinarily favorable enough to justify the additional $100/sf of impact fees for the
added building area.
Fremont 325 is requesting a determination that if the Modified Project is approved, then the
Rincon Hill infrastructure and SOMA impact fees would only be imposed on the additional area
that can be built in the Modified Project (as compared to the Approved Project) based on the
Rincon Hill zoning. Under this approach, the Modified Project would be viable, and the City
would secure many benefits from the Modified Project as compared to the Approved Project.
These benefits would include:
- Additional residential units (119 vs 70) in a location close to transit, jobs, and services
- Additional BMR contribution: approximately $5.3 million in affordable housing fees vs
8 on site units for the Approved Project
Approximately $625,000 of Rincon Hill impact fees, based on the added area of the
building
- Additional revenue from property tax, transfer taxes etc. due to the larger Modified
Project
802126432.1
Scott Sanchez
November 27, 2012
Page 4
- Zeno Place improvements (provided under the Rincon Hill Plan but not in the Approved
Project).
Therefore, the City would benefit substantially if you adopt the proposed determination that
allows the Modified Project to be financially viable. Thus, there are strong policy arguments for
adopting this requested determination.
(Note, we are not requesting a determination as to the precise amount of the impact fees, as that
will depend on the gross residential floor of the Modified Project that is finally approved by the
Commission.)
Moreover, there is nothing in this requested determination which is in any way inconsistent with
the 2005 Rincon Hill Plan, or the June 2006 determination. There is nothing in the 2005 Rincon
Hill Plan and zoning that specifies how the Rincon Hill impact fees would apply to revisions of
an Approved Project like 325 Fremont. The proposed determination also is not inconsistent with
the 2006 determination - that determination said that in the event of an application for a
modified project, such a modified project would be subject to the Rincon Hill impact fees. The
2006 determination did not address exactly how the impact fees would apply to a modified
project on the site, and did not address what portion of a modified project might be subject to the
fees. Under our proposed determination, the Modified Project would be subject to impact fees
imposed on the additional area that the Modified Project would build as a result of the increased
height limit of 250 feet provided by the 2005 Rincon Hill Plan and zoning. Thus, the Modified
Project would pay the impact fees proportionate to the benefit that the Modified Project would
receive based on the Rincon Hill Plan’s increased height limit for the site.
In response to the PPA letter, Fremont 325 has submitted an environmental application for the
Modified Project. The purpose of this environmental application is to keep the process moving
for the Modified Project, in the expectation that you will reach a determination that will make it
viable to proceed with the Modified Project. Based on your determination, Fremont 325 will be
able to decide whether it is worthwhile to pursue the Modified Project or proceed with the
Approved Project.
Please contact us if you would like any further information or to discuss this issues raised by this
request. We are enclosing a fee of $601 for this determination request.
Very truly yours,
tkinson
Enclosure: Application Fee for Determination
802126432.1