S.F. cuts deal with downtown property owners on tax district

San Francisco city officials cut a deal Tuesday with downtown property owners who had threatened to sue over a proposed tax district that city officials are counting on to help pay for the $2.6 billion extension of Caltrain into the new Transbay Transit Center at First and Mission streets.

Under the agreement, the city will still collect up to $1.4 billion in taxes from property owners around the new transit center for the Caltrain, and possibly high-speed rail, connection. But the revenue would come in over 37 years instead of 30 after city officials agreed to extend the life of the tax district to make it more palatable for the property owners.

Accused the city

The property owners – including Boston Properties, which owns Embarcadero Center and is developing, along with another developer, the Salesforce Tower adjacent to the transit center – had accused the city of increasing the amount of property taxes they would have to pay as the city’s development costs for the center rose.

But city officials said the tax rates haven’t changed and that developers are simply the victims of a booming real estate market that has pushed up property values and therefore the taxes they owe. They also noted that the developers are benefiting from another part of the agreement, which will allow them to construct much taller buildings than otherwise allowed under the city’s Planning Code.

On Tuesday, the board delayed its vote creating the Transbay Transit Community Benefits District for two weeks to allow time for the terms of the tax district to be tweaked. Developers said they would drop their plans for a lawsuit in return for the deal.

Supervisor Jane Kim, whose district includes the transit district and who helped negotiate the agreement, said it is a “huge win” for the city.

“We were able to secure every single dollar the city asked to receive … and avoided potential litigation, which could have dragged on for years,” she said.

In a separate action, Kim introduced legislation Tuesday that would preserve blue-collar jobs in her district by temporarily barring property owners in parts of the South of Market neighborhood from converting buildings currently used for light industrial purposes into office space or other uses. The interim zoning moratorium, if passed by the board and signed by the mayor, would prohibit the conversion of buildings zoned for what’s known as PDR – production, distribution and repair – until the city completes a broader land use plan for the Central South of Market Area.

Kim’s district has been the epicenter of the city’s tech boom and the resulting need for more office space. Several recent projects – including the pending sale of the Flower Mart and its potential conversion into a tech-office campus – have brought attention to the potential loss of the city’s remaining industrial spaces and the blue-collar jobs they host.

A larger plan

The proposal, Kim said, is part of a broader legislative effort she will unveil this fall to discourage gentrification and encourage the preservation and construction of affordable housing in her district.

“SoMa is a rich and vibrant area with a mix of uses and, as you know, PDR is an important part of that mix,” Kim said. “The jobs they provide are important for our community, in particular low- and middle-income workers.”

Also Tuesday, the board approved a resolution by Supervisor London Breed denouncing the San Francisco 49ers for allowing defensive tackle Ray McDonald to continue playing after his Aug. 31 arrest for felony domestic violence.

Marisa Lagos is a San Francisco Chronicle staff writer. E-mail: mlagos@sfchronicle.com Twitter @mlagos

Article source: http://www.sfgate.com/bayarea/article/S-F-cuts-deal-with-downtown-property-owners-on-5744931.php

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