HomeMy WebLinkAbout2018-06-27 e-packet@6:00Wednesday, June 27, 2018
6:00 PM
City of South San Francisco
P.O. Box 711 (City Hall, 400 Grand Avenue)
South San Francisco, CA
Municipal Services Building, Council Chambers
33 Arroyo Drive, South San Francisco, CA
Special City Council
Special Meeting Agenda
June 27, 2018Special City Council Special Meeting Agenda
NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of
California, the City Council of the City of South San Francisco will hold a Special Meeting on Wednesday, June
27, 2018, at 6:00 p.m., in the City Council Chambers, Municipal Services Building, 33 Arroyo Drive, South
San Francisco, California.
Purpose of the meeting:
Call to Order.
Roll Call.
Agenda Review.
Public Comments - comments are limited to items on the Special Meeting Agenda.
ITEMS FOR CONSIDERATION
Study session on smart growth in South San Francisco. (Alex Greenwood, Economic
& Community Development Director)
1.
Adjournment.
Page 2 City of South San Francisco Printed on 8/31/2018
City of South San Francisco
Legislation Text
P.O. Box 711 (City Hall, 400
Grand Avenue)
South San Francisco, CA
File #:18-378 Agenda Date:6/27/2018
Version:1 Item #:1.
Study session on smart growth in South San Francisco.(Alex Greenwood,Economic &Community
Development Director)
RECOMMENDATION
Staff recommends that the City Council of South San Francisco accept this informational report and
provide feedback to staff.
BACKGROUND/DISCUSSION
After many years of economic stagnation,South San Francisco is now going through a cycle of particularly
large,high-profile construction activity.The new office,research and development (R&D),housing,and other
projects have generated badly needed jobs,housing units,and economic stimulus;but they have also raised
concerns about gentrification,traffic,and the preservation of South City’s small town character.This study
session provides a high-level overview of the development projects now underway or in planning.
Context of Current Development
Throughout much of 2018,there have been five or more construction cranes visible along South City’s skyline.
Many of these new construction projects seemed to have started abruptly;but in reality they resulted from
many years of careful planning.In some cases,it took more than 15 years of effort before a project could reach
the construction stage.The current round of projects were carefully planned to take advantage of public
transportation (e.g., BART, Caltrain, Ferry, etc.) and to serve the long-term strategic needs of the community.
Current Projects
South San Francisco currently has about 20 projects that are either currently being built or are fully approved
and expected to start construction shortly. These projects include:
·Office/R&D:Approximately 7.2 million square feet of new biotechnology projects,including Genesis
Towers, Oyster Point, Verily Life Sciences, Merck Pharmaceutical, The Cove, and Gateway of Pacific.
·Residential:Approximately 620 units under construction (e.g.,150 Airport,Cadence,Pinefino,Rotary
Senior Housing,WyndFair,etc.)and an additional 350 units that are approved and expected to start
construction within the next year (e.g., 200 Linden, Grand & Linden, 998 El Camino, etc.).
·Hotel Development:Approximately 360 new hotel rooms,including Hilton Home 2 Suites,Fairfield
Inn,and several smaller hotels.This is in addition to the recently completed AC Marriott and remodeled
La Quinta Inn & Suites.
·Other Projects:Including the Downtown SSF Caltrain Station,Genentech’s childcare center,and
Costco Business Center.
New Applications & Informal Discussions
In addition to the projects mentioned above,there are additional projects currently being proposed for the
future,including both formal applications now being reviewed,as well as informal concepts being discussed.
Future, potential projects include the following:
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·Residential:The residential project envisioned for the PUC Site,410 Noor (former Syufi cinema site),
200 Airport (Borba property), 40 Airport, and Phase 2 of Cadence, among others.
·Office/R&D:Genentech’s 10-Year Master Plan,a potential new R&D center at 201 Haskins,and other
concepts.
·Hotel Development:A 250-room upper upscale hotel being proposed for Oyster Point,as well as a 110-
room boutique hotel envisioned for Genesis Towers.
Economic Outlook
The current economic outlook for development reflects both positive trends and headwinds.On the positive
side,unemployment rates recently reached cyclical lows,while economic growth appears to be robust and
stable.In May 2018,the Bay Area Council Economic Institute released its latest regional economic assessment,
which illustrates the following issues:
·Low Unemployment Rates:Unemployment rate in the Bay Area has dropped to 2.5%compared to
4.2%statewide,and 3.9%nationwide.Low unemployment rates can pose a challenge to firms trying to
expand their workforces quickly.Widespread wage growth is not yet evident,so the workforce is facing
affordability of housing and quality-of-life challenges.
·Job Growth:The Bay Area posted a 2.3%job growth rate in the last year,just above the 2.1%state
average,and significantly above the 1.6%U.S.average.Such a growth creates demand for housing in
all income levels and additional office space, particularly around transit.
In the Bay Area,demand for housing and affordable housing continues to outstrip supply,driving rental rate
growth,low vacancy rates,and rapid absorption of new development projects.Institutional and non-
institutional investors both continue to favor new housing investments in supply-constrained,high-growth
markets,providing capital necessary for large and small projects.In select U.S.markets,particularly dense
communities with strong local economies like the Bay Area,the demand for office,retail and industrial
development also continues to be strong.
While benefiting from broad demand and liquid capital markets,developers also face a number of challenges.
The Federal Reserve has begun raising interest rates and plans to continue.Though rate changes to date have
not had significant impacts on the market,additional shifts could substantially raise the cost of borrowing for
developers and decrease the value of completed projects.Such changes increase the risk for any new
development, reducing the likelihood marginal projects will be undertaken or completed.
In addition,construction costs in many urban markets have reached all-time highs,inflating at a much faster
pace than rents and incomes.In many places,high construction costs have limited feasible real estate
development to projects targeting wealthy residents or commercial tenants able to pay high rents.Moreover,
recent trade tariffs targeting non-American steel are likely to increase construction costs further,exacerbating
the challenges of project feasibility, especially with respect to affordable housing.
Consequently,while development in many urban markets of the United States is currently benefiting from
positive demand for new commercial real estate,developers must contend with high costs and rising interest
rates, limiting the number of attractive and feasible new projects.
Impacts of New Development
While the above issues can independently point to a booming economy,combined,they pose a challenge for
developers and residents.The region continues to face the challenges of housing shortages,lack of affordability,
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developers and residents.The region continues to face the challenges of housing shortages,lack of affordability,
increased traffic congestion and mass transit delays.Households throughout the region,and in South San
Francisco, are experiencing these negative externalities of strong economic growth.
Two areas frequently asked about with regard to impact of new development are school conditions and water
and sewer infrastructure.Currently,the South San Francisco Unified School District (SSFUSD)is experiencing
declining student enrollment,losing 670 students over the last 10 years.New residential developments in South
San Francisco are expected to generate 469 new students in the next six years.Additionally,new residential
development pays impact fees to school districts.These fees amount to $3.48 per square foot or about $3,500
per unit.
With regard to sewer capacity,the City maintains its own Water Quality Control Plant (WQCP).The WQCP
currently treats an average daily sewage discharge of 7 to 7.5 million gallons.This is far below the Plant’s dry
weather flow capacity of 13 million gallons per day.There are two main drivers of sewage rate increases,which
are both tied to state and federal environmental regulations and requirements.The first driver of rate increases
are capital improvements and the second are the materials needed to treat the sewage before discharge.The
state and federal environmental regulations that drive these costs are independent of new construction and
would be required even if development slowed or halted.Additionally,new development pays sewer capacity
impact fees.For example,the fee for new residential development is roughly $3,600 per unit,assuming a 100-
unit, prototypical, multi-family residential building.
Water customers in South San Francisco receive service from California Water Service (Cal Water).Water for
South City customers is purchased from the San Francisco Public Utilities Commission and provided by five
groundwater wells.The South San Francisco system includes 144 miles of pipeline and a groundwater
treatment plant that was recently upgraded to provide additional treatment capability.New developments
trigger water supply assessments,which are required by the state.CalWater approaches these assessments
cautiously to make sure that there is sufficient water for larger new developments.Recent assessments have
demonstrated there is sufficient supply to serve new South San Francisco development.Additionally,
developers are required to install new water pipelines for their development.Rate increases are typically tied to
replacement and maintenance of older infrastructure replacement, as well as the cost of water.
CONCLUSION
With this report and presentation,staff seeks to provide Council with an overview of our local economy and
development pipeline.Staff welcomes Council’s feedback and direction with regard to future development in
South San Francisco.
Attachments:
1.Study Session Presentation
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City Council
June 20, 2018
1
Economic & Community Development Department
Context for current development cycle
Current projects
Projected new development applications
Outlook & Discussion
2
Regional growth
State requirements
(RHNA, dissolution of
redevelopment, etc.)
Culmination of many
years of careful
planning
3
General Plan
Downtown Plan
ECR/Chestnut Plan
TOD Planning
Measure W
4
6
Childcare B-40
15
24
Received Applications Preliminary Discussions
Cadence II
410 Noor
818 Linden
200 Airport (Borba Parcel)
40 Airport
7 So. Linden
Eastern Gateway (ProLogis)
26
Upcoming Projects:
PUC Site
Community Civic Campus
SummerHill Homes Project
28
Continued regional job growth
Increased construction costs
Interest rates
Regional slowdown of new housing
construction in 2020?
Impacts of new housing supply on rental
market in Redwood City, etc.
29
Transportation
Public Safety
Parks & Recreation
Other
30
Impact fees
Property Tax
revenues
Short & long-term
school capacity
31
Impact fees collected on new development
Water Quality Control Plant at 60% capacity
Rate increases driven by state and federal
regulations
32
South San Francisco
Economic & Community
Development
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