late. i think 12:00 a.m. is a reasonable compromise. would also remove certain types of commercial uses including auto services, mortuaries and drive-up facilities. i'm asking for an additional requirement of a cu for liquor stores, massage facilities anding a can you agriculture. i want to clarify never permissible under ncs adult businesses are not permitted under ncs and will not be permitted under this sud. there is a lot of misinformation out there. and i absolutely cannot stand misinformation. adult businesses are not permitted under ncs. and they will not be permitted under this sud. i believe that these retail amendments will help to ensure a healthier merchant corridor while addressing concerns raised by neighbors over

the past several months. i really want to thank all those for coming out for my colleagues on this committee for listening and asking some very pointed questions, especially about the trees and parking. and with that, i would like to move the amendments, i believe you have a copy first on the sud. do you all three have copies of those amendments? >> we do, supervisor. >> thank you. well, i can't move since i'm not a member of the committee. but i would ask somebody on this committee would be so kind to do so. >> so that would be as to the sud item number 4, uses that are not permitted that include auto service, drive-up facility mortuary notwithstanding any other provisions, the uses that would require conditional use liquor stores, massage neighborhood agriculture. so those are the changes

in item number 4 item number 5. can we take a moment of time? >> we can take a moment of time. >> i make a motion to propose those amendments as read into the record. the only one you didn't read was the time, from 6:00 a.m. to 12:00 a.m. >> that is correct. that is on page 4 line 10. so supervisor safai has made a motion. and supervisor haney if you have no objection, we will take that amendment. and then we will ask the city attorney to draft the aforementioned amendment as it relates to the reduction of the walnut street senior housing development at .5 on parking. so we will take that yet undrafted amendment and send item number 4 to the full board as one and a half times amended without recommendation upon the advice of counsel to the full board. and supervisor stefani.

>> on november 4 -- november 5 i'm sorry. >> november 5 is the date. that would be election day. and then on item number 5 supervisor stefani has proposed on page 2 at line 21, 857 parking spaces that will come down. so that is subject to amendment including ten car share spaces. and by the way, i would like to work with supervisor stefani, which i can do because she is not a member of this committee. and the project sponsor and oewd to see if we can further bring that amount of parking down between now and when this gets to the full board on 5 november. on page 3 line 25, if approved by the city's public utilities commission,

page 5, subsection b starts at line 8 also additional language. >> you missed one on page 3. if approved by the city's pc. >> i did that one. i did page 2, i did page 3. >> okay, got it. >> page 5 language with regard to the puc as it relates to the auxiliary water supply system benefit fee would be added. and again any changes that need to be drafted as it relates to reducing the parking that we spoke about. and i reserve my right to further reduce the parking when it gets to the full board. a motion made by supervisor safai. and we will take those without objection. and we will send that item to the full board with recommendation. -- without recommendation, excuse me. and item 3, we can send to the

full board with recommendation. is that correct, counselor? >> all the items should go to the full board without recommendation pending appeal. >> understood. we will send all three items two amended to the full board without recommendation without objection. thank you everybody, from the community for coming. thank you supervisor stefani. thank you to oewd and the planning department and the planning commission and the project sponsor. stay tuned. >> madame clerk, while the chambers are clearing could you please read item 6 and 7 together. i would like to welcome supervisor gordon mar to our chambers. >> item number 6 the planning code to modify

the housing linkage fee by allowing indexing of the fee requiring payment of the fee the time of first certificate of occupancy. monetary limits for the small site funds under the housing program and appropriate findings. item number 7 a hearing on the budget and analyst job housing report that evaluates the current and planned housing stock in the san francisco relative to the projected jobs at different income levels. determines existing and planned housing is adequate and affordable and provides information on the contribution of the city's jobs housing linkage program. >> thank you. item number 6 is introduced by supervisor haney. item number 7 saharaing by supervisor mar. supervisor haney, the floor is yours. >> i believe we are going to start

with the report. yep. so supervisor march 1st. >>supervisor mar is first.>> supervisor mar the floor is yours. >> thank you so much, chair peskin. i really appreciate this opportunity for a housing on the report that i requested from the budget and legislative analyst office and the opportunity to hold this hearing in conjunction with consideration of supervisor haney's legislation to update the job housing linkage fee. it's a much needed framework that analyzes housing production by affordability relative to job growth by wages. job housing fit is a new analytical tool that will help us do a better job of managing growth in our city, addressing the housing affordability crisis and reducing traffic gridlock. commissioners have been asking for this data for years. most recently when they were considering the essential

plan. and staff had not been able to provide this sort of job housing fit data and housing by affordability. as you will hear from analyst fred in his presentation, the report provides important new insights into our housing crisis including causes, impacts and needed solutions. the report highlights how our city added more than 200,000 jobs over the past decade including a relatively equal number of high wage and low wageworkers. the biggest takeaway from the report is we are exceeding housing projection for high wageworkers but we are failing miserably at providing housing affordable for low to moderate income workforce and their families. we know the city made sweeping economic policy and land use decisions specifically granting tax breaks to grow the tech sector and up zoning large areas without

adequately planning for housing and other impacts based on the kinds of jobs created. supervisor haney's housing workers ordnance today addresses this imbalance. moving forward, we need job housing fit data every time the planning commission and board of supervisors consider a major development project or area plan. what jobs are being created? for whom? and who will bear the cost? how will these workers be housed? if developers do not pay the full cost of impact, how will the city and its taxpayers come up with the difference? it's time we face the data when making economic policy and land use decisions. and it's time to confront the housing and other impacts on low and moderate wageworkers and families. i'm proud to work together with supervisor haney on a legislative package to house our workers and

make economic policies that serve the needs of our workers and our city. i think we are going to, for item number 6, we are going to start with a presentation from fred from the budget and legislative analyst office. >> mr. brusseau. >> good afternoon chair peskin, supervisor haney and supervisor mar. i'm fred from the budget and legislative analysts office. today i'm going to summarize our report prepared for supervisor mar on the jobs and housing fit. i'll start with a quick overview. san francisco between 2010 and 2018. and you can see here, on this chart the increase

in the population of 847 new 84 -- 84,000 jobs. there's a big drop off between jobs and housing units in that time period. but in terms of the housing units that have been added and the households there's been a significant change between 2010 and 2017. and that's shown on this slide. and what we see is a decrease in low income households, moderate income households and an increase in high-income households. the distribution is shown in number form in the chart but then also graphically in the bar chart with an increase in high-income households from 41 percent of the total to 55 percent of the total

between 2010 and 2017. and the decrease in low income between those same years of 44 percent to 31 percent. and the details are shown in the chart above on the numbers of households in each group. new jobs by wage bracket are presented on the next slide. and this is just for the three-year period 2016 to 2018. in part that's because we could get data for those years. but another significant point about those years is that we were well beyond any recovery from the recession by 2016. so to the extent that new jobs were created after the recession in 2008, they could have been filled by existing residents. but by 2016, we were beyond that and very

comfortable presenting this as a net increase in the san francisco area. and by san francisco area, that means city and county of san francisco and san mateo county, they are grouped by the employment development department of california, which collects this information. so this is more than what we would find in san francisco. but we believe it's reflective that the two counties have a lot in common in terms of their job composition. and later we break out just the san francisco portion of it. but here what's interesting, i think supervisor mar mentioned, the increase in both high wage and low wage jobs. and the employment development department breaks those out by occupation and wages and what we've seen over this period is the increase that i think many of us are familiar with, which is growth in certainly

the technology industry but also other kinds of businesses and finance and industries that contain a lot of high-income jobs, high-wage jobs. but at the same time, a significant growth almost equal in low-wage jobs, which include taxi drivers and personal assistants, in-home supportive service workers and so forth. in terms of job growth, and alluded to that earlier here it shows the increase in jobs the 210,000 between 2010 and 2018 and the increase in housing units during that time, which was 24,671. and just for comparison the ratio, then, of jobs to housing in 2010 was 1.5. and in 2018,

1.9. so for every job -- or excuse me, for every housing unit, that is the ratio. and then when we look at what was built and what was added to the housing stock between 2010 and 2018 it increases significantly to 8.5. so there aren't as many housing units being produced relative to jobs, as has been the case in the past. and it was the baseline when we looked at 2010 and 2018. the breakdown of the housing production during that time period is shown on the bottom of the chart with the low-income housing that is for households with incomes under 80 percent of the area median income, 2,782 housing units added. and then the market rate

making up the difference getting us up to the 24,671. so affordable, which is the housing in the low and moderate categories was 25 percent of what was produced. the next slide shows household income needed to rent or buy. the changes i've just described and the small amount of housing production relative to jobs and population growth during the period of 2010 to 2018 is reflected here in changes in median rent and the household income needed to rent for a four-person household between those years where the median would be -- was 133,000 in 2010, increased to 180,000 in 2019. and the third line there shows the third row the

percentage of median income for a four-person household being 133 percent needed in 2010 and up to 146 percent in 2019. for purchasing a home, median sale price of $703,000 in 2010 and $1.3 million in 2019. so again it's the same phenomenon just the numbers are larger, jumping from a household income needed of $135,000 for a median price for a four-person home up to $243,000 in 2019. so we made attempts to estimate the current deficit in housing production relative to need. and we looked at this from two different ways. this is starting with what's called the regional housing needs allocation, that's developed by the state of california. and they prepare

goals for the entire state and allocate them to cities throughout the state. so what you see in the first column, housing goals 2015 to 2022 is what the state had allocated to the city and county of san francisco as goals. those aren't necessarily based on jobs. they considered jobs, but they also consider in and out migration birthrates and so forth and other factors affecting the city. and the goals there as you can see for the period from 2015 to 22, were 28,869 housing units and some would be low income, 5,460 moderate. we then looked at actual production as of 2018. that's not the full window for this set of goals. but you can see that the numbers there about 25 percent of the goal had been achieved for low

income with 4,270 units. only just under 5 percent for moderate income with 816 units produced. and about 70.4 percent with 12,071 units produced at the high income, which is the same as market rate i guess at this point. and then the next shows the percentage of production target achieved. so we are at 96 percent for the high income or market rate housing. and then the deficit is shown on the right as of 2018, with a total of 11,247 deficit for low and moderate income housing. and on the next slide, it's a -- we approach the question in a different way. this is our own estimate going back to the employment development department statistics that are

collected for that period, 2016 to 2018. what we did is then peel out the number of jobs that would be for san francisco only to remove the san mateo county portion for their database. and here you see the growth and high wage jobs, moderate jobs, low wage jobs just for san francisco our estimate, which amounts to 61,728 jobs just in that three-year period and of those moderate and low. and using the ratio the jobs to housing ratio from 2018, we came up with 14,498 units. what has been produced during that period is 2,913 units leaving a deficit

of 11,585 as of 2018. and that number is a coincidence, but it's similar to what was the results on the last slide using the regional housing goals for san francisco. so we have a similar deficit number as of 2018. so what is the city doing to address this? we identified and have some information in the report about the jobs housing linkage fee. that's tied to commercial development only, non-residential development for developments over 25,000 gross square feet. and next the analysis was completed this year by an outside consultant, prepared for the office of economic and workforce development. and it identified the various needs shown in the chart here. and it doesn't recommend fees but it comes up with a framework so that the number of employees

per development can be identified. and by that, then the need for housing can be deduced and linkage fees can be established. again not establishing analysis but by the board of supervisors. so the nexus analysis for office which has been the biggest area of non-residential development in the last eight years is 238 employees per square foot in a typical office building. and then the analysis further divides that out with 33 percent of those identified as needing affordable housing and the rest able to use market-rate housing. and the factors then are determined in the nexus analysis, affordable unit demand factors. fees can be applied

to them to determine how much can be charged per square foot for each development. and these are the currencies in place shown here for each type of development that fees apply. so getting to the period, 2018 to 2019, this is the amount that was collected for use by the mayor's office of housing and community development from jobs housing linkage fee. there's about $89 million for the period of which $30.2 million has been expended to support development of 527 housing units. so it's a big gap between the numbers we identified above like the 11,000 approximately units that were needed as of the end of '18 and then the additional

-- well we'll talk about the future need in a minute. but mohcd pointed out that they have another $63 million committed for 543 affordable housing units into the future. and that's from a combination of fund balance from fees that have been collected and then what they are anticipating in the near future. so that gets us over 1,000 units. still a far cry from the need. however we know more than that has been built during that time period. there's about units. that tells us the fees aren't segregated so development is necessarily rolled out in the order in which the fees come in or to build the number of housing units that would be required for the types of development that have occurred and for which the fees were charged. so collecting the $89 million,

it didn't all get expended during that time period. i think part of the explanation for that is the funding from the non-residential side the jobs housing linkage fee and then funds from housing or other development impact fees are all combined and used for development projects. and the mohcd has defined sites and put the financing together for the entire project working with developers. so it doesn't all get spent in the same time frame or in unison with the collection pattern and may not result in the number of units being built that the nexus analysis would tell us should be built for the square footage of development that has occurred during that period. it may happen eventually in the future but we don't know what the timeline for that will be. so then looking at the future, we have taken projected jobs by wage level and then

identified housing needed for san francisco only for 2016 through 2026. so this is built off projections prepared by the california employment development department. and just to summarize what is shown on this table there's a need for 34,664 housing units based on the jobs projected and about 20,000 of those are the low and moderate wage categories as you can see there. and then this table is showing what's in the pipeline. so we looked at that housing need and then that pipeline information from the planning department about how many projects are underway and how many units that translates to in the various stages of entitlement. so that's broken out here. this is as of the second quarter of 2018, because that was when

we could get data for which the various income levels are broken out. and you can see that most of the entitlements when you go to the furthest right column are in the high-income housing bracket. although there are some that are to be determined. there could be some changes in this as time goes on. but clearly the bulk of them are not in the low and moderate income brackets for what is entitled as of 2018. and then we took this finally and compared the housing needed that we identified in the previous steps that entitled as of 2018 and came up with a difference. so what this tells us for the future going through the 2026 is there's a need for 15,629 low-income units, 2,810 moderate income. and there's a surplus placed on this approach of 4,605 high-income units

and net deficit of 13,834. a footnote on that, this was 2018 data. and we have seen summary data for 2019 but not the breakout by income level. but it appears progress has been made, more housing has been entitled. so we believe that difference is probably coming down for somewhere in the 9,000 unit bracket as of 2019. what hasn't been updated from 2016 is what the job projections are. so all these pieces keep moving and changing. we tried to give you a snapshot. and i think it reflects the magnitude of the issue. but as soon as a new development project is proposed and entitled, the numbers change. as soon as a new business opens in san francisco, the numbers can change again. so it's a moving target. but by looking at all these years and different sources there's a clear conclusion of the deficit in production of low

and moderate income housing. we do have two policy options in the report. one is to request the planning department to prepare annual projections of jobs by income segment a new affordable housing completed and in the pipeline so we get a snapshot from a single source. and planning of course has the best pipeline data and can analyze that the best. and they also get jobs data from various sources, including the census bureau. but also we have a second option too for the board of supervisors to request the mohcd track new housing as i was describing earlier a lot of it hadn't been used in the 2010 to 2018 period. it may be used in the future but we don't know what the timeline is or when the projects will be completed to fulfill the need. so we think that kind of information

coming to the board on a annual basis would be helpful and honey toring and managing the production -- monitoring and managing the production of housing in san francisco. that is my report. i'm happy to respond to any questions or comments. >> thank you so much for all of your work on this report. i just -- yeah, i think the data and the statistics speak for themselves. i just wanted to add that i am following up on your recommended policy recommendation number 1 in working on legislation that would require the planning department to conduct a jobs housing fit analysis on a analysis and also do it for large development projects and area plans. so thank you. i also feel like this analysis and the report that has been released is really good, makes a good

case, a strong case for supervisor haney's proposed updating of the jobs housing linkage fee. so i'm glad we are able to hold the hearing on these two items together. >> thank you. >> all right r all right. thank you supervisor mar for your work on this and your partnership and for commissioning this report. and thank you, for the report. i think what it makes absolutely clear is we have consistently failed to produce enough affordable housing as a city. and that this has very clear concrete impacts on who is able to live here and who is displaced from our city. i think one of the most striking data points in there which i don't want people to miss, which is that during that seven-year period, the number of low-income households in san francisco decreased by 23 percent at the same time as the high-income households increased by

44 percent. that's a massive change in the demographics of our city. and it's clearly connected to who is able to afford to live here. i also want to underscore that we've talked a lot about numbers. and there are a lot of numbers in this report and even in some of the things i'm going to talk about with the housing for workers legislation. but we don't want to miss the fact that these aren't numbers, these are human beings, these are people, these are families. this is children who are being squeezed by this housing market and impacted directly by our failure here as a city to build adequate housing for them. these are workers janitors people working cafeterias, office workers, who are being forced to live further and further away from their jobs and in some cases forced to leave their jobs altogether because of a lack of housing. these are folks in the district that i represent who

are in sros, who are waiting for years and years for permanent housing. these are seniors who are at risk of being homeless. or the over 8,000 people living on our streets who we are failing as we saw in that report not building adequate housing particularly at the lower level. we do have with this legislation, an opportunity to take an important step towards addressing this failure and beginning to write this mismatch between the number of jobs that are being created and the housing particularly affordable housing that's needed to meet that demand. we are also helping here to meet a need that i've heard again and again from the mayor's office of housing one of the meetings i had early on was to go through the pipeline of housing project affordable housing projects in my district. one

of the most frustrating things was there were a number of projects where we already have the land the city owns the land, and i was told that we can't even begin to build on these sites for in some cases six seven eight years from now because we don't have the funding, because we don't yet have enough money available for the mayor's office of housing in order to start these projects. so with that, this legislation which i'm very proud to have introduced and cosponsored, with supervisors mar ronen, peskin brown walton fewer and i'm hopeful that we'll have the support of this committee and of the entire board. as you saw in that report, since 2010, the city's population has grown by ten percent. our job base has grown by 38 percent. by our housing production

has only grown by 6 percent. for every new office development, a full one-third of those new employees are making under $100,000 a year. and for every tech sector job created five additional low and middle income jobs are created. yet what we know is that we are not building housing for most of those folks. we have the highest jobs to housing ratio in the bay area. over that time period, we were only building one unit of housing for over 8.5 jobs. and only 20 percent were affordable. this is a dangerous trend we cannot afford to continue. the situation on our streets and the outmigration of low income residents is the worst it has been in a long time. and we are forcing people out of our city at alarming rates. we must work toward a higher cityerhousing to jobs ratio and update

the fee to spur affordable housing development is one important step. i want to thank the planning commission which actually endorsed this legislation unanimously. i want to thank the over 50 people who showed up at the rally we had this afternoon. many of whom had to leave, some of whom thank you for still being here. the community counsel of housing organizations, affordable housing developers, jobs of justice the many workers who have been involved and the most impacted communities who have been advocating for this change for a long time, including some were who are here and have been a close partner on this legislation. i also want to thank cortney from my office, the community counsel housing organizations. i'm not going to say too much more because i'm sure we are going to get into this a bit. but i want to add some specifics on what we are doing here. and i do have some amendments which i

can put forward after the public comment. this is a fee that is meant to be updated periodically but hardly matched inflation since the 1990s. new office developments are paying per square foot a rate set a decade ago from outdated housing and construction costs. community members have been asking for this update to the fee for years. and it has been anticipated for years. after nearly 25 years this summer they released an updated jobs housing nexus that analyzed the impact of new office development on housing demand. the total demand per square foot of office by looking at the density of employees in a new office space new worker incomes and what it costs to build affordable housing. it quantifies the needs of new low and

middle-income workers. it shows for new office development to meet the demands it creates on affordable housing and if we were to fully mitigate the impacts of new office development on affordable housing for new low and middle-income workers we would set this at $193..33. these new findings are a wake-up call for us to increase our investment in affordable housing and spur production of housing units. this legislation will change the fee amounts for office to $69 and to $36. it also aligns the indexing of the fee with other fees. it changes in some significant ways how the fees are allocated to specify the ten percent of funds with acquisition and preservation of affordable housing. 30 percent of new funds to new construction to permanent support of housing which will create the first dedicated stream

of funding for that use. and to specify that 60 percent is contributed to the city wide affordable housing fund. this is consistent with area plan impact fees set at 36 percent of the maximum allowable fee on average. it takes into consideration the recommendations from the study and from the economic feasibility study that the city prepared. as i mentioned, the study justifies charging much higher fee rates than those in our proposal. this new fee would generate $500 million for the next ten years which would produce close to 2,000 units for the next decade. these should be union jobs and the construction will have a strong positive impact on our economy. we have been in -- we introduced in five months ago. we've been in conversation closely with community organizations and impacted

developers and oewd for some time. and we believe we are at a point where we have a compromise set of amendments which i'll put forward in a minute that inga allow us to bring in a significant amount of funds for affordable housing while also allowing office development to continue. but to do it in a way that is much more well aligned to our needs when it comes to affordable housing. this is as far as i can tell, smart planning effective planning, common sense planning. when we do it the other way and we don't actually look at the affordable housing that needs to be built, we have what we saw in this jobs report that was just released, which is a huge strain on particularly middle and low income residents a massive displacement of those residents and one of the most expensive housing markets in the country, and one that is getting worse every

day. so this is an important step. it's not the only thing we need to do. but it's one that will address this massive crisis that we are facing as a city in a smart way, in a way that, to be honest, is overdue. so with that, i don't think he did his -- oh. >> good afternoon supervisors. ted from the controller's office. we released an economic report on this item. if you don't have a copy i will pass it out for you now.

just one clarification i misspoke on my cosponsors here. they are supervisors yee fewer, ronen walton, peskin and moore. supervisor brown is not a cosponsor. >> on behalf of. >> for the jobs housing linkage fee, i have haney, fewer ronen mar, peskin, walton and yee. i was going to ask you about brown. >> yeah, i just stated those are the correct ones. supervisor brown is not a cosponsor. >> okay. >> so from the office of the economic analysts the floor is yours. >> thank you chair peskin. as i said today our office issued an economic impact

report on this item. i'm not going to walk you through the full report but i will discuss some of the highlights and i'm happy to answer your questions. of course our report is charged with assessing the economic impact of legislation. in this case the fee increase which is approximately $40 per square foot on office we determined might have a significant impact on office development in the city in the future as well as raising new funds for affordable housing. as you know, there's a couple of studies that have already been done on the impact of this item, the nexus study and feasibility study. the feasibility study found a $10 square foot fee might be viable in the future. but office development at present is not feasible even without any fee increase. for us, that's not really sufficiently specific to be able to get to the economic impact. so we worked with an outside consulting group that we've

worked with before, the blue sky consulting group. and we asked them to work with the city's his coric office permits to see if we could build a model that tests how sensitive office development is in the in the city to changes in things like construction cost fees and rent. and essentially the model works by looking at every parcel in the city that could potentially develop office. nonpublic parcels are excluded. and looks back over the period of 2001 to 2018 and looks at where office did and did not develop and makes a function of that as a function of parcel specific factors, what's the zoning, what's the capacity on the site as well as market variables at the moment including the price in the construction costs. we provided the full details on the model in the appendix to our report. i'll say here the model did find

significant impact of construction costs and negative impact of construction costs on office development. so when development costs increase we do see a holding everything else constant a decline in office development in the city. so that is the finding that we used to simulate the impact of the proposed increase of the fee on office development. the legislation does also increase the fee on laboratory development. we don't have enough data to do a model for laboratory. and we believe most of the impact will be on offices in any event. so with that out of the way to focus on the economic impact factors, we are really looking at a combination of positive and negative factors. as i mentioned the higher fees will likery make some office development infeasible. that has an impact on the number of office workers in the city. that has negative multiplier effects. there's also less construction if less office is being developed. on the positive side, the fee increase should increase and we

project does increase funding for affordable housing per the uses specified in the legislation that will go to construction of permenantly affordable housing. that is a positive impact on theon the city's economy. so just walking through how we use the model we basically determined that given prevailing construction cost of $40 square foot fee is a 6 percent increase in nonland development costs. the model projects that would lead to a .2 percent decline in overall office space in the city. that's equivalent in a reduction between 125,000 to 140,000 square feet per year on average. the range is because there's a range of construction costs out there. >> you mean a decline in potential future development, not -- when you say decline. >> no one is going to be taking existing office off the market because there's a fee on new office, bewe will have less

office in the future. so the decline is relative to the expected growth. >> so you are saying that 98.8 percent of what is expected would be built. is that what you just said? 2 percent decline. >> no, i would say after a year after this goes into effect, we would have 99.8 percent of the total office space in the city we already have. and that's largely because we are not adding a lot of new office space. but that is still true. in each year, we are looking at a decline. the 125,000 to 140,000 which is kind of the direct impact on this, that's about .2 percent of the office space in the city. >> say that again ted. >> after a year of this one year of this going into place we will have in the city, 99.8 percent of the office that we would have had if this legislation does not pass. in other words there's a .2 percent haircut in the city's overall office space as

a result of this, if this legislation were to pass. >> i'm a liberal studies major. so let's be clear. we currently have however many million. 70 million square feet of office. presumably none of that is going away. >> right. >> but we would have had 70.5 million next year. and we are projecting instead you'll have maybe 70.35. and each year going forward you'll have 125,000 to 140,000 square feet less than you otherwise would have. because on the margin, that share of the new projects would be rendered infeasible by the cost increase. >> got it. i am old and i am slow. but what you are saying is we are going to have new office but less of it. >> that's right. >> thank you. >> the other thing that would make it more complex and i'm not getting into it is this

is an average number. of course, at the moment, we are ten years into a very strong economic cycle. there's a great deal of office demand. we are not projecting the business cycle. so this is a model that looked at over a long period of time, we are intending this to be a long term projection. we are not saying every year you should never expect more than 125,000 to 140,000. but that is a useful number for us to get to the impacts that are directly meaningful for our economic model. the nexus study uses an employment density of 238 square feet. that seems to be reasonable to us. so the loss of the office space again the slower growth of the office space translates into slower growth of office jobs of 520 to 585 jobs based on that employment density. and we also determined that loss of office space

leads to a decline in office spending of about $71 million a year. >> it's not a loss of existing jobs. it's a slower amount of future jobs. >> yeah. it's just a decline relative to what we would have in the future, we would expect to have in the future, assuming continued historic trends in office demand or development for office. >> yeah. i would just say it's not a loss, it's less. and there's a big difference between losing and getting less. >> yeah. >> meant i had 17 million and now i'm going to have 15 million. >> that's right. >> one of the reasons we try not to say it that way is because in recession it could be going down for reasons that have nothing to do with this legislation. so we're never saying it's relative to the way things are at that moment. we know it's going up or down. we are always talking about relative

to the world in which you don't do the legislation. >> i totally get it. i read read the study that said don't rely on for this or that and don't use it for anything but here's the number. i get it. >> okay. as i alluded to earlier this also has a positive impact on jobs housing linkage fee revenue. we project a growth of 8 to 9 million in annual revenue as a result of that. this estimate is sensitive to a baseline projection of office base from new construction of 430,000 square feet per year. that is not wildly off what the city has done over the past 17 or 18 years. but it is subject to uncertainty. what we are more confident about is the difference between the baseline and what would happen with the proposed legislation. so we would project a growth of 12 million a year. under the proposed legislation that would rise

to 20 to 21 million a year. so we reconcile the direct and indirect economic impact of the factors that we study using the remi model. given the different construction costs that are out there, we developed a high and a low impact scenario that are quite close to each other. the low scenario just adds in the loss of the office jobs at the low end of 520. $61 million in construction spending and $9 million in fee revenue and the high impact scenario is 585 jobs, $82 million loss in construction spending and $8 million in fee revenue spent on construction. the net effect of this is a decline in the city's jobs by a decline relative so to what we would otherwise have of about 1500 jobs. this represents .1 percent to .2 percent of all jobs in the city. and we did this over a 20-year average a long-term average.

the impact on the city's gdp is projected to be negative to the tune of $280 in today's dollars. the job losses are spread across the economy but about 60 percent of the job losses are in the office-using industries that are directly impacted by the fees. this both accounts for direct job losses, the ones in the offices that wouldn't get built as a result of the fee and others that are lost because they depend on those employees and those companies for customers. about another 25 percent of the losses are in construction and the remainder are spread in other industries. the model also projected a slight decline in housing prices as a result of the legislation. it's due more to a proportional loss of income and population and not because housing is broadly more affordable. of course the major benefit of the legislation is the

expanded affordable housing programs. so both the direct beneficiaries of those and also others who are not direct beneficiaries but compete for housing low-income folks who compete for housing in the private market will also benefit likely because of reduced competition at the low end of the private market. >> are you saying if you don't exacerbate the jobs housing imbalance it actually creates an economic environment that's more or slightly more affordable? is that what you just said? >> if you don't exacerbate by reducing the number of jobs. >> you just said, and by the way, none of us have had the benefit of reading this report. i've read everything in the file but i have not read this. the second-to-last statement you just made was there was a slight positive effect on housing price by virtue of a lack

of office development. >> yes. we are projecting housing prices would be lower than otherwise. but the caveat is they are only lower because there are fewer people employed fewer people living in the city, and the people in the citying having less income with which to build up housing prices. so while prices would be lower the denominator of affordability which is how much income have goes down as well and that's why we make the statement that housing would not become broadly more affordable even though housing prices are lower if that makes sense. >> so my question to you was -- and i heard what you said, i'm not sure if i understand it but what i positives think is by building more

office the actual cost of housing went down. and your answer to that is yeah but everybody is going to have less money. >> that's basically right. the growth of jobs in the city, for example so look at the other way does lead to higher housing prices. it aalso leads to higher incomes. if you look at the trends, for example this decade in the city in terms of housing prices they have grown extremely rapidly. if you look at the trends in income, they have also grown rapidly. if you look at the trends in housing affordability for the low-income people they don't really improve but for sort of everybody at 100 percent of ami and above, housing is quite a bit more affordable than it was several years ago. >> so basically what you are saying is that by building more office, we are exacerbating income inequality in san francisco because the rich are getting richer, housing prices are going up, they remain un, the

poor people are getting screwed. >> the data we have on income inequality doesn't show a dramatic increase. i understand the logic of your statement. i'm not there yet because there's other data that suggests other things. that for example the census tells us what the income inequality is in san francisco every year it's been going down most of this decade. not dramatically but it has been. i don't know why. because i look at it the way you described it, that we've had a large growth in upper income jobs. the upper 40 or 50 percent of the labor market has had really rapid growth in wages. their housing costs have been relatively stable particularly if they are not moving a lot. so they are certainly better off every year. the low income folks particularly people who move a lot have not seen the same level of raises. if they have moved they've not had stability in their housing

prices and they are exposed to the rapid growth in housing prices on the market. and they are worse off. so i understand that argument, it's just not every data that i'm looking at kind of confirms that story. >> i've got a few things. one is to clarify and reiterate when it says something like the projected legislation would result in a job loss of 1,500 jobs, it's actually talking about over time -- it's not a job less, it's that the growth will be that much lower. it's a very confusing and some ways misleading ways to think there's a net job loss as though 1500 people are going to lose their jobs. >> that's not what we intend to say. it is likely that based on past trends, the city

economy will grow more than that. so we are talking about having fewer jobs or slower growth than you otherwise would. however it isn't true that everybody's job will be secure if this goes into effect because what's really going to happen is it's going to inflate office rents higher than it is. and some businesses will be able to sustain those rents including existing businesses and other businesses won't be able to sustain those rents including existing businesses. so it's lower than what we expect san francisco's job growth to be. but i wouldn't say everybody's existing job is going to be untouched by this just because existing office buildings don't have to pay it. >> but you are even under your own projections here, which i think are very conservative based on what we already know about the pipeline is there would

be an annual 300,000 square feet of new office space. so that's a lot of job growth. >> that's right. >> way above the number that you are saying of 1,500 jobs lost. so it's a net job loss over what the expected, very large amount of growth. >> that's right. the only thing i'm saying is we are not saying the city is going to add jobs every year, because we are going to have a recession at some point. but your point is absolutely right. the amount of office space we are projecting the city to grow, even if this legislation passes is more than what that difference between that's a result of the legislation. so the city would continue to add office space with this legislation. >> so with the projected development, this is done on models that are