Construction of the long-delayed second Rincon Tower at Harrison and Fremont streets — part of a skyline-changing, upscale neighborhood near the proposed Transbay Transit Center — can start, after new legislation was signed Tuesday by Mayor Gavin Newsom.
Approved in 2005, the Rincon Hill area expected to see about 2,220 new homes. But after the first condo tower was built, the recession put a halt to further construction.
Rincon Hill was approved on the condition developers pay higher-than-normal impact fees to fund public works projects in the South of Market area.
Developers say the legislation could accelerate the project by two years.
The combined effect of the new legislation and a separate law on transfer fees could “bring $19 million in savings to Phase 2,” said Marc Babsin, who’s working as a consultant on the Rincon Tower project. “It will lower costs and make construction start that much earlier.”
Newsom said there are at least nine projects in San Francisco — including the second Rincon Tower — that are ready for construction, but they’re delayed by financial constraints due to the recession.
The deferral means more to San Francisco than just assisting developers. The legislation will employ 4,800 construction workers and generate $22 million in general-fund tax revenue, Newsom said after signing the legislation on top of the Rincon Tower.
The legislation deferring impact fees decreases up-front costs for developers. Impact fees paid by developers help fund necessary public works like sewer, street and light projects.
The law is only one part of Newsom’s overall plan to jump-start development. The mayor is pushing an affordable-housing component, which would let developers reduce their affordable-housing requirement by 33 percent in exchange for accepting a transfer fee on their property. The transfer fee would require all future sellers of the property to pay an additional 1 percent of the sales value to fund San Francisco’s affordable-housing efforts.
That legislation has been tabled as Newsom works with city supervisors to find a compromise. It includes possibly limiting the affordable-housing transfer fee to high-rise projects only, according to the Mayor’s Office.