Mayor Breed is pushing a new proposal to eliminate an estimated $70,000 and $90,000 per unit in costs to convert downtown office space to housing, as developers aren’t really biting on previous conversion incentives.

With the simultaneous San Francisco problems of way too much vacant office space and not enough housing to meet rigorous new state mandates, City Hall has tried to entice developers to convert office space to housing. The problem is that developers just aren’t taking the bait. The Chronicle points out today that “So far the pay off for all the effort has been stingy — just two significant conversion project applications totaling 164 units have been submitted. Construction hasn’t started on either.”

So Mayor Breed is trying to get more proactive on this in the downtown neighborhoods. The SF Business Times reports on a new Breed proposal to spur downtown office-to-housing conversions, this time by eliminating affordable housing requirements and impact fees that she estimates would save $70,000 to $90,000 per converted unit. The lax new rules would only apply to downtown spaces.  

The Business Times says that Supervisor Matt Dorsey “planned to introduce legislation Tuesday,” presumably at the Board of Supervisors meeting. Dorsey made no mention of this at Tuesday’s meeting, so apparently he will introduce it this coming Tuesday, October 1.

But Breed put out a press release today touting the plan, and tying it to her “30 x 30” plan to bring 30,000 new residents downtown by the year 2030.

“San Francisco is changing to a City of Yes where we remove all the barriers and obstructions that get in the way of what’s possible,” Breed said in the release. “By eliminating these fees we are saying yes to change, yes to housing, and yes to turning Downtown into a 24/7 neighborhood.”

Well, we’re certainly a “City of Yes” when it comes to nonprofits who want to spend taxpayer dollars on first-class flights, luxury dinners and liquor! We’ll see if Breed can transfer this “City of Yes” philosophy to housing, because thus far, it’s been the developers saying No to the current existing incentives.

Per the Business Times, this proposal comes straight from a set of recommendations from a developer called the Emerald Fund, which successfully converted 100 Van Ness from office space to housing back around 2012.

The mayor and the supervisors passed relaxed rules for office-to-housing conversions in 2023, but only one project has gotten financing and is ready to go from those new rules (the Humboldt Bank building at 785 Market Street). That 2023 legislation would sunset after five years, but Breed and Dorsey’s new proposal would eliminate that sunset date.

But for all this legislation, it may be more significant that interest rates were just cut, which may have more effect on housing development than anything SF City Hall might do.

Also, it should be noted, the intricacies and complications with converting office buildings to residential are many, as the New York Times explored in an extensive piece last year. San Francisco does not have a ton of large, pre-World War II office towers that East Coast cities like New York and Philadelphia have. Those are actually much easier to convert than more modern towers, which have deep floor plates that were intended to be lit by electricity alone. A case in point here in SF is that one office-to-residential conversion now underway at 785 Market Street is just such a building, constructed in 1906, with plenty of windows on each floor.

Related: This Market Street Office Building Is Slated to Become 120 Apartments By Next Year [SFist]

Image: @LondonBreed via Twitter