Exempts office development in Candlestick Point and Hunters Point from San Francisco’s annual cap on office space construction.
What the Measure Would Do
Proposition O would allow office development in Candlestick Point and the Hunters Point Naval Shipyard to go forward without being counted toward the citywide annual cap on allowable office development in San Francisco. The measure would specifically change the city’s zoning code to remove Candlestick Point and the Hunters Point Naval Shipyard from the provisions of a measure adopted by voters in 1986 that limits the approval of new office development to 950,000 square feet per year. That limit would still apply to other areas of the city. This measure would not make changes to the approval process for any other type of development (like residential or retail) in Candlestick Point, Hunters Point or elsewhere in the city.
San Francisco currently limits the total amount of new office construction that can be approved each year to 950,000 square feet.1 Of this, 75,000 square feet is reserved for projects between 25,000 and 50,000 square feet (the “small cap”), while 875,000 square feet is reserved for office buildings greater than 50,000 square feet (the “large cap”). Any office development below 25,000 square feet is exempt from the cap.2 If the cap is not fully allocated by the Planning Commission in one year, the remaining portions accrue to future years.
Areas Prop. O Exempts From Citywide Office Cap
This office cap was first included within the 1985 Downtown Plan and then adopted by voters as Prop. M in 1986.3 It was the first annual limit on office development in the United States. The legislation is officially called the Office Development Annual Limit Program, though it’s often referred to simply as Prop. M. Amendments to Prop. M can only be approved by the voters.
During the real estate crash of the late 1980s and the recession of the early 1990s, few office developments went forward, and the amount of allowable office space accrued to more than several million square feet. In fact, the office cap was not likely a major limiting factor to new office development until the dot-com boom of the late 1990s. In the recent economic boom, the office cap has again constrained new office projects, as the building permit pipeline exceeds the total allowable office square footage. As of July 2016, there were 1.16 million square feet of pending large office projects that had applied for less than 450,000 square feet of allowable office space within the cap.5 An additional 6.9 million square feet of proposed office projects are now going through the pre-application permitting process.
In 2008, the voters adopted Prop. G, the Bayview Jobs, Parks and Housing Initiative.6 This measure allowed for about 2.15 million square feet of office space, between 8,500 and 10,000 housing units, 885,000 square feet of retail and entertainment uses and 330 acres of parks and open space in the former Hunters Point Shipyard and adjacent Candlestick Point area. Despite voter approval, any office development in this area has still been subject to the limits of the city’s annual Prop. M office allocation process. Also in 2008, the development agreement between the city and the developer of Candlestick Point and the Hunters Point Shipyard added a provision that gives the first 800,000 square feet of office development at this site priority in the Prop. M allocation process over all other areas of the city (except Mission Bay South and the Transbay Tower). This was an attempt to save some space for office development in the shipyard, given the looming concern that demand would far exceed the annual supply of office space allocation under the cap.
In 2010, the city amended the Bayview Hunters Point Redevelopment Plan to accompany projects approved under Prop. G. The plan increased the amount of allowable office space in the area — permitting 5.15 million square feet7 — in order to provide an alternative use in the event that the proposed football stadium was not built at the shipyard.
The Bayview/Hunters Point area has struggled economically for decades and has not had a large employment center since the closing of the shipyard in 1974.8 The plan adopted by the voters in 2008 promised significant employment opportunities, which have not yet materialized. None of the approved office space is under construction (although some of the residential development in the plan is underway). Regional transit connections remain a concern because much of the shipyard is located more than 3 miles from the nearest BART or Caltrain station. And while there are plans for enhanced bus service, many of the commuters working at the shipyard will likely arrive by car.
This measure was placed on the ballot by voter signatures. It requires a simple majority (50 percent plus one vote) to pass
• Prop. O would remove the Prop. M office allocation process as a potential barrier to office development at Hunters Point Shipyard. It would allow the already approved office portion of the redevelopment project to go forward when there is sufficient demand for the space, regardless of whether there is availability within the office cap.
• To the extent that this measure would help facilitate additional job growth, it could bring employment opportunities to an area of the city that is sorely lacking them. It could also help fulfill the city’s promise to bring jobs, retail and the envisioned mixed-use environment to the Hunters Point Shipyard and Candlestick Point, a plan that voters have endorsed previously.
• By taking the Hunters Point Shipyard and Candlestick Point office projects out of competition with other office proposals citywide (primarily those in central SoMa and downtown), this measure could enable more of the current backlog in office development to go forward. Allowing more office space to be added to San Francisco’s tight real estate market could help moderate the price of office rents and keep organizations from leaving the city.
• Exempting specific areas of the city from the provisions of Prop. M might encourage more neighborhoods and developers to pursue such a strategy instead of pushing for a wholesale reform of Prop. M. It would be better for the city to approach planning policy comprehensively rather than piecemeal at the ballot box.
• This measure would not actually limit the exemption from the Prop. M office cap to only 5 million square feet of office space. A future modification to the Redevelopment Plan and associated environmental documents could permit additional office development that would also then be exempt from the limitations of the Prop. M cap.