Impact fees are adjusted annually by the Annual Infrastructure Construction Cost Increase Estimate (AICCIE) except for the Inclusionary Housing Fee; fees increase annually until a first construction document is issued; payment is due upon issuance of a first construction document; all non-residential development projects are required to pay impact fees in all Zoning Districts; the Planning Code refers to an outdated nexus study from 2014.

Impact fees other than the Inclusionary Housing Fee would be increased annually by a flat 2%; fees would be locked in at project approval; payment of fees could be deferred until the first certificate of occupancy; new retail and industrial projects in PDR and C-2 Districts would be exempt from fees for three years; the Planning Code would refer to an updated Citywide Nexus Analysis.

The changes aim to create predictability and stability by setting a flat rate at which impact fees increase, stabilizing fees upon project approval, reactivating a fee deferral program, and exempting certain commercial developments from fees as part of economic recovery efforts. It intends to complement other proposed legislation to make development easier and financially feasible for the city's housing goals.

To address unpredictable and potentially high annual escalation of fees, which are currently tied to the volatile AICCIE, and to fulfill the city's housing goals as detailed in the recently adopted Housing Element.

The ordinance was approved with modifications by the Commission, and it complements other proposed legislation regarding the inclusionary housing program.

The proposed changes would be accountable to the updated San Francisco Citywide Nexus Analysis, which provides the legal rationale for imposing impact fees and is considered necessary for the public convenience, general welfare, and economic recovery efforts.