STRATEGIC ECONOMICS | 2991 SHATTUCK AVE. BERKELEY, CA. 94705 | 510.647.5291
MEMORANDUM
To: Tony Rozzi, Deputy Director, City of South San Francisco From: Derek W. Braun, Principal
Date: May 13, 2024
Project: Analysis of Labor Standards Impacts on the Financial Feasibility of Development Projects Subject: Proposed Scope and Budget
This memorandum describes a proposed scope of work, budget, and timeline for Strategic Economics to complete an analysis of the impacts of potential labor standards requirements on the financial feasibility of housing development in South San Francisco. The City of South San Francisco requested this scope and budget for consideration of potential approaches for analyzing new labor standards requirements. The study would be used to inform deliberations regarding adoption of new labor standards requirements for development projects in South San Francisco.
As described in the following scope, the analysis would make use of content and analyses currently being prepared by Strategic Economics as part of the commercial linkage fee nexus study and development feasibility analysis for the City of South San Francisco. Analyses for that study are largely completed, and Strategic Economics is currently drafting a report describing the results, findings, conclusions, and recommendations.
Strategic Economics would also incorporate relevant information and findings from a financial feasibility analysis we are currently preparing for the City of Berkeley. That analysis—part of a study to revise the City’s in-lieu fees for inclusionary housing requirements—includes examination of the impacts of Berkeley’s “Helping Achieve Responsible Development with Healthcare and Apprenticeship Training Standards” (HARD HATS) ordinance. Our understanding is that South San Francisco’s new labor standards would likely be similar to the HARD HATS requirements.
Scope of Work
Task 1: Analysis of Labor Standards Impacts on Development Feasibility Using the same housing development “prototypes” analyzed for the South San Francisco commercial linkage fee nexus study, Strategic Economics will complete a pro forma financial feasibility analysis for the prototypes based on application of the proposed labor standards (or, if more details are not available, Strategic Economics will apply the Berkeley HARD HATS standards). The three existing prototypes consist of townhomes, a five-story mixed-use podium project, and a seven-story mixed-use podium project. Strategic Economics will develop assumptions for hard costs of construction under the labor standards by applying information gleaned from analysis and developer interviews completed for other recent Bay Area projects. Strategic Economics will also conduct interviews with locally Scope and Budget for Analysis of Labor Standards Impacts on Development Feasibility May 13, 2024 2
knowledgeable developers and general contractors operating in South San Francisco, contingent on their responsiveness to interview requests.
Strategic Economics will prepare a memo describing the results of the feasibility analysis and other policy issues identified through the analysis. The feasibility analysis will compare results for the prototypes with and without the labor standards. Examples of other potential policy issues include variations in construction cost impacts by project size and consideration of how the labor standards impact vertically integrated development businesses that do not use outside contractors.
Deliverables: Preliminary Administrative Draft Memo for City staff review and comment; Administrative Draft Memo for final City staff comments; Final Memo
Timeline: Delivery of admin draft memo within three months of project kickoff call with City staff Task 2: Public Meetings
A Strategic Economics representative will prepare for and attend, either in-person or virtually, up to two public meetings/hearings to present the analysis results and respond to questions.
Deliverable: PowerPoint slides, if needed
Timeline: Varies depending on when meetings are scheduled by the City Proposed Budget
The scope of work can be completed for a total cost of $22,460. The detailed budget, with staff billing rates and hours by task, is shown on the following page.
Scope and Budget for Analysis of Labor Standards Impacts on Development Feasibility 2