SEC. 415.9. ENFORCEMENT PROVISIONS AND MONITORING OF PROGRAM.

(a) A first construction document or first Certificate of Occupancy, whichever applies, shall not be issued by the Director of DBI to any unit in the Principal Project until all of the affordable housing requirements of Sections 415.1 et seq. are satisfied.

(b) If, after issuance of the first Certificate of Occupancy, the Commission or Department determines that a project sponsor has failed to comply with any requirement in Section 415.1 et seq. or any reporting requirements detailed in

the Procedures Manual, or has violated the Notice of Special Restrictions, the Commission, Department, or DBI may, until the violation is cured, (1) revoke the Certificate of Occupancy for the Principal Project or required Affordable Units, (2) impose a penalty on the project pursuant to Section 176(c) of this Code, and/or (3) the Zoning Administrator or MOHCD may enforce the provisions of Section 415.1 et seq. through any means provided for in Section 176 of this Code.

(c) The Department shall notify MOHCD of any housing project subject to the requirements of Section 415.1 et seq. , including the name of the project sponsor and the number and location of the Affordable Units, within 30 days of the Department’s approval of a building or site permit for the project. MOHCD shall provide all project sponsors with information concerning the City’s first time homebuyer assistance programs and any other related programs MOHCD shall deem relevant to the Inclusionary Affordable Housing Program.

(d) The Department shall, as part of the annual Housing Inventory, report to the Board of Supervisors on the results of Section 415.1 et seq. including, but not limited to, a report on the following items:

(1) The number of, location of, and project applicant for, housing projects which came before the Commission for a Conditional Use Authorization or Planned Unit Development, and the number of, location of, and project applicant for, housing projects which were subject to the requirements of Section 415.1 et seq. ;

(2) The number of, location of, and project sponsor for, housing projects which applied for a waiver, adjustment, or reduction from the requirements of Section 415.1 et seq. pursuant to Section 406 of this Article, and the number of, location of, and project sponsor for, housing projects which were granted such a waiver, adjustment, or reduction and, if a reduction, to what percentage; and

(3) The number of, location of, and project sponsor for, every housing project to which Section 415.1 et seq. applied and the number of market rate units and the number of affordable on- and off-site units provided, including the location of all of the affordable units.

(e) A study is authorized to be undertaken under the direction of MOHCD approximately every five years to update the requirements of Section 415.1 et seq . MOHCD shall make recommendations to the Board of Supervisors and the Commission regarding any legislative changes. MOHCD shall specifically evaluate the different inclusionary housing requirements for developments of over 120 feet approximately five years from the enactment of the requirement or as deemed appropriate by MOHCD. MOHCD shall coordinate this report with the five-year evaluation by the Director of Planning required by Section 410 of this Article.

(f) Annual or Bi-annual Monitoring.

(1) MOHCD shall monitor and require occupancy certification for Owned Units and Rental Units on an annual or bi-annual basis, as outlined in the Procedures Manual.

(2) MOHCD may require the owner of a Rental Unit, the owner’s designated representative, or the tenant in an affordable unit to verify the income levels of the tenant on an annual or bi-annual basis, as outlined in the Procedures Manual.

(Added as Sec. 315.8 by Ord. 37-02, File No. 001262, App. 4/5/2002; amended by Ord. 219-06, File No. 051685, App. 8/10/2006; Ord. 101-07, File No. 060529, App. 5/4/2007; Ord. 198-07, File No. 070444, App. 8/10/2007; redesignated and amended by Ord. 108-10, File No. 091275, App. 5/25/2010; amended by Ord. 312-10, File No. 100046, App. 12/23/2010; Ord. 62-13 , File No. 121162, App. 4/10/2013, Eff. 5/10/2013; Ord. 210-21, File No. 210868, App. 11/19/2021, Eff. 12/20/2021; Ord. 155-22, File No. 220262, App. 7/21/2022, Eff. 8/21/2022) AMENDMENT HISTORY

Former division (f) deleted, former division (g) redesignated as (f); Ord. 62-13 , Eff. 5/10/2013. Divisions (a)-(c), (d) (2)-(3), (e), and (f)-(f)(2) amended; Ord. 210-21, Eff. 12/20/2021. Divisions (a)-(d)(3) amended; Ord. 155-22, Eff. 8/21/2022.

SEC. 415.10. REPORTING TO BOARD OF SUPERVISORS.

(a) Findings.

San Francisco continues to experience a housing crisis that requires a broad spectrum of land use and financing tools to address. The 2022 Housing Element Update of the City’s General Plan calls for 40% of all new housing production to be affordable for lower income

households below 80% of area median income and 17% of new housing affordable to be built for moderate/middle income households up to 120% of area median income. San Francisco’s inclusionary housing program, which requires housing developers to provide affordable units as part of their projects, is a critical component of the City’s programs to expand affordable housing options. The Inclusionary Housing program is one of the City’s tools for increasing affordable housing dedicated to lower income San Franciscans without using public subsidies, and in particular it is a useful tool for creating any affordable housing to meet the growing need of moderate/middle income households. The City adopted an Inclusionary Housing ordinance in 2002 that set requirements on market rate development to include affordable units at 12% of the total for the first time. The inclusionary program has successfully resulted in more than 3,330 units of below-market, permanently affordable housing since its adoption. The City prepared a Nexus Study in 2007 in support of the program, which was updated in 2016. The reports demonstrated the necessary affordable housing in order to mitigate the impacts of market rate housing[1] The City’s inclusionary housing requirements, which have been set at various levels since 2002 in response to changing economic conditions, are codified in Section 415 of the Planning Code.

The purpose of this Section 415.10 is to provide for the ongoing study of how to set inclusionary housing obligations in San Francisco at the maximum economically feasible amount in market rate housing development to create housing for low and moderate/middle income households, at the income levels set forth in Section 415.10(d), and with guidance from the City’s Nexus Study, which shall be periodically updated.

(b) Triennial Economic Feasibility Analysis. With the support of independent con- sultants as deemed appropriate by the Controller and with advice on setting qualifications and criteria for consultant selection from the Inclu- sionary Housing Technical Advisory Committee established in Administrative Code Chapter 5, Article XXIX, the Controller, in consultation with relevant City Departments and the Inclusionary Housing Technical Advisory Committee, shall conduct a feasibility study of the City’s inclusion- ary affordable housing obligations set forth in Planning Code Section 415 et seq. , including but not limited to the affordable housing fee and On- site and Off-site Alternatives, and shall submit a report to the Board of Supervisors by July 31, 2016 and by October 31 for subsequent years. Thereafter, the Controller, in consultation with the Department and the Inclusionary Housing Technical Advisory Committee, shall repeat this process at least every 36 months, or more fre- quently as deemed necessary by the Controller in response to a significant shift in economic or market conditions.

it a report to the Board of Supervisors by July 31, 2016 and by October 31 for subsequent years. Thereafter, the Controller, in consultation with the Department and the Inclusionary Housing Technical Advisory Committee, shall repeat this process at least every 36 months, or more fre- quently as deemed necessary by the Controller in response to a significant shift in economic or market conditions.

(c) Elements of the Economic Feasibility Analysis. The economic feasibility analysis required by subsection (b) of this Section 415.10 shall include sensitivity analyses of key economic parameters that can vary significantly over time, such as, but not limited to: interest rates; capitalization rates; equity return rates; land prices; construction costs; project scale, available state and federal housing finance programs including Low Income Housing Tax Credits readily available for market rate housing; tax-exempt bond financing; Federal Housing Administration and U.S. Department of Housing and Urban Development mortgage insurance; available City or local housing finance programs, such as Enhanced Infrastructure District (EIFD) and tax increments; zoning changes that increase or decrease development potential; variable City exactions, including community benefit fees, capacity charges, community facilities districts; the value of state density bonus, concessions and incentives under California Government Code Section 65915 and any other state law that confers value to development and which project sponsors may attempt to avail themselves of and public-private partnership development agreements where applicable and other factors as deemed reasonably relevant.

, capacity charges, community facilities districts; the value of state density bonus, concessions and incentives under California Government Code Section 65915 and any other state law that confers value to development and which project sponsors may attempt to avail themselves of and public-private partnership development agreements where applicable and other factors as deemed reasonably relevant.

(d) Report to Board of Supervisors. The Board of Supervisors may review the feasibility analyses, as well as the periodic updates to the City’s Nexus Study evaluating the necessary af- fordable housing in order to mitigate the impacts of market rate housing. The Board of Supervisors will review the feasibility analyses within three months of completion and may consider legislative amendments to the City’s Inclusionary Housing in-lieu fees, On-site or Offsite Alternatives, and in so doing will seek consultation from the Planning Commission, adjusting levels of inclusionary or affordable housing obligations and income levels up to maximums as defined in Section 415.2, based on the feasibility analyses, with the objective of maximizing affordable Inclusionary Housing in market rate housing production, and with guidance from the City’s Nexus Study. Any adjustment in income levels shall be adjusted commensurate with the percentage of units required so that the obligation for inclusionary housing is not reduced by any change in income levels. The Board of Supervisors may also utilize the Nexus Study in considering legislative amendments to the Inclusionary Housing requirements. Updates to the City’s Inclusionary Housing requirements shall address affordable housing fees, On-site affordable housing and Off-site affordable housing, as well as the provision of affordable housing available to low-income households at or below 55% of Area Median Income for Rental Units and up to 80% of Area Median Income for Owned Units, and moderate/middle-income households from 80% to 120% of Area Median Income.

(Added by Ord. 76-16 , File No. 160255, App. 5/13/2016, Eff. 6/12/2016; amended by Ord. 158-17, File No. 161351, App. 7/27/2017, Eff. 8/26/2017; Ord. 210-21, File No. 210868, App. 11/19/2021, Eff. 12/20/2021; Ord. 187-23, File No. 230769, App. 9/14/2023, Eff. 10/15/2023, Oper. 11/1/2023; Ord. 201-23, File No. 230855, App. 10/12/2023, Eff. 11/12/2023, Oper. 11/1/2023)

AMENDMENT HISTORY

Section header and division (d) amended; Ord. 158-17, Eff. 8/26/2017. Divisions (b) and (d) amended; Ord. 210-21, Eff. 12/20/2021. Division (a) amended; Ord. 187-23, Eff. 10/15/2023, Ord. 201-23, Eff. 11/12/2023.