SEC. 415.7. OFF-SITE AFFORDABLE HOUSING ALTERNATIVE.

New Ordinance Notice

Publisher's Note: This section has been AMENDED by new legislation (Ord. 187-23 , approved 9/14/2023, effective 10/15/2023, oper. 11/21/2026). The text of the amendment will be incorporated under the new section number when the amending legislation is effective.

New Ordinance Notice

Publisher's Note: This section has been AMENDED by new legislation (Ord. 201-23 , approved 10/12/2023, effective 11/12/2023, oper. 11/21/2026). The text of the amendment will be incorporated under the new section number when the amending legislation is effective.

If the project sponsor elects pursuant to Section 415.5(g) to provide off-site units to satisfy the requirements of Sections 415.1 et seq. , the project sponsor shall notify the Planning Department and MOHCD of its intent prior to approval of the project by the Planning Commission or Department. The Planning Department and MOHCD shall provide an evaluation of the project’s compliance with this Section 415.7 prior to approval by the Planning Commission or Planning Department. The development project shall meet the following requirements:

(a) Number of Units: The number of units constructed off-site shall be as follows:

(1) For any housing development that is located in an area or Special Use District with a specific affordable housing requirement, or in any other Planning Code provision, such as Section 419, the higher off-site housing requirement shall apply.

(2) For housing development projects consisting of 10 units or more but less than 25 units, the number of Affordable Units constructed off-site shall be 20%, so that a project applicant shall construct .20 times the total number of units produced in the Principal Project. If the total number of units is not a whole number, the project applicant shall round up to the nearest whole number for any portion of .5 or above. In no case shall the total number of Affordable Units required exceed the number required as determined by the application of the applicable off-site requirement rate to the total project units. Owned Units shall be affordable to households earning up to 100% of Area Median Income, with an affordable sales price set at 80% of Area Median Income or less. Rental Units shall be affordable to households earning up to 65% of Area Median Income, with an affordable rent set at 55% of Area Median Income or less.

application of the applicable off-site requirement rate to the total project units. Owned Units shall be affordable to households earning up to 100% of Area Median Income, with an affordable sales price set at 80% of Area Median Income or less. Rental Units shall be affordable to households earning up to 65% of Area Median Income, with an affordable rent set at 55% of Area Median Income or less.

(3) For any Ownership Housing Project consisting of 25 or more units, the number of Affordable Units constructed off-site shall be 33% of all units constructed on the project site, with a minimum of 18% of the units affordable to low-income households, 8% of the units affordable to moderate-income households, and 7% of the units affordable to middle income households. In no case shall the total number of Affordable Units required exceed the number required as determined by the application of the applicable off-site requirement rate to the total project units. Owned Units for low-income households shall have an affordable purchase price set at 80% of Area Median Income or less, with households earning up to 100% of Area Median Income eligible to apply for low-income units. Owned Units for moderate-income households shall have an affordable purchase price set at 105% of Area Median Income or less, with households earning from 95% to 120% of Area Median Income eligible to apply for moderate-income units. Owned Units for middle-income households shall have an affordable purchase price set at 130% of Area Median Income or less, with households earning from 120% to 150% of Area Median Income eligible to apply for middle-

income units. For any Affordable Units with purchase prices set at 100% of Area Median Income or above, the units shall have a minimum occupancy of two persons. This unit requirement shall be outlined within the Mayor’s Office of Housing Preferences and Lottery Procedures Manual no later than February 26, 2018. MOHCD may reduce Area Median Income pricing and the minimum income required for eligibility in each rental category.

le Units with purchase prices set at 100% of Area Median Income or above, the units shall have a minimum occupancy of two persons. This unit requirement shall be outlined within the Mayor’s Office of Housing Preferences and Lottery Procedures Manual no later than February 26, 2018. MOHCD may reduce Area Median Income pricing and the minimum income required for eligibility in each rental category.

(4) For any Rental Housing Project consisting of 25 or more Rental Units, the number of affordable units constructed off-site shall generally be 30% of all units constructed on the project site, with a minimum of 18% of the units affordable to low-income households, 6% of the units affordable to moderate-income households, and 6% of the units affordable to middle-income households. In no case shall the total number of affordable units required exceed the number required as determined by the application of the applicable off-site requirement rate to the total project units. Rental Units for low-income households shall have an affordable rent set at 55% of Area Median Income or less, with households earning up to 65% of Area Median Income eligible to apply for low-income units. Rental Units for moderate-income households shall have an affordable rent set at 80% of Area Median Income or less, with households earning from 65% to 90% of Area Median Income eligible to apply for moderate-income units. Rental Units for middle-income households shall have an affordable rent set at 110% of Area Median Income or less, with households earning from 90% to 130% of Area Median Income eligible to apply for middle-income units. For any affordable units with rental rates set at 100% of Area Median Income or above, the units shall have a minimum occupancy of two persons. This unit requirement shall be outlined within the Mayor’s Office of Housing Preferences and Lottery Procedures Manual no later than 6 months following the effective date of the Ordinance contained in Board of Supervisors File No. 161351. MOHCD may reduce Area Median Income pricing and the minimum income required for eligibility in each rental category. MOHCD shall set forth in the Procedures Manual the administration of rental units within this range.

(5) In the event that a Rental Housing project converts to an Ownership Housing project, the Project Sponsor shall either (A) reimburse the City the proportional amount of the Inclusionary Affordable Housing Fee, which would be equivalent to the then-current Inclusionary Affordable Housing Fee requirement for Ownership Housing Projects, or (B) provide additional on-site or off-site Affordable Units equivalent to the then-current inclusionary requirements for Ownership Housing Projects, apportioned among the required number of units at various income levels in compliance with the requirements in effect at the time of conversion.

nt to the then-current Inclusionary Affordable Housing Fee requirement for Ownership Housing Projects, or (B) provide additional on-site or off-site Affordable Units equivalent to the then-current inclusionary requirements for Ownership Housing Projects, apportioned among the required number of units at various income levels in compliance with the requirements in effect at the time of conversion.

(6) The applicable amount of the percentage required for the off-site housing units shall be determined based upon the date that the project sponsor has submitted a complete Environmental Evaluation application. Any development project that constructs off-site affordable housing units as set forth in this Section 415.6 shall diligently pursue completion of such units. In the event the project sponsor does not procure a building permit or site permit for construction of the principal project or the off-site affordable housing project within 30 months of the project’s approval, the development project shall comply with the inclusionary affordable housing requirements applicable thereafter at the time when the project sponsor procures a building permit. Such deadline shall be extended in the event of any litigation seeking to invalidate the City’s approval of the principal project or off-site affordable housing project for the duration of the litigation.

(7) If the principal project or the off-site project has resulted in demolition of affordable housing units that are subject to a recorded covenant, ordinance, or law that restricts rents to levels affordable to persons and families of moderate-, low- or very low-income, or housing that is subject to any form of rent or price control through a public entity’s valid exercise of its police power and determined to be affordable housing, the project sponsor shall comply with Section 317.2.

(b) Timing of Construction: The project sponsor shall ensure that the off-site units are constructed, completed, ready for occupancy, and marketed no later than the market rate units in the principal project. In no case shall the

Principal Project receive its first certificate of occupancy until the off-site project has received its first certificate of occupancy.

(c) Location of off-site housing:

(1) Except as specified in subsection (ii) below, the off-site units shall be located within one mile of the principal project;

(2) Projects within the Central SoMa SUD must be located within the area bounded by Market Street, the Embarcadero, King Street, Division Street, and South Van Ness Avenue.

(d) Type of Housing: Nothing in this Section shall limit a project sponsor from meeting the requirements of this Section through the construction of units in a limited equity or land trust form of ownership if such units otherwise meet all of the requirements for off-site housing. In general, affordable units constructed or otherwise provided under this Section shall be comparable in number of bedrooms, exterior appearance and overall quality of construction to market rate units in the principal project. The total square footage of the off-site affordable units constructed or otherwise provided under this Section shall be no less than the calculation of the total square footage of the on-site market-rate units in the principal project multiplied by the relevant on-site percentage requirement for the project specified in this Section. The Notice of Special Restrictions or conditions of approval shall include a specific number of units at specified unit sizes – including number of bedrooms and minimum square footage – for affordable units. The interior features in affordable units should generally be the same as those of the market rate units in the principal project but need not be the same make, model, or type of such item as long as they are of new and good quality and are consistent with then-current standards for new housing and so long as they are consistent with the “Quality Standards for Off-Site Affordable Housing Units” found in the Procedures Manual. Where applicable, parking shall be offered to the affordable units subject to the terms and conditions of the Department’s policy on unbundled parking for affordable housing units as specified in the Procedures Manual and amended from time to time. If the residential units in the principal project are live/work units which do not contain bedrooms or are other types of units which do not contain bedrooms separated from the living space, the off-site units shall be comparable in size according to the following equivalency calculation between live/work and units with bedrooms:

(e) Marketing the Units: The Project Sponsor shall submit a proposed marketing plan to MOHCD to begin marketing the Affordable Units at least six months prior to the beginning of marketing for any unit in the Principal Project. MOHCD shall approve the marketing plan for the Affordable Units prior to the Project Sponsor marketing any unit in the Principal Project. Failure to comply shall be deemed a violation of the Planning Code subject to enforcement and penalties as set forth in Section 415.9. MOHCD shall be responsible for overseeing and monitoring the marketing of Affordable Units under this Section 415.7. In general, the marketing requirements and procedures shall be contained in the Procedures Manual as amended from time to time and shall apply to the Affordable Units in the project. MOHCD may develop occupancy standards for units of different bedroom sizes in the Procedures Manual in order to promote an efficient allocation of Affordable Units. MOHCD may require in the Procedures Manual that prospective purchasers complete homebuyer education training or fulfill other requirements. MOHCD shall develop a

list of minimum qualifications for marketing firms that market Affordable Units under Section 415.1 et seq. , referred to in the Procedures Manual as Below Market Rate (BMR units). No project sponsor marketing units under the Program shall be able to market BMR units except through a firm meeting all of the minimum qualifications. The Notice of Special Restrictions or conditions of approval shall specify that the marketing requirements and procedures contained in the Procedures Manual as amended from time to time, shall apply to the Affordable Units in the project.

(1) Lottery: At the initial offering of affordable units in a housing project and when Affordable Units become available for resale or re-lease in any housing project subject to this Program after the initial offering, MOHCD must require the use of a public lottery approved by MOHCD to select purchasers or tenants.

(2) Preferences: MOHCD shall create a lottery system that gives preference according to the provisions of Administrative Code Chapter 47. MOHCD shall propose policies and procedures for implementing these preferences to the Planning Commission for inclusion in the Procedures Manual. Otherwise, it is the policy of the City to treat all households equally in allocating affordable units under this Program.

(f) Individual affordable units constructed as part of a larger off-site project under this Section 415.7 shall not receive development subsidies from any Federal, State or local program established for the purpose of providing affordable housing, and shall not be counted to satisfy any affordable housing requirement for the off-site development. Other units in the same off-site project may receive such subsidies. In addition, subsidies may be used, only with the express written permission by MOHCD, to deepen the affordability of an affordable unit beyond the level of affordability required by this Program.

of providing affordable housing, and shall not be counted to satisfy any affordable housing requirement for the off-site development. Other units in the same off-site project may receive such subsidies. In addition, subsidies may be used, only with the express written permission by MOHCD, to deepen the affordability of an affordable unit beyond the level of affordability required by this Program.

(g) Notwithstanding the provisions of Section 415.7(f) above, a project may use California Debt Limit Allocation Committee (CDLAC) tax-exempt bond financing and 4% credits under the Tax Credit Allocation Committee (TCAC) to help fund its obligations under this ordinance as long as the project provides at least 60% of the off-site affordable units as affordable at 55% of area median income and the balance of the off-site affordable units using these funds at affordability rates that comply with the requirements of TCAC, CDLAC, and this Section 415. The income table to be used for such projects when the units are priced at 55% of area median income is the income table used by MOHCD for the Inclusionary Housing Program, not that used by TCAC or CDLAC. Except as provided in this subsection (g), all units provided under this Section 415.7 must meet all of the requirements of the Inclusionary Affordable Housing Program and the Procedures Manual for off-site housing.

(Added as Sec. 315.6 by Ord. 37-02, File No. 001262, App. 4/5/2002; amended by Ord. 76-03, File No. 020592, App. 5/2/2003; Ord. 213-06, File No. 051668, App. 8/2/2006; 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; Ord. 232-08, File No. 080521, App. 10/30/2008; Ord. 63-09, File No. 081249, App. 4/23/2009; 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. 277-13, File No. 130968, App. 12/18/2013, Eff. 1/17/2014; Ord. 204-15 , File No. 150622, App. 12/3/2015, Eff. 1/2/2016; Ord. 76-16 , File No. 160255, App. 5/13/2016, Eff. 6/12/2016; Ord. 15817, File No. 161351, App. 7/27/2017, Eff. 8/26/2017; Ord. 26-18, File No. 171193, App. 2/23/2018, Eff. 3/26/2018; Ord. 202-18, File No. 180557, App. 8/10/2018, Eff. 9/10/2018; Ord. 296-18, File No. 180184, App. 12/12/2018, Eff. 1/12/2019; Ord. 210-21, File No. 210868, App. 11/19/2021, Eff. 12/20/2021; Ord. 3-26, File No. 250926, App. 1/8/2026, Eff. 2/8/2026)

AMENDMENT HISTORY

Undesignated introductory paragraph and divisions (a)(1), (b), (d), and (f) amended; division (g) added; Ord. 62-13 , Eff. 5/10/2013. Undesignated introductory paragraph and division (e)(2) amended; references to "MOHCD" corrected throughout; Ord. 277-13, Eff. 1/17/2014. Division (e)(2) amended; Ord. 204-15 , Eff. 1/2/2016. Undesignated introductory paragraph amended; former division (a)(1)(A) redesignated as (a)(1) and amended; former divisions (a) (1)(B) and (C) deleted; new divisions (a)(2)-(4) added; divisions (b), (c), and (d) amended; Ord. 76-16 , Eff.

raph and division (e)(2) amended; references to "MOHCD" corrected throughout; Ord. 277-13, Eff. 1/17/2014. Division (e)(2) amended; Ord. 204-15 , Eff. 1/2/2016. Undesignated introductory paragraph amended; former division (a)(1)(A) redesignated as (a)(1) and amended; former divisions (a) (1)(B) and (C) deleted; new divisions (a)(2)-(4) added; divisions (b), (c), and (d) amended; Ord. 76-16 , Eff.

6/12/2016. Undesignated introductory paragraph and divisions (a)(1)-(3) amended; former division (a)(4) deleted; new divisions (a)(4)-(7) added; divisions (e), (f), and (g) amended; Ord. 158-17, Eff. 8/26/2017. Undesignated introductory paragraph and division (d) amended; Ord. 26-18, Eff. 3/26/2018. Undesignated introductory paragraph and division

(g)[1] amended; Ord. 202-18 , Eff. 9/10/2018. Division (c) redesignated as divisions (c) and (c)(1); division (c)(1) amended; division (c)(2) added; Ord. 296-18 , Eff. 1/12/2019. Undesignated introductory paragraph and divisions (a) (2), (a)(3), (a)(5), and (e)-(e)(1) amended; Ord. 210-21 , Eff. 12/20/2021. Division (a)(7) amended; Ord. 3-26 , Eff. 2/8/2026.

CODIFICATION NOTE

1. This subsection (g) was amended by Ord. 208-17; however, because of formatting issues in Ord. 208-17, that text was not transposed into the Code. Amendments made by Ord. 202-18 have since superseded those made to subsection (g) by Ord. 208-17.

A project sponsor of a principal project comprised of 24 or fewer residential units may elect under Section 415.5(g) to meet its Inclusionary Affordable Housing requirement by designating its payment of the Affordable Housing Fee due under Section 415.5 for a Small Sites program that MOHCD shall establish for this purpose. Affordable Housing Fees designated for this program shall not be considered part of the designated funds specified by Section 415.5(f). MOHCD shall expend the program funds from a principal project on a Small Sites Project that meets the requirements set forth in Section 415.5(f)(2)(B) and that is within the same neighborhood as the principal project. The neighborhood of the principal project shall be determined by the Planning Department’s Neighborhood Groups Map. If MOHCD is unable to identify and apply the fee to a qualifying Small Sites Project within the same neighborhood as the principal project within two years of the payment of the fee, such fee shall be released into the Affordable Housing Fund to fund other qualifying Small Sites Projects in San Francisco.

(Added by Ord. 7-17, File No. 161157, App. 1/20/2017, Eff. 2/19/2017)