SEC. 419.5. ALTERNATIVES TO THE INCLUSIONARY HOUSING COMPONENT.

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.

(See Interpretations related to this Section.)

(a) Alternatives to the Inclusionary Housing Component. In addition to the Alternatives specified in Section 415.5(g) the project sponsor may elect to satisfy the requirements of Section 415.5 by one of the Alternatives specified in this Section. The project sponsor has the choice between the Alternatives and the Planning Commission may not require a specific Alternative. The project sponsor must elect an Alternative before it receives project approvals from the Planning Commission or Planning Department and that Alternative will be a condition of project approval. The Alternatives are as follows:

(1) Middle Income Alternative. On sites with less than 50,000 square feet of total developable area, applicants may provide units as affordable to qualifying “middle income” households as follows:

(A) A minimum percent of the total units constructed shall be affordable to and occupied affordable to qualifying “middle income” households upon initial sale, according the schedule in Table 419.5. 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. Units shall be affordable to households between 120% and 150% of the San Francisco Area Median Income, with an average affordability level of 135% for all units provided through this Alternative.

(B) Where market rate sales prices exceed restricted sales prices, the difference between the market rate sales prices and the restricted sales prices shall be held by the MOHCD as a silent second mortgage according to the Procedures Manual. The City shall hold a deed of trust and promissory note for the second mortgage. MOHCD shall hold this mortgage and shall release it when the original note and proportional share of the appreciation are paid in full to the City.

(C) Units shall initially be sold at or below prices to be determined by MOHCD in the Conditions of Approval or Notice of Special Restrictions according to the formula specified in the Procedures Manual to make them affordable to middle income households. Upon resale, the seller shall be permitted to sell the units at their market price. The City will waive its right of first refusal to the seller when the promissory note and deed of trust are paid, along with the City’s share of the appreciation of the unit. The promissory note shall accrue no interest and shall require no monthly payments.

ual to make them affordable to middle income households. Upon resale, the seller shall be permitted to sell the units at their market price. The City will waive its right of first refusal to the seller when the promissory note and deed of trust are paid, along with the City’s share of the appreciation of the unit. The promissory note shall accrue no interest and shall require no monthly payments.

(D) Upon first resale, the seller shall have a right to keep a percentage of the total appreciation of the unit proportional to every year the original seller owns the unit as an owner occupant. The remainder of the proceeds of the sale, after the first mortgage, the second mortgage, and any other subordinate financing is paid off, shall be repaid to MOHCD. Detailed resale procedures shall be specified in the Middle Income Housing Procedures Manual published by MOHCD and approved by the Planning Commission. The Director of MOHCD shall amend the Procedures Manual as needed with the Commission’s approval.

(E) The City shall monitor units provided under this option during the 2- and 5-year Monitoring Report specified in Section 342 of this Code and in separate resolution. Should this monitoring report indicate that units constructed under this program do not meet the programs1 program’s stated goals of providing affordable housing to Middle Income Households, the Planning Department and MOHCD shall consider changes to this program, including, but not limited to, legislative changes.

(F) If the project sponsor elects to satisfy the requirements of Section 415.5 and of this Section by the Alternative specified above, the dwelling unit mix required by Section 207.6 may be waived provided the minimum percent of total units affordable to qualifying “middle income” households as required by Table 419.5 is increased by 10%.

(2) Land Dedication Alternative. Applicants may dedicate a portion of the total developable area of the principal site to the City and County of San Francisco for the purpose of constructing units Affordable to Qualifying Households. A minimum percentage of developable area, representing an equivalent percent of total potential units to be constructed, shall be dedicated to the City according the schedule in Table 419.5 . To meet the requirements of this Alternative, the developer must convey title to land in fee simple absolute to MOHCD according to the Procedures Manual, provided the dedicated site is deemed of equivalent or greater value to the principal site per those procedures and is in line with the following requirements:

(A) The dedicated site will result in a total amount of inclusionary units not less than 40 units. MOHCD may conditionally approve and accept dedicated sites which result in no less than 25 units at its discretion.

(B) The dedicated site will result in a total amount of inclusionary units that is equivalent or greater than the minimum percentage of the units that will be provided on the principal site, as required by Table 419.5. MOHCD may also accept dedicated sites that represent the equivalent of or greater than the required percentage of units for all units that could be provided on a collective of sites within a one-mile radius, provided the total amount of inclusionary units provided on the dedicated site is equivalent to or greater than the total requirements for all principal sites participating in the collective, according to the requirements of Table 419.5.

(C) The dedicated site is suitable from the perspective of size, configuration, physical characteristics, physical and environmental constraints, access, location, adjacent use, and other relevant planning criteria. The site must allow development of affordable housing that is sound, safe, and acceptable.

(D) The dedicated site includes infrastructure necessary to serve the inclusionary units, including sewer, utilities, water, light, street access, and sidewalks.

(E) The developer must submit full environmental clearance for the dedicated site before the land can be considered for conveyance, and before a first site or building permit may be conferred upon the Principal Project.

(F) The City may accept dedicated sites that vary from the minimum threshold, provided such a dedication is deemed generally equivalent to the original requirement by the MOHCD.

(G) The City may accept dedicated sites that meet the above requirements in accordance with the Procedures Manual, in combination with fees or on-site units, provided such a combination is deemed generally equivalent by MOHCD to the original requirement.

(H) The project applicant has a letter from MOHCD verifying acceptance of site before it receives project approvals from the Planning Commission or Planning Department, which shall be used to verify dedication as a condition of approval.

(I) If the project sponsor elects to satisfy the requirements of Section 415.5 and of this Section by the Alternative specified above, the dwelling unit mix required by Section 207.6 may be waived.

(J) The Land Dedication Alternative may be satisfied through the dedication to the City of air space above or adjacent to the project, upon the approval of MOHCD, or a successor entity, and provided the other requirements of subsection (a)(2)(A)-(I) are otherwise satisfied.

TABLE 419.5

HOUSING REQUIREMENTS FOR THE UMU DISTRICT

*Requirement increases by 5% if dwelling unit mix required by Section 207.6 is waived.

(b) Adjustments to Requirements for the Inclusionary Housing Component. This Section is intended to incorporate, rather than supersede, any changes made to Planning Code Section 415. In the instance that the base requirements of Section 415 are amended, the above-noted requirements shall be reviewed, and if appropriate, amended and/or increased accordingly.

(Added by Ord. 108-10, File No. 091275, App. 5/25/2010; amended by Ord. 55-11, File No. 101523, App. 3/23/2011; Ord. 196-11 , File No. 110786, App. 10/4/2011, Eff. 11/3/2011; Ord. 56-13 , File No. 130062, App. 3/28/2013, Eff. 4/27/2013; Ord. 62-13 , File No. 121162, App. 4/10/2013, Eff. 5/10/2013; Ord. 182-15 , File No. 150496, App. 10/16/2015, Eff. 11/15/2015; Ord. 210-21, File No. 210868, App. 11/19/2021, Eff. 12/20/2021)

AMENDMENT HISTORY

Divisions (a)(1)(F), (a)(2)(B), (a)(2)(I) amended; former Table 419A.4 redesignated as Table 419.5 and internal references adjusted accordingly; Table 419.5 note amended; Ord. 196-11 , Eff. 11/3/2011. [Former] division (b) amended; Ord. 56-13 , Eff. 4/27/2013. Table 419.5 amended; Ord. 62-13 , Eff. 5/10/2013. Former division (b) deleted; former division (c) redesignated as (b); Ord. 182-15 , Eff. 11/15/2015. Divisions (a), (a)(1)(A)-(F), and (a)(2)-(a)(2)(J) amended; Ord. 210-21, Eff. 12/20/2021.

1. So in Ord. 210-21.

CODIFICATION NOTE