SEC. 415.8. DURATION AND MONITORING OF AFFORDABILITY.

• (a) For any units permitted under the Program:

(1) All units constructed pursuant to Sections 415.6 (On-site Affordable Housing Alternative) and 415.7 (Off-site Affordable Housing Alternative) must be owner-occupied, as defined in the Procedures Manual, in the case of Owned Units, or occupied by qualified households in the case of Rental Units.

(2) Units shall not remain vacant for a period exceeding 60 days without the written consent of MOHCD.

(3) All units constructed pursuant to Sections 415.6 and 415.7 must remain Affordable to Qualifying Households for the life of the project.

(4) The income levels specified in the Notice of Special Restrictions and/or conditions of approval for the project shall be the required income percentages for the life of the project. Notwithstanding the foregoing sentence, if approved by MOHCD and as provided in the Procedures Manual, an exception to the required income percentage may be made in the following cases:

(A) a rental unit that converts to an Owned Unit with Qualifying Income up to a maximum of 150% of AMI and a sales price established pursuant to Section 415.8(b)(5);

(B) where there is an existing tenant who has undergone re-certification as defined in the Procedures Manual, the existing tenant’s household income may increase up to a maximum of 200% of AMI;

(C) new Owned Units where the project sponsor has used good faith efforts to secure a contract with a qualified buyer but is unable to secure such a contract in a timely manner from the initiation of marketing;

(D) resale Owned Units where the owner has used good faith efforts to secure a contract with a qualified buyer but is unable to secure a buyer contract at a maximum resale price specified by MOHCD in a timely manner;

(E) the Qualifying Income level for new or resale Owned Units may be set at 20% above the income level stated in the Notice of Special Restrictions or conditions of approval; or

(F) resale Owned Units where the owner has requested an adjustment to the maximum income limit stated in the existing Notice of Special Restrictions or other document establishing affordability requirements for the unit and/or has requested an increase to the Qualifying Income level, pursuant to subsection (b)(9).

(5) The Commission or the Department shall require all housing projects subject to Section 415.1 et seq. to record a Notice of Special Restrictions in the official records of the City and County of San Francisco. The Notice of Special Restrictions must incorporate the affordability restrictions. All projects described in Section 415.3(a) must incorporate all of the requirements of this Section 415.8 into the Notice for Special Restrictions, including any provisions required to be in the conditions of approval for housing projects described in Section 415.3(a). These Section 415.3(a) projects which are housing projects that go through the conditional use or planned unit development process shall have conditions of approval. The conditions of approval shall specify that project applicants shall adhere to the marketing, monitoring, and enforcement procedures outlined in the Procedures Manual, as amended from time to time, in effect at the time of project approval. The Commission shall file the Procedures Manual in the case file for each project requiring inclusionary housing pursuant to this Program. The Procedures Manual will be referenced in the Notice of Special Restrictions for each project.

(b) For any units permitted to be Owned Units under the Program, the MOHCD shall:

(1) Establish and implement a process for reselling an affordable unit in the Procedures Manual.

(2) Provide that owners may not change title on the unit without review and approval by MOHCD and according to guidelines published in the Procedures Manual, as amended from time to time.

(3) Provide that owners must comply with refinancing procedures and limitations as published in the Procedures Manual, as amended from time to time.

(4) Provide that, in order to retain all units restricted as affordable under this Program within the City’s affordable housing stock, the specific procedures for passing an affordable unit through inheritance are contained in the Procedures Manual. All transfers through inheritance must be reviewed and approved by MOHCD and, in all cases, the heir must acknowledge and agree to the provisions of the Program. The following households may inherit the ability to occupy a unit restricted under this Program: (i) a spouse or registered domestic partner, regardless of income; or (ii) a child of the owner if the child is a qualifying household for the unit. If the heir qualifies under one of these categories, the heir must occupy the unit or the heir must market and sell the unit at the restricted price through a public lottery process and retain the proceeds from the sale. If the heir does not qualify to occupy the unit, the heir must market and sell the unit at the restricted price to a qualified buyer through a public lottery process. The heir would retain the proceeds of such sale.

(5) Require that affordable Rental Units permitted by the Commission to be converted to Owned Units satisfy the requirements of the Procedures Manual, as amended from time to time, including that the units shall be sold at restricted

sales prices to households meeting the income qualifications specified in the Notice of Special Restrictions or conditions of approval, with a right of first refusal for the occupant(s) of such units at the time of conversion. If the current tenant qualifies for and purchases the unit, the unit shall be sold at a sales price corresponding to the affordability level required for the unit as a Rental Unit as specified in the Notice of Special Restrictions or conditions of approval, with a maximum allowable Qualifying Income level up to 150% of AMI. If the unit is sold to a buyer who is not a current tenant, the sales price shall correspond to the affordability level required for the unit as an Owned Unit as specified in the Notice of Special Restrictions or conditions of approval. Upon conversion to ownership, the units are subject to the resale and other restrictions of this Program for the life of the project, as defined in the Notice of Special Restrictions or conditions of approval for the Project.

(6) For Owned Units approved pursuant to Sections 415.6 or 415.7, the Notice of Special Restrictions or conditions of approval will include provisions restricting resale prices and purchaser income levels according to the formula specified in the Procedures Manual, as amended from time to time. All amenities and parking spaces that were purchased with the initial sale of the Owned Unit must be sold with the Owned Unit upon resale and shall be included in the resale price. In the event subordination of the Affordability Conditions contained in a recorded Notice of Special Restrictions may be necessary to ensure the project applicant’s receipt of adequate construction and/or permanent financing for the project, or to enable first-time home buyers to qualify for mortgages, the project applicant may follow the procedures for subordination of affordability restrictions as described in the Principal Project’s conditions of approval or in the Procedures Manual. A release following foreclosure or other transfer in lieu of foreclosure may be authorized if required as a condition to financing pursuant to the procedures set forth in the Procedures Manual.

(7) Purchasers of Affordable Units shall secure the obligations contained in the Notice of Special Restrictions or conditions of approval by executing and delivering to the City a promissory note secured by a deed of trust encumbering the applicable affordable unit as described in the Procedures Manual or by an alternative means if so provided for in the Procedures Manual, as amended from time to time.

rchasers of Affordable Units shall secure the obligations contained in the Notice of Special Restrictions or conditions of approval by executing and delivering to the City a promissory note secured by a deed of trust encumbering the applicable affordable unit as described in the Procedures Manual or by an alternative means if so provided for in the Procedures Manual, as amended from time to time.

(8) Procedures for Units Unable to Resell. The Board of Supervisors finds that certain requirements of this Program and the Procedures Manual may create hardship for owners of Affordable Units restricted under this Program. However, the Board also recognizes that the requirements of this Program are important to preserve the long-term affordability of units restricted under the Program. In order to allow some relief for owners of Affordable Units during a time of economic downturn, but to provide the maximum protection for the long-term affordability of the units, the Board directs MOHCD to analyze the following issues and, if it deems appropriate, to propose amendments to the Procedures Manual to address the issues:

(A) Waiver of Resale Requirements and Maximum Qualifying Income Level for New Buyers of Resale BMR Units. The Board recognizes that the risk to low- and moderate-income homeowners during times of economic downturn can increase the risk of default and foreclosure of units restricted under this Program. The Board directs MOHCD to study ways to reduce such risks in the below market rate unit context and, if it deems appropriate, to make recommendations to the Planning Commission to amend the Procedures Manual to allow MOHCD discretion, in certain limited circumstances, to waive requirements for owners of Affordable Units who have used good faith efforts to secure a contract with a qualified buyer but are unable to resell their unit in a timely manner. Such amendments to the Procedures Manual may include, but are not limited to, authorizing MOHCD to make one or more allowances for owners of Affordable Units unable to resell, such as: (i) a one-time waiver of the first-time homebuyer rule for the purchasing household; (ii) a onetime waiver of qualifying household size requirements for the purchasing household; (iii) a one-time waiver of owner occupancy rules to allow a temporary rental; (iv) a one-time modification of the asset test for the new buyer household; and (v) allowing MOHCD discretion to increase the Qualifying Income level for the unit by up to 20% above the maximum income limit currently allowed by the Use Restrictions for the unit but at no time higher than 150% of AMI. MOHCD and the Commission shall set forth criteria for granting such allowances such as establishing a minimum time that the units must have been advertised by MOHCD without selling; establishing criteria related to unusual economic or personal circumstances of the owner; providing a maximum percentage for the increase above the maximum income limit

the unit but at no time higher than 150% of AMI. MOHCD and the Commission shall set forth criteria for granting such allowances such as establishing a minimum time that the units must have been advertised by MOHCD without selling; establishing criteria related to unusual economic or personal circumstances of the owner; providing a maximum percentage for the increase above the maximum income limit

currently allowed; providing that the increase may only be granted on a one-time basis; and requiring the owner to clearly establish that the BMR unit is being resold at the maximum resale price specified in the Procedures Manual, as amended from time to time.

(B) Waiver of Maximum Qualifying Income Level for New Buyers of Initial Sale BMR Units. The Board of

Supervisors recognizes that the current Program provides that the income of a new buyer of a below market rate household cannot exceed the maximum income stated in the Planning Approval or Notice of Special Restrictions for the BMR Unit. Due to less desirable developments or geographic areas, a project sponsor is sometimes unable to find a buyer for a BMR Unit within the maximum income stated in the Planning Approval or Notice of Special Restrictions for the unit. This situation makes it difficult, if not impossible, for certain current owners of below market rate units to resell their units. In order to minimize this situation, the Board of Supervisors directs MOHCD to study ways to address this issue and, if it deems appropriate, to make recommendations to the Planning Commission to amend the Procedures Manual to allow MOHCD to assist project sponsors who have used good faith efforts as determined by MOHCD to secure a contract with a qualified buyer but who are unable to secure such a contract in a timely manner from the initiation of marketing. Such amendments may include allowing MOHCD discretion to increase the Qualifying Income level for the unit by up to 20% above the maximum income limit currently allowed by the Use Restrictions for the unit but at no time higher than 150% of AMI. MOHCD and the Planning Commission shall establish limits to this or a similar proposal such as:

providing a maximum percentage for the increase above the maximum income limit currently allowed; requiring that a certain period without securing a buyer would pass before such an allowance would be made; and providing that the increase may only be granted on a one-time basis.

(9) Adjustment of Pricing and Income Limits for Owned Units Purchased at a Price Above the Affordable Price Determined at the Time of Resale.

(A) Findings and Purposes. The Board of Supervisors finds that the requirements of this Program and the Procedures Manual may create financial hardship for certain Owners of Affordable Units who could suffer a financial loss if said Owners sold their units at a price in compliance with the existing Notice of Special Restrictions or other affordability restrictions for the unit. However, the Board also recognizes that the requirements of this Program are important to preserve the long-term affordability of units restricted under the Program. To provide flexibility while protecting the long-term affordability of the Affordable Units and viability of the Program, this subsection (b)(9) provides options to allow some relief for Owners of Affordable Units that are re-selling at a time when the Affordable Price would be lower than the price at which they originally purchased their Affordable Unit.

(B) Authorization to Reset Pricing and Income Limits. The Board authorizes MOHCD to adjust the Affordable Price at the time of resale and to establish the corresponding maximum income limit or income range for eligible Owned Units, as further specified and limited in this subsection (b)(9). This authorization and adjustment procedure shall be available only once per eligible Owned Unit and shall result in an Affordable Price that is based on a permanent increase to the restrictions on Affordable Price and maximum income limit for the Owned Unit. For the resale and any subsequent resale of the Owned Unit, the Maximum Purchase Price shall be determined by MOHCD based on the new, increased maximum percentage of AMI established pursuant to this subsection (b)(9).

(C) Eligibility. An Owned Unit is eligible for an increase in the Affordable Price and corresponding maximum income limit or income range for the Owned Unit if: 1) the Owner purchased the unit at a price above the Affordable Price at the time of resale, which Affordable Price shall be determined by MOHCD based on the existing Notice of Special Restrictions or other document establishing affordability requirements for the unit at the time MOHCD processes the Owner’s resale request; and 2) the Owner submits a resale request for the unit to MOHCD within three years from the effective date of the ordinance in Board File No. 240802, enacting this subsection (b)(9). The Owner is not required to attempt to sell the unit prior to the adjustment described in this subsection (b)(9) to qualify for said adjustment.

(D) Maximum Allowable Adjustment. For the resale of an Owned Unit eligible for an adjustment under this subsection (b)(9), MOHCD may establish an adjusted Affordable Price up to the original purchase price paid by the current Owner. MOHCD may increase the maximum income limit or income range for the unit to reflect the adjusted

Affordable Price, up to a maximum of 130% AMI. In addition, once per eligible Owned Unit, MOHCD may increase the maximum Qualifying Income level for the unit by up to 20% above the maximum income limit or income range in the new Notice of Special Restrictions or other document establishing affordability requirements for the unit, provided that the increased maximum Qualifying Income level does not exceed 150% of AMI. The ultimate resale price may be lower or higher than the adjusted Affordable Price. Nothing in this subsection (b)(9) ensures or entitles an Owner to a resale price equal to the adjusted Affordable Price when reselling their Owned Unit.

(E) Procedures.

(i) MOHCD shall propose policies and procedures for implementing price and AMI level adjustments consistent with this subsection (b)(9) to the Planning Commission for inclusion in the Procedures Manual.

(ii) MOHCD may establish an adjusted Affordable Price and increase the maximum AMI level consistent with this subsection (b)(9) for the purposes of processing the resale, including marketing the Affordable Unit. If approved pursuant to subsections (b)(9)(E)(iii) through (vi), the increased maximum AMI level shall be established for all other purposes by the recording of a new Notice of Special Restrictions upon closing the resale of the Owned Unit that reflects the increased AMI level. As a condition of MOHCD’s approval of the adjustments under this subsection (b)(9), the Owner shall execute and authorize the recordation of the new Notice of Special Restrictions in senior lien priority upon closing the resale of the Owned Unit.

(iii) For units in principal projects that required Planning Commission approval, the Planning Commission, in consultation with MOHCD, may modify any original conditions of approval for the principal project related to the maximum price or income levels consistent with this subsection (b)(9), including, but not limited to, modification to the required terms of a Notice of Special Restrictions recorded or to be recorded against the project or the Owned Unit. If the Planning Commission has delegated its authority to the Planning Department to review and approve requests for pricing and AMI level adjustments, such adjustments shall be reviewed and considered for approval by the Director of the Planning Department, and the Planning Commission shall not hold a public hearing for discretionary review.

(iv) For units in principal projects that required Planning Department approval but not Planning Commission approval, the Planning Department, in consultation with MOHCD, may modify any original conditions of approval for the principal project related to the maximum price or income levels including but not limited to modification to the required terms of a Notice of Special Restrictions recorded or to be recorded against the project or the Owned Unit.

ing Department approval but not Planning Commission approval, the Planning Department, in consultation with MOHCD, may modify any original conditions of approval for the principal project related to the maximum price or income levels including but not limited to modification to the required terms of a Notice of Special Restrictions recorded or to be recorded against the project or the Owned Unit.

(v) For units in principal projects that did not require Planning Commission or Planning Department approval, the Planning Department, in consultation with MOHCD, may modify the required terms of a Notice of Special Restrictions recorded or to be recorded against the project or the Owned Unit.

(vi) Any other City approval required prior to modifying the terms of a Notice of Special Restrictions, such as amending a development agreement, shall be obtained.

(vii) Modifications under this subsection (b)(9) shall not be subject to review under any other Planning Code provision applicable to a change of use or change of condition including but not limited to Sections 303(e), 309(f), or 329(f)(7).

(F) Reporting. MOHCD shall provide a report to the Inclusionary Housing Technical Advisory Committee, Planning Commission, and Board of Supervisors or a committee thereof after 10 adjustments are approved under this subsection (b)(9), and after every tenth adjustment approved thereafter. In addition, MOHCD shall provide a report to the Inclusionary Housing Technical Advisory Committee, Planning Commission, and Board of Supervisors or a committee thereof within twelve months from the effective date of the ordinance in Board File No. 240802 enacting this subsection (b)(9), and every twelve months thereafter. The Board of Supervisors or a committee thereof shall hold a public hearing on the first annual report; accordingly, that report must be accompanied by a draft resolution for the Board to accept the report. Each report provided pursuant to this subsection (F) shall include at least the following information for each approved adjustment:

(i) The location of the Affordable Unit;

(ii) The date the adjustment was approved; and

(iii) Pricing and AMI level information before and after the adjustment.

(G) Expiration of this Subsection and Related Subsection. This subsection (b)(9), and the related subsection (a) (4)(F), shall expire by operation of law four years from the effective date of the ordinance in Board File No. 240802 enacting those two subsections. Upon expiration of those subsections, the City Attorney is authorized to cause their removal from the Planning Code, which removal may include as appropriate nonsubstantive modifications in subsection lettering, numbering, punctuation, and language.

(c) For any units permitted to be Rental Units under the Program, MOHCD shall establish:

(1) restrictions on lease changes and propose such restrictions to the Commission for inclusion in the Procedures Manual.

(2) additional eligibility criteria for sub-leasing and propose such restrictions to the Commission for inclusion in the Procedures Manual.

(3) criteria for continued eligibility for occupied rental units and propose such restrictions to the Commission for inclusion in the Procedures Manual.

(4) criteria for homeownership status and propose such restrictions to the Commission for inclusion in the Procedures Manual.

(5) criteria for granting affordable rental households the right of first refusal in purchasing an Affordable Unit that is converted from a Rental Unit to an Owned Unit and propose such restric- tions to the Commission for inclusion in the Procedures Manual.

(6) that at no time shall an annual increase exceed the actual allowable increase for that year. In cases where the rent has decreased, the tenant’s rent must be decreased. In cases where the annual adjustments have not been applied year to year, the Project Owner may not take advantage of any increases that were not applied until the Unit is vacant and rerented.

(Added as Sec. 315.7 by Ord. 37-02, File No. 001262, App. 4/5/2002; amended by 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. 258-24, File No. 240802, App. 11/14/2024, Eff. 12/15/2024)

AMENDMENT HISTORY

Division (a)(4) amended and divisions (a)(4)(A) through (E) added; division (b)(5) amended; division (b)(8) amended and divided into divisions (b)(8) and (b)(8)(A)1 ; divisions (b)(8)(B) and (c)(6) added; Ord. 62-13 , Eff. 5/10/2013. Divisions (a)(1)- (a)(4)(A), (a)(4)(C)-(E), (b)-(b)(8)(B), (c), and (c)(5) amended; Ord. 210-21 , Eff. 12/20/2021. Divisions (a)(1), (a) (4)-(a)(4)(B), (a)(4)(D)-(E), (a)(5), (b)(1)-(6), (b)(8)-(b)(8)(B) amended; divisions (a)(4)(F) and (b)(9)-(b)(9)(G) added; Ord. 258-24 , Eff. 12/15/2024.