San Francisco County Municipal Code Ch. 85 The Housing Innovation Program

The Board of Supervisors finds and declares the following: (a) San Francisco faces a severe and continuing housing crisis. This crisis is caused by a shortage of affordable rental housing as well as a shortage of affordable homeownership opportunities. The City is committed to responding to this housing crisis with a multifaceted and innovative approach. (b) A housing innovation program can: (1) promote homeownership and housing preservation, especially for communities that are at high risk of displacement and have been historically denied equal access to capital; (2) develop and finance the construction of additional housing units that provide low-income and moderate-income homeowners the ability to leverage their assets to support multi- generational living and/or support their ability to age in place; and (3) explore creative prototypes for construction designs and financing options to provide housing for low-income and moderate-income residents.

(c) Further, a housing innovation program can create additional housing opportunities and complement the existing housing opportunities and resources administered by the Mayor’s Office of Housing and Community Development, such as homeownership programs that provide income-eligible residents with grants or loans to purchase or rehabilitate single-family homes, including for the development of additional units. (Added by Ord. 172-22, File No. 211232, App. 8/4/2022, Eff. 9/4/2022) (Former Sec. 85.1 added by Ord. 258-99, File No. 990624, App. 10/15/99; repealed by Ord. 171-03, File No. 030422, App. 7/3/2003)

For purposes of this Chapter 85, the following definitions apply: “Accessory Dwelling Unit” has the meaning set forth in Section 102 of the Planning Code, as it may be amended from time to time. “Area Median Income” means the median income of a household for the County of San Francisco, adjusted for household size, as annually published by the California Department of Housing and Community Development under California Code of Regulations Title 25 Section 6932 and pursuant to the authority granted under California Health and Safety Code Section 50093, as it may be amended from time to time. “Board” means the Board of Supervisors. “City” means the City and County of San Francisco. “Family Child Care Program” means a State-licensed childcare program provided by a Family Child Care Provider in accordance with all applicable laws, regulations, and other requirements. “Family Child Care Provider” means a State-licensed child care provider as defined in California Health and Safety Code Section 1596.791, as it may be amended from time to time. “Low-Income and Moderate Income” has the same meaning as “Persons and families of low or moderate income” as set forth in California Health and Safety Code Section 50093, as it may be amended from time to time. “MOHCD” means the Mayor’s Office of Housing and Community Development, or any successor agency, department, or office. “New Unit(s)” means one or more new Accessory Dwelling Units or other units constructed in accordance with the Program on the real property in San Francisco owned by the Property Owner. “Partner Organization” means an organization with the experience and capacity to administer the Program. “Program” means the Housing Innovation Program authorized by this Chapter 85. “Property Owner” means the legal owner of record of the Residence who has owned the Residence for at least five years prior to their application for assistance under the Program. For the purposes of establishing eligibility under the Program, a property owner who has inherited the Residence, including any inheritance in or through a trust, from a blood, adoptive, or step family relationship, specifically from a grandparent, parent, sibling, child, or grandchild, or the spouse or registered domestic partner of such relations, or the property owner’s spouse or registered domestic partner (each an “Eligible Predecessor”), may add an Eligible Predecessor’s duration of ownership of the Residence to the property owner’s duration of ownership of the Residence. “Residence” means the single-family property, without regards to zoning classification, in San Francisco owned and occupied by the Property Owner and for which the Property Owner is applying for assistance under the Program. “State” means the State of California. (Added by Ord. 172-22, File No. 211232, App. 8/4/2022, Eff. 9/4/2022) (Former Sec. 85.2 added by Ord. 258-99, File No. 990624, App. 10/15/99; repealed by Ord. 171-03, File No. 030422, App. 7/3/2003)

(a) Establishment. There is hereby created a Housing Innovation Program for the City to be administered by MOHCD. (b) Purpose. The purpose of the Program is to develop additional housing opportunities that complement the existing housing opportunities and resources offered through programs administered by MOHCD, including, but not limited to (1) promoting homeownership and housing preservation, especially for communities that are at high risk of displacement and have been historically denied equal access to capital; (2) financing the construction of additional housing units that support Low-Income and Moderate-Income homeowners with multi-generational living and/or the ability to age in place; and (3) exploring creative prototypes for housing and financing options for Low-Income and Moderate-Income residents.

(c) Duties. To administer the Program, MOHCD shall: (1) Provide grants to organizations, including a Partner Organization, of up to 10% of each disbursement of Program funds for the following purposes: (A) to establish marketing and educational materials about wealth-building and homeownership, with the goal of promoting racial equity and increasing participation in the Program by current and displaced San Francisco residents who have been historically disadvantaged by government and private actions; and (B) to provide professional development, capacity building, and training for staff to implement the purposes of the Program; (C) to develop creative construction design prototypes that could be pre-approved for simplified permitting and financing options for Low-Income and Moderate-Income residents, especially to add additional dwelling units to single family homes; (2) Provide loans and technical assistance for Low-Income and Moderate-Income Property Owners to construct the New Unit(s), with the goal of supporting multi-generational living and/or aging in place, provided that the following conditions shall apply to these loans: (A) the value of the Residence shall not be considered when assessing the Property Owner’s eligibility for a loan; (B) as long as the borrower is not in default and as long as the borrower continues to occupy the Residence or one of the New Unit(s) as their primary residence (except in extenuating circumstances as determined by MOHCD): (i) repayment shall be deferred until the earlier of: five years after the first certificate of occupancy is issued for the New Unit(s), or seven years after the deed of trust for the loan is recorded on the Residence or New Unit(s), except as described in subsection (c)(2)(C) below, (ii) the loan shall not accrue interest prior to the maturity date, and (iii) the loan shall be repaid in full on the maturity date; (C) if the borrower enters into an agreement, effective upon commencement of the loan, to receive referrals of households with rental subsidies from the San Francisco Housing Authority and/or the Department of Homelessness and Supportive Housing or any successor agency to fill any and all vacancies in the New Unit(s) or the Residence during the loan term, repayment shall be deferred until the earlier of: 10 years after the first certificate of occupancy is issued for the New Unit(s), or 12 years after the deed of trust for the loan is recorded on the Residence or New Unit(s); (D) if the New Unit(s) is sold, separately or in conjunction with the sale of the Residence, prior to the maturity date, the loan shall either be (i) assumed by the new owner of the New Unit(s), if the new owner meets all other loan eligibility requirements, for the remainder of the loan term, or (ii) repaid in full with interest immediately upon the sale of the New Unit(s); (E) the Property Owner enters into one or more agreements with the City (i) subjecting the New Unit(s) to Administrative Code Chapter 37, as it may be amended from time to time, including but not limited to the rent increase limitations of Chapter 37, and (ii) waiving the Property Owner’s ability to displace one or more tenants in the New Unit(s) in accordance with the Ellis Act, California Government Code Sections 7060, et seq., as it may be amended from time to time; (F) within the 10 years prior to the Property Owner’s application for the loan, and continuing until the commencement of the loan, the Property Owner has not at the Residence: (i) displaced one or more tenants in accordance with the Ellis Act, California Government Code Sections 7060, et seq., as it may be amended from time to time; (ii) recovered possession of a unit pursuant to Administrative Code Section 37.9(a)(8), as it may be amended from time to time; (iii) recovered possession of a unit pursuant to a Buyout Agreement as defined in Administrative Code Section 37.9E, as it may be amended from time to time; or (iv) otherwise withdrawn any rental unit from rental housing use; (G) the Property Owner has not received a notice of violation of Administrative Code Chapter 37 within the 10 years prior to the Property Owner’s application for the loan, and continuing until the commencement of the loan; and (H) MOHCD shall require any other loan terms it deems necessary, except that MOHCD may not impose any conditions or restrictions that prohibit the inheritance of the New Unit(s) or Residence by the heir(s) of the Low-Income and Moderate-Income Property Owners; and (3) Provide down payment assistance loans for: (A) the acquisition of units by Low-Income and Moderate-Income tenants who: (i) are at risk of displacement from their rental unit due to the anticipated sale of their tenancy-in-common building, and (ii) desire to purchase their rental unit; (B) the acquisition of single-family homes, condominiums, and residential units by Low-Income and Moderate-Income tenants who: (i) are at risk of displacement due to sale or conversion of the single-family home, condominium, or residential unit that they are currently renting, and (ii) desire to purchase that single-family home, condominium, or residential unit; and (C) Family Child Care Providers who desire to purchase a residence to operate a Family Child Care Program. (Added by Ord. 172-22, File No. 211232, App. 8/4/2022, Eff. 9/4/2022) (Former Sec. 85.3 added by Ord. 258-99, File No. 990624, App. 10/15/99; repealed by Ord. 171-03, File No. 030422, App. 7/3/2003)

(a) MOHCD may administer the Program through one or more Partner Organizations, subject to this Chapter 85 and any rules or regulations adopted by MOHCD. If MOHCD administers the Program through one or more Partner Organizations, MOHCD shall comply with Administrative Code Chapter 21 and Chapter 21G, as applicable, and give preference to Partner Organizations that demonstrate successful prior experience working with initiatives similar to the Program in historically disadvantaged communities in San Francisco. (b) The Program shall be funded through the General Fund, subject to the City’s annual appropriations ordinance. MOHCD shall establish an account for $10 million appropriated to MOHCD under Ordinance No. 108-21 for the creation of additional affordable housing opportunities and innovation. MOHCD, and the Partner Organizations if applicable, shall administer the Program in a manner that can leverage any applicable external funding, including but not limited to funding administered by the State, federal government, private foundations, or lenders. (c) MOHCD may adopt rules or regulations to administer the Program consistent with this Chapter 85, including but not limited to rules or regulations designed to avoid abuse and fraud, provided that MOHCD shall not require any Partner Organization, as a condition of assistance, to use a Citywide housing portal for any units constructed or assisted under the Program for the purpose of registration, marketing, or leasing. (d) MOHCD shall support Property Owners with the rental of any vacant New Unit(s) to tenants receiving rental assistance from any federal, State, local, or nonprofit-administered benefit or subsidy program. (e) MOHCD shall annually report to the Board of Supervisors regarding the implementation and results of the Program. (Added by Ord. 172-22, File No. 211232, App. 8/4/2022, Eff. 9/4/2022) (Former Sec. 85.4 added by Ord. 258-99, File No. 990624, App. 10/15/99; repealed by Ord. 58-03, File No. 030043, App. 4/11/2003)

In enacting and implementing this Chapter 85, the City is assuming an undertaking only to promote the general welfare. It is not assuming, nor is it imposing on its officers and employees, an obligation or duty for breach of which it is liable in money damages or any other relief to any person who claims that such a breach proximately caused injury or damages, including but not limited to any claims by landlords, tenants, or property owners affected by assistance offered under the Program. (Added by Ord. 172-22, File No. 211232, App. 8/4/2022, Eff. 9/4/2022) (Former Sec. 85.5 added by Ord. 258-99, File No. 990624, App. 10/15/99; repealed by Ord. 171-03, File No. 030422, App. 7/3/2003)

If any section, subsection, sentence, clause, phrase, or word of this Chapter 85, or any application thereof to any person or circumstance, is held to be invalid or unconstitutional by a decision of a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions or applications of this Chapter. The Board hereby declares that it would have enacted this Chapter and every section, subsection, sentence, clause, phrase, and word not declared invalid or unconstitutional without regard to whether any other portion of this Chapter or application thereof would be subsequently declared invalid or unconstitutional. (Added by Ord. 172-22, File No. 211232, App. 8/4/2022, Eff. 9/4/2022) (Former Sec. 85.6 added by Ord. 258-99, File No. 990624, App. 10/15/99; repealed by Ord. 171-03, File No. 030422, App. 7/3/2003) Sec. 85.7. (Added by Ord. 258-99, File No. 990624, App. 10/15/99; repealed by Ord. 171-03, File No. 030422, App. 7/3/2003) Sec. 85.8. (Added by Ord. 258-99, File No. 990624, App. 10/15/99; repealed by Ord. 171-03, File No. 030422, App. 7/3/2003) Sec. 85.9. (Added by Ord. 258-99, File No. 990624, App. 10/15/99; repealed by Ord. 171-03, File No. 030422, App. 7/3/2003) Sec. 85.10. (Added by Ord. 258-99, File No. 990624, App. 10/15/99; amended by Ord. 58-03, File No. 030043, App. 4/11/2003; repealed by Ord. 171-03, File No. 030422, App. 7/3/2003) CHAPTER 86:

[REDESIGNATED] Editor’s Note: Former Ch. 86, “Children and Families First Commission”, comprising former Secs. 86.1 through 86.5, was redesignated as Ch. 5, Art. XXVIII by Ord. 99-26, effective June 29, 2026.

(Added by Ord. 409-98, App. 12/24/98; amended by Ord. 321-99, File No. 991829, App. 12/17/99; Ord. 189-22, File No. 220808, App. 9/8/2022, Eff. 10/9/2022; amended and redesignated as Sec. 5.28-1 by Ord. 99-26, File No. 260217, App. 5/29/2026, Eff. 6/29/2026)

(Added by Ord. 409-98, App. 12/24/98; amended by Ord. 321-99, File No. 991829, App. 12/17/99; Ord. 221, File No. 000150, App. 9/29/2000; Ord. 189-22, File No. 220808, App. 9/8/2022, Eff. 10/9/2022; amended and redesignated as Sec. 5.28-2 by Ord. 99-26, File No. 260217, App. 5/29/2026, Eff. 6/29/2026)

(Added by Ord. 409-98, App. 12/24/98; amended by Ord. 321-99, File No. 991829, App. 12/17/99; Ord. 189-22, File No. 220808, App. 9/8/2022, Eff. 10/9/2022; amended and redesignated as Sec. 5.28-3 by Ord. 99-26, File No. 260217, App. 5/29/2026, Eff. 6/29/2026)

(Added by Ord. 409-98, App. 12/24/98; amended by Ord. 189-22, File No. 220808, App. 9/8/2022, Eff. 10/9/2022; amended and redesignated as Sec. 5.28-4 by Ord. 99-26, File No. 260217, App. 5/29/2026, Eff. 6/29/2026)

(Added by Ord. 409-98, App. 12/24/98; repealed by Ord. 99-26, File No. 260217, App. 5/29/2026, Eff. 6/29/2026)