SEC. 415.6. ON-SITE AFFORDABLE HOUSING ALTERNATIVE.

   If a project sponsor elects to provide on-site units pursuant to Section 415.5(g), the development project shall meet the following requirements:

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

      (1)   For housing development projects consisting of 10 dwelling units or more, but less than 25 dwelling units, the number of affordable units constructed on-site shall generally be 12% of all units constructed on the project site. The affordable units shall all be affordable to low-income households. 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.

      (2)   For any housing development project consisting of 25 or more Owned Units, the number of affordable units constructed on-site shall generally be 20% of all units constructed on the project site. A minimum of 10% of the units shall be affordable to low-income households, 5% of the units shall be affordable to moderate-income households, and 5% of the units shall be 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 on-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 130% of Area Median Income, 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 ownership category.

      (3)   For any Rental Housing Project consisting of 25 or more Rental Units, the number of affordable units constructed on-site shall generally be 18% of all units constructed on the project site, with a minimum of 10% of the units affordable to low-income households, 4% of the units affordable to moderate-income households, and 4% 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 on-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 110% of Area Median Income, 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.

      (4)   Notwithstanding the foregoing Area Median Income limits for Rental Units and Owned Units, the maximum affordable rents or sales price shall be no higher than 20% below median market rents or sales prices for the neighborhood within which the project is located, which shall be defined in accordance with the American Community Survey Neighborhood Profile Boundaries Map. MOHCD shall adjust the allowable rents and sales prices, and the eligible households for such units, accordingly, and such potential readjustment shall be a condition of approval upon project entitlement. The City shall review the updated data on neighborhood rents and sales prices on an annual basis.

      (5)   Starting on January 1, 2018, and no later than January 1 of each year thereafter, MOHCD shall increase the percentage of units required on-site for projects consisting of 10 - 24 units, as set forth in Section 415.6(a)(1), by increments of 0.5% each year, until such requirement is 15%. For all development projects with 25 or more Owned or Rental Units, the required on-site affordable ownership housing to satisfy this Section 415.6 shall increase by 1.0% annually for two consecutive years starting January 1, 2018. The increase shall be apportioned to units affordable to low-income households, as defined above in subsection 415.6(a)(3). Starting January 1, 2020, the increase to on-site rental and ownership developments with 25 or more units shall increase by 0.5% annually, with such increases allocated equally for rental and ownership units to moderate and middle income households, as defined above in subsection 415.6(a)(3). The total on-site inclusionary affordable housing requirement shall not exceed 26% for development projects consisting of Owned Units or 24% for development projects consisting of Rental Units, and the increases shall cease at such time as these limits are reached. MOHCD shall provide the Planning Department, DBI, and the Controller with information on the adjustment to the on-site percentage so that it can be included in the Planning Department’s and DBI’s website notice of the fee adjustments and the Controller’s Citywide Development Fee and Development Impact Requirements Report described in Section 409(a).

      (6)   The Department shall require as a condition of Department approval of a project’s building permit, or as a condition of approval of a Conditional Use Authorization or Planned Unit Development or as a condition of Department approval of a live/work project, that 12%, 18%, or 20%, as applicable, or such percentage that has been adjusted annually by MOHCD, of all units constructed on the project site shall be affordable to qualifying households so that a project sponsor must construct .12, .18, or .20 times, or such current number as adjusted annually by MOHCD, as applicable, the total number of units produced in the principal project. If the total number of units is not a whole number, the project sponsor 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 on-site requirement rate to the total project units.

      (7)   In the event one or more of the Rental Units in the principal Rental Housing Project become ownership units, for each converted Rental Unit, or for the principal Rental Housing Project in its entirety, as applicable, 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 fee requirement for Owned Units, or (B) provide additional on-site or off-site affordable units equivalent to the then-current inclusionary requirements for Owned Units, apportioned among the required number of units at various income levels in compliance with the requirements in effect at the time of conversion.

      (8)   Specific Geographic Areas.For any housing development that is located in an area with a specific affordable housing requirement set forth in a Special Use District or in any other section of the Code such as Section 419, the higher housing requirement shall apply. The Planning Department, in consultation with the Controller, shall undertake a study of areas greater than 5 acres in size, where an Area Plan, Special Use District, or other re-zoning is being considered for adoption or has been adopted after January 1, 2015, to determine whether a higher on-site inclusionary affordable housing requirement is feasible on sites that have received a 20% or greater increase in developable residential gross floor area or a 35% or greater increase in residential density over prior zoning, and shall submit such information to the Planning Commission and Board of Supervisors.

      (9)   If the principal project has resulted in demolition, conversion, or removal 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 Commission or the Department shall require that the project sponsor replace the number of affordable units removed with units of a comparable number of bedrooms and sales prices or rents, in addition to compliance with the requirements set forth in this Section.

      (10)   The applicable amount of the percentage required for the on-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 on-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 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 such project, for the duration of the litigation.

   (b)   Any On-site units provided through this Section 415.6 may be used to qualify for a density bonus under California Government Code Section 65915, any ordinance implementing Government Code Section 65915, or one of the Affordable Housing Bonus Programs contained in Planning Code Section 206et seq. An applicant seeking a density bonus under State Law shall provide reasonable documentation to establish eligibility for a requested density bonus, incentive or concession, and waiver or reduction of development standards, as provided for under State Law and as consistent with the process and procedures detailed in a locally adopted ordinance implementing the State Law.

   (c)   Beginning in January 2018, the Planning Department shall prepare an annual report to the Planning Commission about the number of density bonus projects under California Government Code Section 65915, the number of density bonus units, and the types of concessions and incentives and waivers provided to each density bonus project.

   (d)   In the event the project sponsor is eligible for and elects to receive additional density under California Government Code Section 65915, the Sponsor shall pay the Affordable Housing Fee on any additional units or square footage authorized under that section in accordance with the provisions in Section 415.5(g)(1)(D).

   (e)   Timing of Construction. On-site affordable housing required by this Section 415.6 shall be constructed, completed, ready for occupancy, and marketed no later than the market rate units in the principal project.

   (f)   Type of Housing.

      (1)   Equivalency of Units. In general, affordable units constructed under this Section 415.6 shall be comparable in number of bedrooms, exterior appearance and overall quality of construction to market rate units in the principal project. A Notice of Special Restrictions shall be recorded prior to issuance of the first construction document and shall specify the number, location and sizes for all affordable units required under this subsection (f). The affordable units shall be evenly distributed throughout the building. For buildings over 120 feet in height, as measured under the requirements set forth in the Planning Code, the affordable units may be distributed throughout the lower 2/3 of the building, as measured by the number of floors. The interior features in affordable units should be generally 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 good and new quality and are consistent with then-current standards for new housing. 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.

      (2)   Minimum Size of Affordable Units. The affordable units are not required to be the same size as the market rate units. For buildings over 120 feet in height, as measured under the requirements set forth in the Planning Code, the average size of the unit type may be calculated for the lower 2/3 of the building, as measured by the number of floors. All units shall be no smaller than the minimum unit sizes set forth by the California Tax Credit Allocation Committee as of May 16, 2017, and no smaller than 300 square feet for studios. The total residential floor area devoted to the affordable units shall not be less than the applicable percentage applied to the total residential floor area of the principal project, provided that a 10% variation in floor area is permitted.

   (g)   Marketing the Units. The Mayor’s Office of Housing and Community Development (“MOHCD”) shall be responsible for overseeing and monitoring the marketing of affordable units under this Section 415.6. 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 415.6et seq., referred to in the Procedures Manual as Below Market Rate (BMR units). No developer marketing units under the Program shall be able to market affordable 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 ownership units become available for re-sale 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 as an addendum to the Procedures Manual. Otherwise, it is the policy of the City to treat all households equally in allocating affordable units under this Program.

   (h)   Individual affordable units constructed under Section 415.6 as part of an on-site project shall not have received 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. Other units in the same on-site project may have received 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.

   (i)   Notwithstanding the provisions of Section 415.6 (h) above, a project may use California Debt Limit Allocation Committee (CDLAC) tax-exempt bond financing and 4% tax credits under the Tax Credit Allocation Committee (TCAC) to help fund its obligations under Section 415.1et seq. as long as the project provides 20% of the units as affordable to households at 50% of Area Median Income for on-site housing or 10% of the units as affordable to households at 50% of Area Median Income, and 30% of the units as affordable to households at 60% of Area Median Income for on-site housing. The income table to be used for such projects when the units are priced at 50% or 60% of Area Median Income is the income table used by MOHCD for the Inclusionary Affordable Housing Program, not that used by TCAC or CDLAC. Except as provided in this subsection (i), all units provided under this Section must meet all of the requirements of Section 415.1et seq. and the Procedures Manual for on-site housing.

   (j)   Benefits. If the project sponsor elects to satisfy the affordable housing requirements through the production of on-site affordable housing in this Section 415.6 , the project sponsor shall be eligible to receive a refund for only that portion of the housing project which is affordable for the following fees: a Conditional Use authorization or other fee required by Section 352 of this Code, if applicable; an environmental review fee required by Administrative Code Section 31.22, if applicable; a building permit fee required by Section 355 of this Code for the portion of the housing project that is affordable. The project sponsor shall pay the building fee for the portion of the project that is market-rate. An application for a refund must be made within six months from the issuance of the first certificate of occupancy.

   The Controller shall refund fees from any appropriated funds to the project sponsor on application by the project sponsor. The application must include a copy of the Certificate of Occupancy for all units affordable to a qualifying household required by the Inclusionary Housing Program. It is the policy of the Board of Supervisors to appropriate money for this purpose from the General Fund.

(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. 164-15 , File No. 150348, App. 9/23/2015, Eff. 10/23/2015, Retro. 5/20/2015; Ord. 188-15 , File No. 150871, App. 11/4/2015, Eff. 12/4/2015; 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. 158-17, File No. 161351, App. 7/27/2017, Eff. 8/26/2017; Ord. 208-17, File No. 170834, App. 11/3/2017, Eff. 12/3/2017; 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. 70-19, File No. 181154, App. 4/19/2019, Eff. 5/20/2019)

AMENDMENT HISTORY

Division (a)(1) amended; former division (a)(1)(A) redesignated as new division (a)(2) and amended; former divisions (a)(1)(B) and (C) deleted; former division (a)(2) redesignated as (a)(3) and amended; [former] division (a)(4) added; divisions (c) and (e) amended; new division (f) added and former division (f) redesignated as (g); Ord. 62-13 , Eff. 5/10/2013. Divisions (d) and (d)(2) amended and references to "MOHCD" corrected throughout; Ord. 277-13, Eff. 1/17/2014. Division (c) amended; Ord. 164-15 , Eff. 10/23/2015. Division (g) amended; Ord. 188-15 , Eff. 12/4/2015. Division (d)(2) amended; Ord. 204-15 , Eff. 1/2/2016. Undesignated introductory paragraph and divisions (a)(1)-(3) amended; former division (a)(4) deleted; divisions (b) and (c) amended; Ord. 76-16 , Eff. 6/12/2016. Undesignated introductory paragraph amended; division (a)(1) redesignated as (a)(1) and (a)(6) and amended; former divisions (a)(2), (a)(3), and (b) redesignated as (a)(8), (a)(9), and (e) and amended; new divisions (a)(2)-(a)(5), (a)(7), (a)(10), and (b)-(d) added; former division (c) redesignated as (f) and (f)(1) and amended; new division (f)(2) added; former divisions (d)-(g) redesignated as (g)-(j) and amended; Ord. 158-17, Eff. 8/26/2017. Division (a)(8) amended; Ord. 208-17, Eff. 12/3/2017. Undesignated introductory paragraph and divisions (b), (f)(1), and (j) amended; Ord. 26-18, Eff. 3/26/2018. Division (a)(4) amended; Ord. 202-18, Eff. 9/10/2018. Division (d) amended; Ord. 70-19, Eff. 5/20/2019.

Editor's Note:
   Ordinance 155-15 (File No. 150348, App. 8/6/2015, Eff. 9/5/2015) purported to amend this section. At the direction of the Office of the City Attorney, Ord. 155-15 was never codified (and accordingly is not referenced in the history notes above). Its provisions effectively were superseded by Ord. 164-15 (File No. 150348, App. 9/23/2015, Eff. 10/23/2015, Retro. 5/20/2015).