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(a) The purpose of the Affordable Housing Bonus Programs is to facilitate the development and construction of affordable housing in San Francisco. Affordable housing is of paramount statewide concern, and the Legislature has declared that local and state governments have a responsibility to use the powers vested in them to facilitate the improvement and development of housing to make adequate provision for the housing needs of all economic segments of the community, especially families. The Legislature has found that local governments must encourage the development of a variety of types of housing for all income levels, including multifamily rental housing and assist in the development of adequate housing to meet the needs of low- and moderate-income households.
(b) Affordable housing is an especially paramount concern in San Francisco. San Francisco has one of the highest housing costs in the nation, but San Francisco’s economy and culture rely on a diverse workforce at all income levels. It is the policy of the City to enable these workers to afford housing in San Francisco and ensure that they pay a reasonably proportionate share of their incomes to live in adequate housing and to not have to commute ever-increasing distances to their jobs. The Association of Bay Area Governments determined that San Francisco’s share of the Regional Housing Need for January 2015 to June 2022 was the provision of 28,870 new housing units, with 6,234 (or 21.6%) as very low, 4,639 (or 16.1%) as low, and 5,460 (or 18.9%) as moderate income units.
(c) The Board of Supervisors, and the voters in San Francisco, have long recognized the need for the production of affordable housing. The voters, in some cases, and the Board in others, have adopted measures to address this need, such as mandatory Inclusionary Affordable Housing Ordinance in Planning Code Section 415; the San Francisco Housing Trust Fund, adopted in 2012, which established a fund to create, support and rehabilitate affordable housing, and set aside $20 million in its first year, with increasing allocations to reach $50 million a year for affordable housing; the adoption of Proposition K in November 2014, which established as City policy that the City, by 2020, will help construct or rehabilitate at least 30,000 homes, with more than 50% of the housing affordable for middle-income households, and at least 33% as affordable for low- and moderate income households; and the multiple programs that rely on Federal, State and local funding sources as identified in the Mayor’s Office of Housing and Community Development Comprehensive Plan. These programs enable the City to work towards the voter-mandated affordable housing goals.
(d) Historically, in the United States and San Francisco, affordable housing requires high levels of public subsidy, including public investment and reliance on public dollars. Costs to subsidize an affordable housing unit vary greatly depending on a number of factors, such as household income of the residents, the type of housing, and the cost to acquire land acquisition. Currently, MOHCD estimates that the level of subsidy for an affordable housing unit is approximately $350,000 per unit. Given this high cost per unit, San Francisco can only meet its affordable housing goals through a combination of increased public dollars dedicated to affordable housing and other tools that do not rely on public money.
(e) Development incentives are a long standing zoning tool that enable cities to encourage private development projects to provide public benefits including affordable housing. By offering increased development potential, a project sponsor can offset the expenses necessary to provide additional public benefits. In 1979, the State of California adopted the Density Bonus Law, Government Code section 65915 et seq. which requires that density bonuses and other concessions and incentives be offered to projects that provide a minimum amount of on-site affordable housing.
(f) In recognition of the City’s affordable housing goals, including the need to produce more affordable housing without the need for public subsidies, the Planning Department contracted with David Baker Architects and Seifel Consulting to determine a menu of zoning modifications and development bonuses that could offset a private developer’s costs of providing various levels of additional on-site affordable housing. These experts analyzed various parcels in San Francisco, to determine the conditions in which a zoning accommodation would be necessary to achieve additional density. The analysis modeled various zoning districts and lot size configurations, consistent with current market conditions and the City’s stated policy goals, including to achieve a mix of unit types, including larger units that can accommodate larger households. These reports are on file in Board of Supervisors File No. 160687.
(g) Based on these reports, the Planning Department developed four programs to provide options by which developers can include additional affordable units on-site through increased density and other zoning or design modifications. These programs are the HOME-SF Program, the 100 Percent Affordable Housing Bonus Program, the Analyzed State Density Bonus Program and the Individually Requested Bonus Program.
(h) The goal of the HOME-SF Program is to increase affordable housing production, especially housing affordable to middle income households. Housing for middle income households in San Francisco is necessary to stabilize San Francisco’s households and families, ensure income and household diversity in the long term population of San Francisco, and reduce transportation impacts of middle income households working in San Francisco. Middle income households do not traditionally benefit from public subsidies.
(i) The 100 Percent Affordable Housing Bonus Program provides additional incentives for developers of 100% affordable housing projects, thereby reducing the overall cost of such developments on a per unit basis.
(j) The Affordable Housing Bonus Program also establishes a clear local process for all projects seeking the density bonuses guaranteed through the State Density Bonus Law. The State Analyzed Program provides an expedited process for projects that comply with a pre-determined menu of incentives, concessions and waivers of development standards that the Department has determined can appropriately respond to neighborhood context without causing adverse impacts on public health and safety, and provide affordable units through the City’s already-established Inclusionary Housing Program. Projects requesting density or concessions, incentives and waivers outside of the City’s preferred menu may seek a density bonus consistent with State law in the Individually Requested Density Bonus Program.
(k) San Francisco’s small business community is an integral part of San Francisco’s neighborhood commercial corridors, local economy, and rich culture. San Francisco is committed to maintaining small businesses in its neighborhoods. For this reason, the HOME-SF Program acknowledges the need for general assistance and support for any business that might be impacted. Developments using the Affordable Housing Bonus Program will generally produce additional commercial spaces which may enhance existing commercial corridors. The Office of Economic and Workforce Development (OEWD), in coordination with the Office of Small Business, currently coordinate on referrals to and deployment of a range of services to small businesses including but not limited to: small business consulting, lease negotiation assistance, small business loans, ADA Certified Access Specialists (CASp) inspection services, legacy business registry, façade improvement assistance, commercial corridor management, grants and assessments, relocation and broker services for production, distribution and repair (PDR) businesses, business permit assistance, and coordination with city agencies.
(l) In fiscal year 2016 - 2017 the OEWD and the Office of Small Business will initiate and coordinate the implementation of a citywide small business retention and relocation program. This program will provide additional small business consulting and case management, real estate readiness assessment, relocation assistance, broker services, real estate acquisition assistance, succession planning, legacy business grants and technical assistance, and restaurant sector permit coordination and assistance.
Divisions (a) and (c) amended; divisions (d), (e), and (h)-(l) added; former divisions (d) and (e) redesignated (f) and (g) and amended; Ord. 116-17, Eff. 7/13/2017.