SEC. 415.6. ON-SITE AFFORDABLE HOUSING ALTERNATIVE.

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.

The fees set forth in this Section 415.5 will be reviewed when the City completes an Economic Feasibility Study. Except as provided in Section 415.5(g), all development projects subject to this Program shall be required to pay an Affordable Housing Fee subject to the following requirements:

(a) Timing of Fee Payments. The fee shall be paid to DBI for deposit into the Citywide Affordable Housing Fund at the time required by Section 402(d).

(b) Amount of Fee. The amount of the fee that may be paid by the project sponsor subject to this Program shall be determined by MOHCD utilizing the following factors:

(1) The number of units equivalent to the applicable off-site percentage of the number of units in the Principal Project.

(A) For housing development projects consisting of 10 units or more, but less than 25 units, the applicable percentage shall be 20%.

(B) For development projects consisting of 25 units or more, the applicable percentage shall be 33% if such units are Owned Units.

(C) For development projects consisting of 25 units or more, the applicable percentage shall be 30% if the development project is a Rental Housing Project. In the event a Rental Housing Project becomes an Ownership Housing Project, the Project Sponsor shall either (A) reimburse the City the proportional amount of the Inclusionary Affordable Housing Fee, which would be equivalent to the current Inclusionary Affordable Housing Fee requirement for Ownership Housing Projects, or (B) provide additional on-site or off-site Affordable Units equivalent to the current inclusionary requirements for Ownership Housing Units, apportioned among the required number of units at various income levels in compliance with the requirements in effect at the time of conversion. Any additional Affordable Units provided on-site or off-site shall comply with Section 415 and the Procedures Manual.

(2) The affordability gap, using data on MOHCD’s cost of construction of affordable residential housing. No later than January 31, 2018, the Controller, with the support of consultants as necessary, and in consultation with the Inclusionary Housing Technical Advisory Committee (TAC) established in Planning Code Section 415.10, shall conduct a study to develop an appropriate methodology for calculating, indexing, and applying the appropriate amount of the Inclusionary Affordable Housing Fee. To support the Controller’s study, and annually thereafter, MOHCD shall provide the following documentation: (1) schedules of sources and uses of funds and independent auditor’s reports (“Cost Certifications”) for all MOHCD-funded developments completed within three years of the date of reporting to the Controller; and, (2) for any MOHCD-funded development that commenced construction within three years of the reporting date to the Controller but for which no Cost Certification is yet complete, the sources and uses of funds approved by MOHCD and the construction lender as of the date of the development’s construction loan closing. Cost Certifications completed in years prior to the year of reporting to the Controller may be increased or decreased by the applicable annual Construction Cost Index percentage(s) for residential construction for San Francisco reported in the Engineering News Record. MOHCD, together with the Controller and TAC, shall evaluate the cost-to-construct data, including actual and appraised land costs, state and/or federal public subsidies available to MOHCD-funded projects, and determine MOHCD’s average costs. Following completion of this study, the Board of Supervisors, in its sole and absolute discretion, and within the legal allowances of the Residential Nexus Analysis, will review the analyses, methodology, fee application, and the proposed fee schedule; and may consider adopting legislation to revise the Inclusionary Affordable Housing fees. The method of calculating, indexing, and applying the fee shall be published in the Procedures Manual. The Department and MOHCD shall update the fee methodology and technical report every three years, with analysis from the Technical Advisory Committee, in order to ensure that the affordability gap remains current, consistent with the requirements set forth below in Section 415.5(b)(3) and Section 415.10.

(3) Annual Fee Update. For all housing developments, no later than January 1 of each year, MOHCD shall adjust the fee based on the cost of constructing affordable housing, including development and land acquisition costs. MOHCD shall provide the Planning Department, DBI, and the Controller with current information on the adjustment to the fee 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). The method of indexing shall be published in the Procedures Manual.

(4) 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 affordable housing requirement shall apply.

(5) The applicable amount of the inclusionary housing fee shall be determined based upon the date that the project sponsor has submitted a complete Environmental Evaluation application. 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 does proceed with pursuing a building permit. Such time period 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.

(6) The fee shall be imposed on any additional units or square footage authorized and developed under California Government Code Sections 65915 et seq.

(7) 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 pay the Inclusionary Affordable Housing Fee equivalent for the number of affordable units removed, in addition to compliance with the inclusionary requirements set forth in this Section.

(c) Notice to Development Fee Collection Unit of Amount Owed. Prior to issuance of the first construction document for a development project subject to Section 415.5, the Planning Department shall notify the Development Fee Collection Unit at DBI electronically or in writing of its calculation of the amount of the fee owed.

(d) Lien Proceedings. If, for any reason, the Affordable Housing Fee imposed pursuant to Section 415.5 remains unpaid following issuance of the first Certificate of Occupancy, the Development Fee Collection Unit at DBI shall institute lien proceedings to make the entire unpaid balance of the fee, plus interest and any deferral surcharge, a lien against all parcels used for the development project in accordance with Section 408 of this Article and Section 107A.13.15 of the San Francisco Building Code.

(e) If a housing project is located in an Area Plan with an additional or specific affordable housing requirements such as those set forth in a special use district or Sections 416, 417, and 419 or elsewhere in this code, the higher housing requirement shall apply.

(f) Use of Fees. All monies contributed pursuant to the Inclusionary Affordable Housing Program shall be deposited in the Citywide Affordable Housing Fund (“Fund”), established in Administrative Code Section 10.100-49, except as specified below. MOHCD shall use the funds collected under this Section 415.5 in the following manner:

(1) Except as provided in subsection (2) below, the funds collected under this Section shall be used to:

(A) increase the supply of housing Affordable to Qualifying Households subject to the conditions of this Section; and

(B) provide assistance to low- and moderate-income homebuyers; and

(C) pay the expenses of MOHCD in connection with monitoring and administering compliance with the requirements of the Program. MOHCD is authorized to use funds in an amount not to exceed $200,000 every 5 years to conduct follow-up studies under Section 415.9(e) and to update the affordable housing fee amounts as described above in Section 415.5(b). All other monitoring and administrative expenses shall be appropriated through the annual budget process or supplemental appropriation for MOHCD.

(D) Funds from this fee collected from projects within the Central SoMa Special Use District shall be accounted for separately and expended only within the area bounded by Market Street, the Embarcadero, King Street, Division Street, and South Van Ness Avenue.

(2) "Small Sites Funds."

(A) Designation of Funds. MOHCD shall designate and separately account for 10% of all fees that it receives under Section 415.1 et seq. that are deposited into the Fund, excluding fees that are geographically targeted such as those referred to in Sections 249.78(e)(1), 415.5(b)(1), and 827(b)(1), to support acquisition and rehabilitation of Small Sites (“Small Sites Funds”). When the total amount of fees paid to the City under Section 415.1 et seq. totals is1 less than $10 million over the preceding 12-month period, MOHCD is authorized to temporarily divert funds from the Small Sites Funds for other purposes. MOHCD shall keep track of the diverted funds, however, such that when the amount of fees paid to the City under Section 415.1 et seq. meets or exceeds $10 million over the preceding 12-month period, MOHCD shall commit all of the previously diverted funds and 10% of any new funds to the Small Sites Funds.

(B) Use of Small Sites Funds. The funds shall be used exclusively to acquire or rehabilitate “Small Sites” defined as properties consisting of 2-25 units. Units supported by monies from the fund shall be designated as housing affordable to qualified households for the life of the project. Properties supported by the Small Sites Funds must be:

(i) rental properties that will be maintained as rental properties;

(ii) vacant properties that were formerly rental properties as long as those properties have been vacant for a minimum of two years prior to the effective date of this legislation;

(iii) properties that have been the subject of foreclosure; or

(iv) a Limited Equity Housing Cooperative as defined in Subdivision Code Sections 1399.1 et seq. or a property owned or leased by a non-profit entity modeled as a Community Land Trust.

(C) Initial Funds. If, within 18 months from April 23, 2009, MOHCD dedicates an initial one-time contribution of other eligible funds to be used initially as Small Sites Funds, MOHCD may use the equivalent amount of Small Sites Funds received from fees for other purposes permitted by the Citywide Affordable Housing Fund until the amount of the initial one-time contribution is reached.

(D) Annual Report. At the end of each fiscal year, MOHCD shall issue a report to the Board of Supervisors regarding the amount of Small Sites Funds received from fees under this legislation, and a report of how those funds were used.

(E) Intent. In establishing guidelines for Small Sites Funds, the Board of Supervisors does not intend to preclude MOHCD from expending other eligible sources of funding on Small Sites as described in this Section 415.5.

(3) For all projects funded by the Citywide Affordable Housing Fund, MOHCD requires the project sponsor or its successor in interest to give preference as provided in Administrative Code Chapter 47.

(4) Pursuant to Section 249.78(e)(1), all monies contributed pursuant to the Inclusionary Affordable Housing Program and collected within the Central SoMa Special Use District shall be paid into the Citywide Affordable Housing Fund, but the funds shall be separately accounted for. Such funds shall be expended within the area bounded by Market Street, the Embarcadero, King Street, Division Street, and South Van Ness Avenue.

(g) Alternatives to Payment of Affordable Housing Fee.

(1) Eligibility: A project sponsor must pay the Affordable Housing Fee unless it chooses to meet the requirements of the Program though an Alternative provided in this subsection (g). The project sponsor may choose one of the following Alternatives:

(A) Alternative #1: On-Site Units. Project sponsors may elect to construct units Affordable to Qualifying Households on-site of the Principal Project pursuant to the requirements of Section 415.6.

(B) Alternative #2: Off-Site Units. Project sponsors may elect to construct units Affordable to Qualifying Households at an alternative site within the City and County of San Francisco pursuant to the requirements of Section 415.7.

(C) Alternative #3: Small Sites. Qualifying project sponsors may elect to fund buildings as set forth in Section 415.7-1.

(D) Alternative #4: Combination. Project sponsors may elect any combination of payment of the Affordable Housing Fee as provided in Section 415.5, construction of on-site units as provided in Section 415.6, or construction of off-site units as provided in Section 415.7, provided that the project applicant constructs or pays the fee at the appropriate percentage or fee level required for that option. Development Projects that are providing on-site units under Section 415.6 and that qualify for and receive additional density under California Government Code Sections 65915 et seq. shall use Alternative #4 to pay the Affordable Housing Fee on any additional units or square footage authorized under Section 65915.

(2) A project sponsor who elects to satisfy Section 415.1 et seq 2 through one of the alternatives described in Section 415.5(g)(1), must provide written notice of their election 30 days prior to project approval by the Planning Commission or Department, as applicable. The Planning Commission or the Department may not require a project sponsor to select a specific Alternative. The Alternative will be a condition of project approval and recorded against the property in a Notice of Special Restrictions.

(3) Modification of Elected Alternative. Except as specified below, after project approval, any proposed change in the alternative elected by a project sponsor under Section 415.5(g)(1), or any proposed change from an Ownership Project to a Rental Project, or from a Rental Project to an Ownership Project, shall require public notice for a hearing and approval from the Planning Commission to amend the conditions of approval. Public notice shall be as required by the original entitlement.

(4) Notwithstanding subsection (g)(3), if such modification is requested prior to issuance of a first construction document, the Zoning Administrator or the Zoning Administrator’s designee may modify conditions of approval to allow a project that had elected to pay the Affordable Housing Fee to change from an Ownership Project to a Rental Project or a Rental Project to an Ownership Project, or to allow a project that had elected to pay the Affordable Housing Fee to provide on-site units under Section 415.6.

(5) If a project sponsor requests a modification to its conditions of approval for the sole purpose of complying with this Section 415.5(g)(3), the Planning Commission shall be limited to considering issues related to Section 415 et seq. in considering the request for modification. The Planning Commission shall approve such modification if it finds all of the following:

(A) The project sponsor complied with the applicable requirements for modification set forth in the Procedures Manual including protections for current occupants, if any, of Rental Units or Owned Units;

(B) The modification will not result in a delay in marketing any On-Site Units at the same time as the market-rate housing in the project;

(C) If a Rental Housing Project was granted a density bonus pursuant to Section 206, the change from a Rental Housing Project to an Ownership Housing Project provides On-Site Units in an amount such that the Ownership Housing Project qualifies for the same density bonus, waivers, and/or incentives and concessions that were granted to the Rental Housing Project;

(D) If a Rental Housing Project is converting to an Ownership Housing Project, the amount of Affordable Housing Fee or number of On-Site Units complies with Section 415.6(a)(7);

(E) For projects that chose to provide On-site or Off-site units and seek a modification of the conditions of approval to pay the Affordable Housing Fee prior to the issuance of the first construction permit, the project sponsor shall pay the Affordable Housing Fee equivalent to the loss of On-site or Off-site Affordable Housing units that were approved in the original conditions of approval; and

(F) For projects that chose to provide On-site or Off-site units and seek a modification of the conditions of approval to pay the Affordable Housing Fee after the issuance of the first construction document, the project sponsor or its successor shall pay the Affordable Housing Fee equivalent to the loss of On-site or Off-site Affordable Housing units that were approved in the original conditions of approval, plus interest and any applicable penalties provided for under this Code.

(Added by Ord. 108-10, File No. 091275, App. 5/25/2010; amended by Ord. 312-10, File No. 100046, App. 12/23/2010; Ord. 55-11, File No. 101523, App. 3/23/2011; 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. 263-13, File No. 130549, App. 11/27/2013, Eff. 12/27/2013; Ord. 277-13, File No. 130968, App. 12/18/2013, Eff. 1/17/2014; Ord. 50-15 , File No. 150149, App. 4/24/2015, Eff. 5/24/2015; Ord. 143-15 , File No. 150568, App. 8/6/2015, Eff. 9/5/2015; 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. 7-17, File No. 161157, App. 1/20/2017, Eff. 2/19/2017; Ord. 158-17, File No. 161351, App. 7/27/2017, Eff. 8/26/2017; Ord. 26-18, File No. 171193, App. 2/23/2018, Eff. 3/26/2018; Ord. 296-18, File No. 180184, App. 12/12/2018, Eff. 1/12/2019; Ord. 70-19, File No. 181154, App. 4/19/2019, Eff. 5/20/2019; Ord. 251-19, File No. 190548, App. 11/15/2019, Eff. 12/16/2019; Ord. 63-20, File No. 200077, App. 4/24/2020, Eff. 5/25/2020; Ord. 47-21, File No. 201175, App. 4/16/2021, Eff. 5/17/2021; Ord. 210-21, File No. 210868, App. 11/19/2021, Eff. 12/20/2021)

AMENDMENT HISTORY

Division (b)(1) amended; Ord. 56-13 , Eff. 4/27/2013. Divisions (b)(1), (b)(2), (b)(3), (e), (g)(2)(i), and (g)(2)(ii) amended; former division (g)(2)(iii) deleted; division (g)(3) amended; Ord. 62-13 , Eff. 5/10/2013. Division (b)(3) amended; Ord. 263-13, Eff. 12/27/2013. Division (f) amended and references to "MOHCD" corrected throughout; former divisions (f)(1)(a)-(c) redesignated as (f)(1)(A)-(C); division (f)(3) added; Ord. 277-13, Eff. 1/17/2014. Division (a) amended; Ord. 50-15 , Eff. 5/24/2015. Divisions (f), (f)(1), and (f)(2)(A) amended; Ord. 143-15 , Eff. 9/5/2015. Divisions (f)(2)(C) and (f)(3) amended; Ord. 204-15 , Eff. 1/2/2016. Undesignated introductory paragraph and divisions (a) and (b)(1)-(3) amended; new division (b)(4) added; divisions (f)(2)(B) and (f)(2)(E) amended; Ord. 76-16 , Eff. 6/12/2016. Divisions (f), (f)(2)(A), (f)(2)(E), and (g)(1) amended; new division (g)(1)(C) added; former division (g)(1)(C) redesignated as (g)(1)(D); Ord. 7-17, Eff. 2/19/2017. Divisions (b)-(b)(4) amended; divisions (b)(1)(A)-(C) designated; divisions (b)(5)- (7) added; divisions (c), (e), (f)(1)(B), (f)(2)(A), (f)(2)(B), (g)(1)(D), (g)(2), (g)(2)(ii), (g)(3), and (g)(4) amended; Ord. 158-17, Eff. 8/26/2017. Division (g)(1) amended; former division (g)(2) deleted; former divisions (g)(3)-(4) redesignated as (g)(2)- (3) and amended; Ord. 26-18, Eff. 3/26/2018. Divisions (f) and (f)(2)(A) amended; division (f)(4) added; Ord. 296-18, Eff. 1/12/2019. Divisions (b)(6) and (g)(1)(D) amended; Ord. 70-19, Eff. 5/20/2019. Divisions (f), (f)(2)(A), and (f)(2)(E) amended; Ord. 251-19, Eff. 12/16/2019. Division (a) amended; Ord. 63-20, Eff. 5/25/2020. Division (f)(1)(D) added; Ord. 47-21, Eff. 5/17/2021. Divisions (b)(1)-(b)(1)(C), (f)(1)(A), (g)(1)(A)-(B), (g)(2) amended; former division (g)(3) deleted; divisions (g)(3)- (g)(5)(F) added; Ord. 210-21, Eff. 12/20/2021.

CODIFICATION NOTES

1 . So in Ord. 251-19.

2 . So in Ord. 210-21.

SEC. 415.6. ON-SITE AFFORDABLE HOUSING ALTERNATIVE.

New Ordinance Notice

Publisher's Note: This section has been AMENDED by new legislation (Ord. 19-25 , approved 3/4/2025, effective 4/4/2025). The text of the amendment will be incorporated under the new section number when the amending legislation is operative.

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 Ownership Housing Project consisting of 25 or more 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 February 26, 2018. 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 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 February 26, 2018. 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 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 units, the required on-site affordable ownership housing to satisfy this Section 415.6 shall increase by 1% 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 housing developments with 25 or more units shall increase by 0.5% annually, with such increases allocated equally 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 Ownership Housing Projects or 24% for Rental Housing Projects, 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) A project seeking to convert from a Rental Housing Project to an Ownership Housing Project, or from an Ownership Housing Project to a Rental Housing Project, shall require public notice for a hearing and approval from the Planning Commission to amend the conditions of approval for the Principal Project.

(8) In the event that a Rental Housing Project converts to an Ownership Housing Project, 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 Ownership Housing Projects, or (B) provide additional on-site or off-site Affordable Units equivalent to the then-current inclusionary requirements for Ownership Housing Projects, apportioned among the required number of units at various income levels in compliance with the requirements in effect at the time of conversion.

(9) Notwithstanding subsection 415.6(a)(10) below, Affordable Units in Rental Housing Projects shall be Rental Units, and Affordable Units in Ownership Housing Projects shall be Owned Units. In the event an Ownership Housing Project converts to a Rental Housing Project, or more than 50% of the total units in the Principal Project operate as a Rental Housing Project, on-site Affordable Units shall be offered as Rental Units. Affordable Units may only be sold as Owned Units if more than 50% of the units in the building shall be sold to unaffiliated third-party homebuyers and are operated as an Ownership Housing Project.

(10) A development project consisting of multiple buildings may include both a Rental Housing Project and an Ownership Housing Project with written notice to the Department and MOHCD, at least 30 days prior to approval of the project by the Planning Commission or the Planning Department.

(11) 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 five 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.

(12) 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.

(13) 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 206 et 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. A project shall not receive its first certificate of occupancy until MOHCD has approved the marketing plan.

(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 architectural addendum to the Site Permit for the project or building permit for the project, whichever is earlier 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 residential 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 residential 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 as indicated in the table below, and no smaller than 300 square feet for studios.

Unit Type	Minimum Unit Size (in gross square feet)
One-bedroom	450
Two-bedroom	700
Three-bedroom	900
Four-bedroom	1,000

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. MOHCD shall be responsible for overseeing and monitoring the marketing of Affordable Units by the Project Sponsor 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 415.6 et seq., referred to in the Procedures Manual as Below Market Rate (BMR units). Developers marketing Affordable Unit under Section 415.6 shall market the Affordable Units through a marketing 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) The Notice of Special Restrictions (“NSR”) required pursuant to Section 415.6 shall be completed and recorded by the project sponsor no later than the issuance of the architectural addendum for the site permit and at least 12 months prior to the first certificate of occupancy.

(2) The project sponsor shall submit a request for a pricing determination from MOHCD at least 8 months prior to issuance of a first certificate of occupancy.

(3) After the project has been approved by the Planning Commission or Department, the project sponsor must submit an update to the Department and MOHCD which includes an estimated timeline for the construction of the project. The estimated construction timeline must assume the requirements of subsections (1) and (2) above. Failure to finalize the NSR or initiate marketing within the time frames set forth in this Section 415.6(g), or to submit an estimated construction timeline will be deemed a violation of the Planning Code subject to enforcement and penalties.

(2)1 Lottery. At the initial offering of Affordable Units in a housing project and when Affordable Units become available for re-sale or re-rent 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.

(3)1 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 415.1 et 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 415.1 et 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; Ord. 63-20, File No. 200077, App. 4/24/2020, Eff. 5/25/2020; Ord. 210-21, File No. 210868, App. 11/19/2021, Eff. 12/20/2021)

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. Division (a)(4) amended; Ord. 63-20, Eff. 5/25/2020. Divisions (a)(2)-(3) and (a)(5)-(6) amended; new divisions (a)(7) and (a)(9)-(10) added; former divisions (a)(7)-(10) redesignated as (a)(8) and (a)(11)-(13) and amended; dvisions (e), (f)-(f)(2), and (g) amended; new divisions (g)(1)-(3) added; former divisions (g)(1)-(2) redesignated as second (g)(2)-(3);1 Ord. 210-21 , Eff. 12/20/2021.

CODIFICATION NOTE

1. So in Ord. 210-21.

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).

Disclaimer: This Code of Ordinances and/or any other documents that appear on this site may not reflect the most current legislation adopted by the Municipality. American Legal Publishing provides these documents for informational purposes only. These documents should not be relied upon as the definitive authority for local legislation. Additionally, the formatting and pagination of the posted documents varies from the formatting and pagination of the official copy. The official printed copy of a Code of Ordinances should be consulted prior to any action being taken. For further information regarding the official version of any of this Code of Ordinances or other documents posted on this site, please contact the Municipality directly or contact American Legal Publishing toll-free at 800-445-5588.

Hosted by: American Legal Publishing

Back to Code Library

Previous Doc

Next Doc