(a) For any units permitted under the Program:
(2) Units shall not remain vacant for a period exceeding 60 days without the written consent of MOHCD.
(4) The income levels specified in the Notice of Special Restrictions and/or conditions of approval for the project shall be the required income percentages for the life of the project. Notwithstanding the foregoing, if approved by MOHCD and as provided in the Procedures Manual, an exception to the required income percentage may be made in the following cases:
(A) a rental unit that converts to an Owned Unit, up to a maximum of 120% of AMI;
(B) where there is an existing tenant, the household income may increase by up to 200% of the levels specified in the Notice of Special Restrictions or conditions of approval;
(C) new Owned Units where the project sponsor has used good faith efforts to secure a contract with a qualified buyer but is unable to secure such a contract in a timely manner from the initiation of marketing;
(D) resale Owned Units where the owner has used good faith efforts to secure a contract with a qualified buyer but is unable to secure a buyer contract at a maximum resale price specified by MOH in a timely manner; or
(E) the qualifying income level for new Owned Units may be set at 10% above the income level stated in the Notice of Special Restrictions or conditions of approval.
(5) The Commission or the Department shall require all housing projects subject to Section 415.1 et seq. to record a Notice of Special Restrictions with the Recorder of the City and County of San Francisco. The Notice of Special Restrictions must incorporate the affordability restrictions. All projects described in Section 415.3(a)(1) and 415.3(a)(3) must incorporate all of the requirements of this Section 415.8 into the Notice for Special Restrictions, including any provisions required to be in the conditions of approval for housing projects described in Section 415.3(a)(2). These Section 415.3(a)(2) projects which are housing projects which go through the conditional use or planned unit development process shall have conditions of approval. The conditions of approval shall specify that project applicants shall adhere to the marketing, monitoring, and enforcement procedures outlined in the Procedures Manual, as amended from time to time, in effect at the time of project approval. The Commission shall file the Procedures Manual in the case file for each project requiring inclusionary housing pursuant to this Program. The Procedures Manual will be referenced in the Notice of Special Restrictions for each project.
(b) For any units permitted to be Owned Units under the Program, the MOHCD shall:
(1) Establish and implement a process for reselling an affordable unit in the Procedures Manual;
(2) Provide that owners may not change title on the unit without review and approval by MOHCD and according to guidelines published in the Procedures Manual.
(3) Provide that owners must comply with refinancing procedures and limitations as published in the Procedures Manual.
(4) Provide that, in order to retain all units restricted as affordable under this Program within the City’s affordable housing stock, the specific procedures for passing an affordable unit through inheritance are contained in the Procedures Manual. All transfers through inheritance must be reviewed and approved by MOHCD and, in all cases, the heir must acknowledge and agree to the provisions of the Program. The following households may inherit the ability to occupy a unit restricted under this Program: (1) a spouse or registered domestic partner, regardless of income; or (2) a child of the owner if the child is a qualifying household for the unit. If the heir qualifies under one of these categories, the heir must occupy the unit or the heir must market and sell the unit at the restricted price through a public lottery process and retain the proceeds from the sale. If the heir does not qualify to occupy the unit, the heir must market and sell the unit at the restricted price to a qualified buyer through a public lottery process. The heir would retain the proceeds of such sale.
(5) Require that affordable Rental Units permitted by the Commission to be converted to Owned Units must satisfy the requirements of the Procedures Manual, as amended from time to time, including that the units shall be sold at restricted sales prices to households meeting the income qualifications specified in the Notice of Special Restrictions or conditions of approval, with a right of first refusal for the occupant(s) of such units at the time of conversion. If the current tenant qualifies for and purchases the unit, the unit shall be sold at a sales price corresponding to the affordability level required for rental units or to the affordability level for the specific tenant household, whichever is higher, with a maximum allowable qualifying income level up to 120% of AMI. If the unit is sold to anyone else, the sales price shall correspond to the affordability level required for Owned Units. Upon conversion to ownership, the units are subject to the resale and other restrictions of this Program for the life of the project, as defined in the Notice of Special Restrictions or conditions of approval for the Project.
(6) For Owned Units approved pursuant to Sections 415.6 or 415.7, the Notice of Special Restrictions or conditions of approval will include provisions restricting resale prices and purchaser income levels according to the formula specified in the Procedures Manual, as amended from time to time. In the case that subordination of the Affordability Conditions contained in a recorded Notice of Special Restrictions may be necessary to ensure the Project Applicant’s receipt of adequate construction and/or permanent financing for the project, or to enable first time home buyers to qualify for mortgages, the project applicant may follow the procedures for subordination of affordability restrictions as described in the Principal Project’s conditions of approval or in the Procedures Manual. A release following foreclosure or other transfer in lieu of foreclosure may be authorized if required as a condition to financing pursuant to the procedures set forth in the Procedures Manual.
(7) Purchasers of Affordable Units shall secure the obligations contained in the Notice of Special Restrictions or conditions of approval by executing and delivering to the City a promissory note secured by a deed of trust encumbering the applicable affordable unit as described in the Procedures Manual or by an alternative means if so provided for in the Procedures Manual, as amended from time to time.
(8) Procedures For Units Unable To Resell. The Board of Supervisors finds that certain requirements of this Program and the Procedures Manual may create hardship for owners of Affordable Units restricted under this Program. However, the Board also recognizes that the requirements of this Program are important to preserve the long-term affordability of units restricted under the Program. In order to allow some relief for owners of Affordable Units during a time of economic downturn, but to provide the maximum protection for the long-term affordability of the units, the Board directs MOHCD to analyze the following issues and, if it deems appropriate, to propose amendments to the Procedures Manual to address the issues:
(A)1 Waiver of Re-Sale Requirements and Maximum Qualifying Income Level for New Buyers of Resale BMR Units. The Board recognizes that the risk to low and moderate income homeowners during times of economic downturn can increase the risk of default and foreclosure of units restricted under this Program. The Board directs MOHCD to study ways to reduce such risks in the below market rate unit context and, if it deems appropriate, to make recommendations to the Planning Commission to amend the Procedures Manual to allow MOHCD discretion, in certain limited circumstances, to waive requirements for owners of Affordable Units who have used good faith efforts to secure a contract with a qualified buyer but are unable to resell their unit in a timely manner. Such amendments to the Procedures Manual may include, but are not limited to, authorizing MOHCD to make one or more allowances for owners of Affordable Units unable to resell such as: (1) a one-time waiver of the first-time homebuyer rule for the purchasing household; (2) a one-time waiver of qualifying household size requirements for the purchasing household; (3) and a one-time waiver of owner occupancy rules to allow a temporary rental; (4) a one-time modification of the asset test for the new buyer household and (5) allowing MOHCD discretion to increase the qualifying income level for the unit by up to 20% above the maximum income limit currently allowed by the Use Restrictions for the Unit but at no time higher than 120% of AMI. MOHCD and the Commission shall set forth criteria for granting such allowances such as establishing a minimum time that the units must have been advertised by MOHCD without selling; establishing criteria related to unusual economic or personal circumstances of the owner; providing a maximum percentage for the increase above the maximum income limit currently allowed; providing that the increase may only be granted on a one-time basis; and requiring the owner to clearly establish that the BMR unit is being resold at the original purchase price plus the current repricing mechanism under the Program which calculates the percentage change in AMI from the time of purchase to resale plus the commission and any eligible capital improvements or special assessments.
(B) Waiver of Maximum Qualifying Income Level For New Buyers of Initial Sale BMR Units. The Board of Supervisors recognizes that the current Program provides that the income of a new buyer of a below market rate household cannot exceed the maximum income stated in the Planning Approval or Notice of Special Restrictions for the BMR Unit. Due to less desirable developments or geographic areas, a Project Sponsor is sometimes unable to find a buyer for a BMR Unit within the maximum income stated in the Planning Approval or Notice of Special Restrictions for the Unit. This situation makes it difficult, if not impossible, for certain current owners of below market rate units to sell their units. In order to minimize this situation, the Board of Supervisors directs MOHCD to study ways to address this issue and, if it deems appropriate, to make recommendations to the Planning Commission to amend the Procedures Manual to allow MOHCD to assist Project Sponsors who have used good faith efforts to secure a contract with a qualified buyer but who are unable to secure such a contract in a timely manner from the initiation of marketing. Such amendments may include allowing MOHCD discretion to increase the qualifying income level for the unit by up to 20% above the maximum income limit currently allowed by the Use Restrictions for the Unit but at no time higher than 120% of AMI. MOHCD and the Planning Commission shall establish limits to this or a similar proposal such as: providing a maximum percentage for the increase above the maximum income limit currently allowed; requiring that a certain period without securing a buyer would pass before such an allowance would be made; providing that the increase may only be granted on a one-time basis.
(c) For any units permitted to be Rental Units under the Program, MOHCD shall establish:
(1) restrictions on lease changes and propose such restrictions to the Commission for inclusion in the Procedures Manual.
(2) additional eligibility criteria for subleasing and propose such restrictions to the Commission for inclusion in the Procedures Manual.
(3) criteria for continued eligibility for occupied rental units and propose such restrictions to the Commission for inclusion in the Procedures Manual.
(4) criteria for homeownership status and propose such restrictions to the Commission for inclusion in the Procedures Manual.
(5) criteria for granting affordable rental households the right of first refusal in purchasing an Affordable Unit that is converted from a Rental Unit to an Owned Unit and propose such restrictions to the Commission for inclusion in the Procedures Manual.
(6) that at no time shall an annual increase exceed the actual allowable increase for that year. In cases where the rent has decreased, the tenant’s rent must be decreased. In cases where the annual adjustments have not been applied year to year, the Project Owner may not take advantage of any increases that were not applied until the Unit is vacant and re-rented.
(Added as Sec. 315.7 by Ord. 37-02, File No. 001262, App. 4/5/2002; amended by Ord. 101-07, File No. 060529, App. 5/4/2007; Ord. 198-07, File No. 070444, App. 8/10/2007; redesignated and amended by Ord. 108-10, File No. 091275, App. 5/25/2010; amended by Ord. 312-10, File No. 100046, App. 12/23/2010; Ord. 62-13
, File No. 121162, App. 4/10/2013, Eff. 5/10/2013; Ord. 210-21, File No. 210868, App. 11/19/2021, Eff. 12/20/2021)
AMENDMENT HISTORY
Division (a)(4) amended and divisions (a)(4)(A) through (E) added; division (b)(5) amended; division (b)(8) amended and divided into divisions (b)(8) and (b)(8)(A)1
; divisions (b)(8)(B) and (c)(6) added; Ord. 62-13
, Eff. 5/10/2013. Divisions (a)(1)- (a)(4)(A), (a)(4)(C)-(E), (b)-(b)(8)(B), (c), and (c)(5) amended; Ord. 210-21
, Eff. 12/20/2021.
CODIFICATION NOTE
1. The subdivisions of division (b)(8) have been redesignated by the codifier for clarity and consistency.