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FILE NO. 240873 AMENDED IN COMMITTEE 2/3/2025 ORDINANCE NO. 019-25 [Planning, Health Code~ - lnclusionary Housing Ordinance, Non-Potable Water Exemption] Ordinance amending the Planning Code to permit the use of California Debt Limit Allocation Committee tax-exempt bond financing and tax credits under the Tax Credit Allocation Committee for certain affordable housing projects that provide additional affordable units or deeper affordability levels than required by the lnclusionary Housing Ordinance. and require the Mayor's Office of Housing and Community Development to report on such projects; amending the Health Code to exempt such affordable housing projects from compliance with the requirement that new buildings be constructed. operated. and maintained using alternate water sources for non- potable uses: affirming the Planning Department's determination under the California Environmental Quality Act; making public necessity, convenience, and welfare findings under Planning Code, Section 302; and making findings of consistency with the General Plan and the eight priority policies of Planning Code, Section 101.1. NOTE: Unchanged Code text and uncodified text are in plain Arial font. Additions to Codes are in single-underline italics Times New Roman font. Deletions to Codes are in strikethreugh italics Times ]\/-cw Roman font. Board amendment additions are in double-underlined Arial font. Board amendment deletions are in strikethrough Arial font. Asterisks (* * * *) indicate the omission of unchanged Code subsections or parts of tables. Be it ordained by the People of the City and County of San Francisco: Section 1. Environmental and Land Use Findings. (a) The Planning Department has determined that the actions contemplated in this ordinance comply with the California Environmental Quality Act (California Public Resources Mayor Lurie; Supervisors Sauter, Mahmood BOARD OF SUPERVISORS Page 1 Code Sections 21000 et seq.). Said determination is on file with the Clerk of the Board of Supervisors in File No. 240873 and is incorporated herein by reference. The Board affirms this determination. (b) On October 24, 2024, the Planning Commission, in Resolution No. 21634, adopted findings that the actions contemplated in this ordinance are consistent, on balance, with the City's General Plan and eight priority policies of Planning Code Section 101.1. The Board adopts these findings as its own. A copy of said Resolution is on file with the Clerk of the Board of Supervisors in File No. 240873, and is incorporated herein by reference. (c) Pursuant to Planning Code Section 302, this Board finds that these Planning Code amendments will serve the public necessity, convenience, and welfare for the reasons set forth in Planning Commission Resolution No. 21634, and the Board adopts such reasons as its own. A copy of said resolution is on file with the Clerk of the Board of Supervisors in File No. 240873 and is incorporated herein by reference. Section 2. General Findings. (a) The California Debt Limit Allocation Committee (CDLAC) administers the State's tax-exempt bond financing program that helps spur affordable housing production by assisting developers of multifamily rental housing units with the acquisition and construction of new units, or the purchase and rehabilitation of existing units. (b) The California Tax Credit Allocation Committee (TCAC) administers the State's Low Income Housing Tax Credit Programs to facilitate the investment of private capital into the development of affordable rental housing for low-income Californians. TCAC allocates federal and state tax credits to the developers of these projects. (c) Currently, the lnclusionary Housing Ordinance permits housing projects to use financing awarded from CD LAC and TCAC if (1) 20% of the project's units are affordable to Mayor Lurie; Supervisors Sauter, Mahmood BOARD OF SUPERVISORS Page 2 households at 50% of Area Median Income; or (2) 10% of the project's units are affordable to households at 50% of Area Median Income, and 30% of the units are affordable to households at 60% of Area Median Income for on-site housing. (d) Certain affordable housing projects that exceed these thresholds, but do not meet the minimum affordability levels, are unable to use the CDLAC and TCAC financing. It is reasonable and in the public interest to allow the use of these financing programs when the project will provide additional affordable units, or units at deeper affordability levels. (e) Pursuant to Administrative Code Chapter 43, Article IX, the Mayor's Office of Housing & Community Development administers the Multifamily Securities Program and has adopted the Multifamily Securities Program Manual (the "Manual") for administering the issuance of tax exempt multifamily revenue bonds for affordable housing projects that have received an allocation from CDLAC and TCAC. Under the Manual. MOHCD monitors the regional allocation to the San Francisco Bay Area and competitiveness under TCAC and CDLAC regulations. Based on the availability of TCAC and CDLAC allocations and competitiveness within the Bay Area, MOHCD may request non-City funded affordable housing projects to temporarily delay an application for a TCAC and CD LAC allocation if there is an insufficient amount of allocation for City funded affordable housing that are ready for construction. Section 3. Article 4 of the Planning Code is hereby amended by revising Section 415.6, to read as follows: SEC. 415. HOUSING REQUIREMENTS FOR RESIDENTIAL AND LIVE/WORK DEVELOPMENT PROJECTS. * * * * SEC. 415.6. ON-SITE AFFORDABLE HOUSING ALTERNATIVE. Mayor Lurie; Supervisors Sauter, Mahmood BOARD OF SUPERVISORS Page 3 * * * * (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 Unil1 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) Notice o{Special Restrictions. The Notice of Special Restrictions ("NSR") required pursuant to this 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) Pricing Determination. 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) Timeline for Construction. After the project has been approved by the Planning Commission or Department, the project sponsor must submit an update to the Department and MOH CD which includes an estimated timeline for the construction of the Mayor Lurie; Supervisors Sauter, Mahmood BOARD OF SUPERVISORS Page 4 project. The estimated construction timeline must assume the requirements of subsections {g)_(1) and {g)_(2) above. Failure to finalize the NSR or initiate marketing within the time frames set forth in this Section 415.6(9), or to submit an estimated construction timeline will be deemed a violation of the Planning Code subject to enforcement and penalties. (1.-J) 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. (J.J) 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) Use o{Subsidies. ill Generally Prohibited. Individual affordable units constructed under Section 415.6 as part of an on-site project shall not have received development subsidies from any Federal, StateL or local program established for the purpose of providing affordable housing end. Units that have received such development subsidies shall not be counted to satisfy any affordable housing requirement. Other units in the same on site project may' have receh,ed such subsidies. In addition, (2) Exceptions: (A) Notwithstanding subsection (h)(J ), subsidies may be used, only with tlw express written permission by MOHCIJ, to deepen the affordability of an affordable unit beyond the level of affordability required by this Program, with the express written permission o(MOHCD. Mayor Lurie; Supervisors Sauter, Mahmood BOARD OF SUPERVISORS Page 5 (ill..) CDLAC and TCAC. Notwithstanding the provisions of Ssubection 415.6 (h)(l) and (h)(2)(A) above, a project may use California Debt Limit Allocation Committee (CDLAC) tax-exempt bond financingL tmd 4% tax credits under the Tax Credit Allocation Committee (TCAC), and tax credits allocated under the TCAC guidelines to help fund its obligations under Section 415.1 et seq. as long as the project provides at least one of the following: ill__20% of the units as affordable to households at 50% of Area Median Income for on-site housing..:. ffl'- {jjJ_ 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; or (iii) the same number of on-site affgrdable units as required by the applicable on- site affgrdable housing requirement in this Section 415 et seq. or any temporary reduction as set forth in Sections 415A et seq. or 415B et seq .. plus an additional number of on-site affordable units equal to 254-0% o(the applicable on-site affordable units as affordable to households at or below 80% o{Area Median Income. The income table to be used for such projects when the units are priced at 50%L ffl'-60% or 80% of Area Median Income is the income table used by MOHCD for the lnclusionary Affordable Housing Program, not that used by TCAC or CDLAC. Except as provided in this subsection {l!JQl(ifl..), 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. (3) Reporting. MOHCD shall monitor state and federal funding for 100% affordable housing projects, awards made by TCAC and CD LAC to 100% affordable housing projects in San Francisco, and any changes to the regulations of TCAC and CD LAC. MOH CD shall provide to the lnclusionary Housing Technical Advisory Committee, established in Administrative Code Chapter 5 Article XXIX, a written report of projects approved under Section 415.6(h)(2)(B), 100% affordable housing projects applying for tax exempt bond financing under CD LAC and tax credits under TCAC, and challenges for 100% affordable housing projects to obtain an award from CDLAC and TCAC. Mayor Lurie; Supervisors Sauter, Mahmood BOARD OF SUPERVISORS Page 6 * * * * Section 4. Article 12C of the Health Code is hereby amended by revising Section 12C.2, to read as follows: SEC. 12C.2 DEFINITIONS. * * * * Development Project: Construction of a new building or buildings. Development Projects are Large Development Projects and Small Development Projects. Development Project does not include rehabilitation of buildings constructed prior to August 1, 2015. Development Project does not include (1) any 100% Affordable Housing Project, 100% Permanent Supportive Housing Project, Gf--housing project funded or constructed pursuant to the HOPE SF Program sponsored and developed by the San Francisco Housing Authority and either the Mayor's Office of Housing and Community Development or the Office of Community Investment and Infrastructure, or housing project that is issued a First Construction Document. as that term is defined in Building Code Section 107 A.13.1, prior to July 1, 2025, uses California Debt Limit Allocation Committee tax-exempt bond financing and tax credits under the Tax Credit Allocation Committee, as set forth in Planning Code Section 415.6(h)(2}(B}, and provides at least 100 total on-site affordable units; (2) Hospital Buildings, Health Service Buildings, and Institutional Healthcare Use Buildings; (3) Industrial Use Buildings; (4) Production, Distribution, and Repair Use Buildings; (5) construction of a new building that will receive water service from the San Francisco Public Utilities Commission through no larger than a 5/8" domestic water meter or a 5/8" recycled water domestic meter, as determined in accordance with the San Francisco Public Utilities Commission's rules for water service; (6) for District projects located within the boundaries of the Reclaimed Water Mayor Lurie; Supervisors Sauter, Mahmood BOARD OF SUPERVISORS Page 7 Use Map, construction of new buildings subject to a disposition and development agreement or similar contractual agreement approved before November 1, 2015, that includes in its applicable infrastructure plan the construction and operations of water treatment facilities within the project boundaries that would provide recycled water to the project; (7) for District projects located within the boundaries of the Reclaimed Water Use Map, construction of new buildings subject to a development agreement or similar contractual agreement, within a development phase or subphase, a street improvement plan, or a tentative map or vesting tentative map approved before November 1, 2015; or (8) for District projects located outside the boundaries of the Reclaimed Water Use Map, construction of new buildings subject to a development agreement or similar contractual agreement, within a development phase or subphase, a street improvement plan, or a tentative map or vesting tentative map approved before November 1, 2017. * * * * Section 4§. Effective Date. This ordinance shall become effective 30 days after enactment. Enactment occurs when the Mayor signs the ordinance, the Mayor returns the ordinance unsigned or does not sign the ordinance within ten days of receiving it, or the Board of Supervisors overrides the Mayor's veto of the ordinance. Mayor Lurie; Supervisors Sauter, Mahmood BOARD OF SUPERVISORS Page 8 Section a§. Scope of Ordinance. In enacting this ordinance, the Board of Supervisors intends to amend only those words, phrases, paragraphs, subsections, sections, articles, numbers, punctuation marks, charts, diagrams, or any other constituent parts of the Municipal Code that are explicitly shown in this ordinance as additions, deletions, Board amendment additions, and Board amendment deletions in accordance with the "Note" that appears under the official title of the ordinance. APPROVED AS TO FORM: DAVID CHIU, City Attorney By: Isl AUSTIN M. YANG Deputy City Attorney n:lleganalas202412500022101815627.docx Mayor Lurie; Supervisors Sauter, Mahmood BOARD OF SUPERVISORS Page 9 City and County of San Francisco Tails Ordinance City Hall I Dr. Carlton B. Goodlett Place San Francisco, CA 94102-4689 File Number: 240873 Date Passed: February 25, 2025 Ordinance amending the Planning Code to permit the use of California Debt Limit Allocation Committee tax-exempt bond financing and tax credits under the Tax Credit Allocation Committee for certain affordable housing projects that provide additional affordable units or deeper affordability levels than required by the lnclusionary Housing Ordinance, and require the Mayor's Office of Housing and Community Development to report on such projects; amending the Health Code to exempt such affordable housing projects from compliance with the requirement that new buildings be constructed, operated, and maintained using alternate water sources for non-potable uses; affirming the Planning Department's determination under the California Environmental Quality Act; making public necessity, convenience, and welfare findings under Planning Code, Section 302; and making findings of consistency with the General Plan and the eight priority policies of Planning Code, Section 101.1. February 03, 2025 Land Use and Transportation Committee - AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE February 03, 2025 Land Use and Transportation Committee - AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE February 03, 2025 Land Use and Transportation Committee - CONTINUED AS AMENDED February 10, 2025 Land Use and Transportation Committee - RECOMMENDED AS COMMITTEE REPORT February 11, 2025 Board of Supervisors - PASSED ON FIRST READING Ayes: 10 - Chan, Chen, Dorsey, Engardio, Fielder, Mahmood, Mandelman, Melgar, Sauter and Sherrill Absent: 1 - Walton February 25, 2025 Board of Supervisors - Fl NALLY PASSED City and County of San Francisco Ayes: 11 - Chan, Chen, Dorsey, Engardio, Fielder, Mahmood, Mandelman, Melgar, Sauter, Sherrill and Walton Page I Printed at 10:35 am on 2/26/25 File No. 240873 City a11d County of Sa11 Fm11cisco Daniel Lurie Mayor Page2 I hereby certify that the foregoing Ordinance was Fl NALLY PASSED on 2/25/2025 by the Board of Supervisors of the City and County of San Francisco. Date Approved Printed at 10:35 am 011 2/26/25