o0210-21

FILE NO. 210868 SUBSTITUTED 10/05/2021 ORDINANCE NO. 210-21 [Planning Code - lnclusionary Housing Program Updates] Ordinance amending the Planning Code to update inclusionary housing program requirements; affirming the Planning Department's determination under the California Environmental Quality Act; and making findings of consistency with the General Plan, and the eight priority policies of Planning Code, Section 101.1, and findings of necessity, convenience, and welfare under Planning Code, Section 302. 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 strikethrough italics Times Nev; 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 Code Sections 21000 et seq.). Said determination is on file with the Clerk of the Board of Supervisors in File No. 210868 and is incorporated herein by reference. The Board affirms this determination. (b) On October 14, 2021, the Planning Commission, in Resolution No. 21013, 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. 210868, and is incorporated herein by reference. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 1 (c) Pursuant to Planning Code Section 302, the Board of Supervisors find that this ordinance will serve the public necessity, convenience, and welfare for the reasons set forth in Planning Commission Resolution No. 21013, and incorporates such reasons by this reference thereto. A copy of said resolution is on file with the Clerk of the Board of Supervisors in File No. 210868. Section 2. The Planning Code is hereby amended by revising Sections 207, 401, 413.6, 413.9, 415, 415.2, 415.3, 415.5, 415.6, 415.7, 415.8, 415.9, 415.10, 416, 416.3, 416.5, 417, 417.5, 419, 419.1, 419.2, 419.4, 419.5, 419.6, 424, 424.4, 428.3, and 428.5 to read as follows: SEC. 207. DWELLING UNIT DENSITY LIMITS. * * * * (c) Exceptions to Dwelling Unit Density Limits. An exception to the calculations under this Section 207 shall be made in the following circumstances: (1) Affordable Units in Projects with 20% Percent or More Affordable Units. For projects that are not located in any RH-1 or RH-2 zoning district, or are not seeking and receiving a density bonus under the provisions of California Government Code Section 65915, where 20%percent or more of the Dwelling Units on-site are "Affordable Units," the on- site Affordable Units shall not count towards the calculation of dwelling unit density. This Planning Code Section does not provide exceptions to any other Planning Code requirements such as height or bulk. For purposes of this Section 207, "Affordable Units" shall be defined as meeting (A) the criteria of Section 406(b); (B) the requirements of Section 415 et seq. for on-site units; or (C) restricted units in a project using California Debt Limit Allocation Committee (CDLAC) tax-exempt bond financing and 4% percent tax credits under the Tax Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 2 Credit Allocation Committee (TCAC). If a project sponsor proposes to provide "Affordable Units" that are not restricted by any other program, in order to receive the benefit of the additional density permitted under this Subsection (c)(1) or Subsection (c)(2), the project sponsor shall elect and the Planning Department and MOHCD shall be authorized to enforce, restricting the units as affordable under Planning Code Section 415.6 up to a maximum of 25% percent of the units in the principalproject Principal Project. The project sponsor shall make such election through the procedures described in Section 415.5(g) including submitting an Affidavit of Compliance indicating the project sponsor's election to pursue the benefits of Subsection (c)(1) or (c)(2) and committing to up to 25% percent on-site units restricted under Section 415.6 prior to approval by the Planning Commission or Planning Department staff. If a project sponsor obtains the exemption from the density calculation for Affordable Units provided ih this subsection, the exemption shall be documented and recorded against the property under the terms ofa RegulatorvAgreement as defined under Section 206.2 and consistent with the provisions set forth in Section 206. 6(1)(4). Any later request to decrease the number of Affordable Units shall require the project to go back to the Planning Commission or Planning Department, whichever entity approved the project as a whole. * * * * SEC. 401. DEFINITIONS. In addition to the specific definitions set forth in Section 102 and elsewhere in this Article 1_, the following definitions shall govern interpretation of this Article: "Affordable unit-Unit" or "affordable housing unit. A[{ordable Housing Unit." A unit that is Affordable to Qualifj;ing Households restricted as affordable under Section 415 et seq. * * * * Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 3 "Affordable to qualifying households Qualifying Households." (A) With respect tommed units Owned Units, the average purchase price on the initial sale of all affordable owned units Owned Units in a housing project shall not exceed the allowable average purchase price. Each unit shall be sold: (i) Only to first-time homebuyer households, as defined in this Section; (ii) Only to households with an annual gross income equal to or less than the qualifying income limits for a household of moderate income, adjusted for household size, except for the exceptions set forth in Section 415.8(a)(4)(C), (D)L and (E); (iii) Only to households that meet the household size requirements, as 1 O defined in the Procedures Manual; (iv) On the initial sale, at or below the maximum purchase price, as defined in this Section; (v) On subsequent sales at or below the prices to be determined according to the formula specified in the Procedures Manual in place at the time of the ajferdable unit armer's purchase ofthe Owned Unit, as amended from time to time, such that the units remain affordable to qualifying households for the life o[the project. The formula in the Procedures Manual shall permit the seller to include certain allowable capital improvements in the new maximum purchase price. The formula shall include a per unit cap on capital improvements of 10% of the resale price in order to maintain affordability. Special Assessments shall be added to the resale price at an uncapped rate. Capital improvement requests shall be evaluated by the Mayor's Office of Housing according to the formula specified in the Procedures Manual. (B) With respect to Rental Units rental units in an affordable housingproject, the average annual rent shall not exceed the allowable average annual rent. Each unit shall be rented: Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 4 (i) Only to households with an annual gross income equal to or less than qualifying limits for a household of lower income adjusted for household size, as defined in this Section, except for the exceptions set forth in Section 415.8(a)(4)(A) and (B); (ii) Only to households that meet the household size requirements, as defined in the Procedures Manual; (iii) At or less than the maximum annual rent. "Allowable average purchase price." A price for all affordable mvned units Owned Units of the size indicated below that are affordable to a household of median income as defined in this Section, adjusted for the household size indicated below as of the date of the close of escrow, except for Single Room Occupancy units and Group Housing units that are less than 350 square feet (both as defined in Section 102), which shall be 75% of the maximum purchase price level for studio units, and, where applicable, adjusted to reflect the Department's policy on unbundled parking for affordable housing units as specified in the Procedures Manual and amended from time to time: * * * * "Allowable average annual rent." Annual rent for a Rental Unit an affordable rental unit of the size indicated below that is 30% percent of the annual gross income of a household of low income as defined in this Section, adjusted for the household size indicated below except for Single Room Occupancy units and Group Housing units that are less than 350 square feet (both as defined in Section 102), which shall be 75% of the maximum rent level for studio units, and, where applicable, adjusted to reflect the Department's policy on unbundled parking for affordable housing units as specified in the Procedures Manual and amended from time to time: * * * * Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 5 At no time can a rent increase, or can multiple rent increases within one year, exceed the percentage change in Maximum Monthly Rent levels as published by MOHCD from the previous calendar year to the current calendar year. * * * * "Annual gross income." Gross income as defined in CCR Title 25, Section 6914, as amended from time to time, except that MOHCD may, in order to promote consistency with the procedures of the San Francisco Redevelopment Agency, develop an asset test that differs from the State definition if it publishes that test in the Procedures Manual. * * * * "Average annual rent." The total annual rent for the calendar year charged by a housing project for all affordable rental units Rental Units in the project of an equal number of bedrooms divided by the total number of affordable units Affordable Units in the project with that number of bedrooms. "Average purchase price." The purchase price for all Owned Units qfferdable m'med units in an affordable housing project of an equal number of bedrooms divided by the total number of affordable units Affordable Units in the project with that number of bedrooms. * * * * "Maximum annual rent." The maximum rent that a housing developer may charge any tenant occupying an affordable unit for the calendar year. The maximum annual rent for an affordable housing unit of the size indicated below shall be no more than 30% percent of the annual gross income for a household of low income as defined in this Section, as adjusted for the household size indicated below, except in the case of Single Room Occupancy units and Group Housing units that are less than 350 square feet (both as defined in Section 102), which shall be 75% of the maximum rent level for studio units, as of the first date of the tenancy: Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 6 * * * * At no time can a rent increase, or can multiple rent increases within one year, exceed the percentage change in Maximum Monthly Rent levels as published by MOHCD from the previous calendar year to the current calendar year. "Maximum purchase price." The maximum purchase price for an Owned Unit affordable m+·ned unit of the size indicated below except in the case of Single Room Occupancy units and Group Housing units that are less than 350 square feet (both as defined in Section 102), which shall be 75% of the maximum purchase price level for studio units, that is affordable to a household of moderate income, adjusted for the household size indicated below, assuming an annual payment for all housing costs of 33 percent of the combined household annual gross income, a down payment recommended by MOHCD and set forth in the Procedures Manual, and available financing: * * * * "Mayor's Office of Housing" or "MOH." The Mayor's Office of Housing and Community Development or its successor. * * * * "MOH." The Mayor's Office of Housing, or the Mayor's Office o[Housing and Community Development, or its successor. "MOHCD. " The Mayor's Office of Housing and Community Development, or its successor. * * * * "Off-site U-unit." A unit affordable to qualifying households Affordable to Qualifj;ing Households constructed pursuant to this Article on a site other than the site of the principal projectPrincipal Project. Jfa Housing Project is constructed in multiple phases or consists of multiple buildings, Affgrdable Units may be constructed in one building or phase. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 7 "On-site Uunit." A unit affordable to qualifjdng households A(fordable to Qualifying Households constructed pursuant to this Article on the site of the principal project. If a Housing Project is constructed in multiple phases or consists of multiple buildings, Affordable Units shall be distributed proportionally throughout the building or phase. "Owned Unit '/;ff/;#." A unit Affordable to Qualifying Households that affordable to qualifying households -which is a condominium, stock cooperative, community apartment, or detached single-family home. The owner or owners of an owned unit Owned Unit must occupy the unit as their primary residence. * * * * "Procedures Manual." The City and County of San Francisco lnclusionary Affordable Housing Program Monitoring Procedures Manual issued by the Mayor's Ofjice ofHousing and Community Development, San Francisco Department of City Planning, as amended from time to * * * * "Rental Unit '/;ff/;#." A unit Affordable to Qualifying Households that ajjOrdable to qualifying households v;hich is not a condominium, stock cooperative, or community apartment. * * * * SEC. 413.6. COMPLIANCE BY LAND DEDICATION. (a) Controls. Projects may satisfy all or a portion of the requirements of Section 413.1 et seq. via dedication of land to the City for the purpose of constructing units A(fordable to Qualifying Households affordable to qualifjdng households. Projects may receive a credit against such requirements up to the value of the land donated, calculated pursuant to subsection (b) below. * * * * Supervisors Ronen; Chan. Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 8 SEC. 413.9. CITYWIDE AFFORDABLE HOUSING FUND. (a) Use of Fees. All monies contributed pursuant to the Jobs Housing Linkage Fee Program in Section 413.1 et seq. shall be deposited in the Citywide Affordable Housing Fund ("Fund"), established in Administrative Code Section 10.100-49. The receipts in the Fund collected under Section 413.1 et seq. shall be used solely to increase the supply of housing Affordable to Qualifying Households afferdable to qualif)'ing households subject to the conditions of this Section 413.9. The fees collected under this Section may not be used, by way of loan or otherwise, to pay any administrative, general overhead, or similar expense of any entity. MOHCD shall develop procedures such that, for all projects funded by the Citywide Affordable Housing Fund, MOHCD requires the project sponsor or its successor in interest to give preference in occupying units as provided for in Administrative Code Chapter 47. * * * * SEC. 415. HOUSING REQUIREMENTS FOR RESIDENTIAL AND LIVE/WORK DEVELOPMENT PROJECTS. Sections415.1 through415.11, hereafterSection415.1 et seq., set forth the requirements and procedures for the lnclusionary Affordable Housing Program ("Program" or "lnclusionary Housing Program"). The Planning Department and MOHCD shall periodically publish a Procedures Manual containing procedures for monitoring and enforcement of the policies and procedures for implementation of this Program. The Procedures Manual must be made available on the Department's web site. The Procedures Manual shall not be amended, except for an annual update of the affordability housing guidelines, which reflect updated income limits, prices, and rents, without approval of the Commission or as otherwise specified herein. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 9 The Procedures Manual in effect at the time of initial purchase or initial rental of an Affordable Unit a-unit shall govern the regulation of that unit until it is sold or re-rented unless an owner or current tenant chooses to be governed by all of the more up-to-date provisions of the then-current Procedures Manual. In that case, the owner or tenant must agree to be governed by the totality of the new regulations - an owner or tenant may not pick some provisions from the Procedures Manual in effect at the time of initial purchase or initial rental and some in effect in the then-current Procedures Manual. If the owner or tenant chooses to be governed by the then-current Procedures Manual he or she shall sign an agreement with the City to that effect, and the Department and MOH CD shall apply all of the rules and 1 O regulations in the then-current Procedures Manual to the unit. SEC. 415.2. DEFINITIONS. See Section 401 of this Article. "Owned Unit" shall mean a dwelling unit that is a condominium, stock cooperative, community apartment or detached single family home. The mmer or mvners of an mnwd unit must occupy the unit as their primary residence. "Rental Housing Project" shall mean a housing project consisting solely o.fRental [Jnits, as defined in Section 401, v;hich meets the following requirements: (1) The units shall be rental housing for not less than 30 years from the issuance of the certificate of occupancy pursuant to an agreement between the developer and the City. This agreement shall be in accordance ·with applicable State law governing rental housing. All such agreements entered into with the City must be re-viewed and appro-ved by the Planning Director and the City Attorney's Office, and may be executed by the Planning Director,· (2) The agreement shall be recorded against the property prior to issuance of the certificate ofoccupancy. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 10 "Ownership Housing Project" shall mean a housing project consisting solely of units that are condominiums, stock cooperatives, community apartments, or detached single-family homes. Ownership Housing Projects include all of the units in a housing development including A(fordable Units and Market Rate Housing. "Rental Housing Project" shall mean a housing project consisting solely of units owned by a single entity and rented to individual tenants. Rental Housing Projects include all o[the units in a housing development including Affordable and Market Rate Housing. SEC. 415.3. APPLICATION. * * * * (b) Except as provided in subsection (3) below, any development project that has submitted a complete Environmental Evaluation application prior to January 12, 2016 shall comply with the Affordable Housing Fee requirements, the on-site affordable housing requirements or the off-site affordable housing requirements, and all other provisions of Section 415.1 et seq., as applicable, in effect on January 12, 2016. For development projects that have submitted a complete Environmental Evaluation application on or after January 1, 2013, the requirements set forth in Planning Code Sections 415.5, 415.6, and 415.7 shall apply to certain development projects consisting of 25 dwelling units or more during a limited period of time as follows. * * * * (2) If a development project pays the Affordable Housing Fee or elects to provide off-site affordable housing, the development project shall provide the following fee amount or amounts of off-site affordable housing during the limited periods of time set forth below. * * * * Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 11 (F) Notwithstanding the provisions set forth in subsections (b )(2)(A), (B) and (C) of this Section 415.3, if a development project is located in a UMU Zoning District or in the South of Market Youth and Family Zoning District, and pays the Affordable Housing Fee or elects fo provide off-site affordable housing pursuant to Section 415.5(g), or elects to comply with a land dedication alternative Land Dedication Alternative, such development project shall comply with the fee, off-site or land dedication requirements applicable within such Zoning Districts, as they existed on January 12, 2016, plus the following additional amounts for the Affordable Housing Fee or for land dedication or off-site affordable units: (i) if the development project has submitted a complete Environmental Evaluation application prior to January 1, 2014, the Project Sponsor shall pay an additional fee, or provide additional land dedication or off-site affordable units, in an amount equivalent to 5% of the number of units constructed on-site; (ii) if the development project has submitted a complete Environmental Evaluation application prior to January 1, 2015, the Project Sponsor shall pay an additional fee, or provide additional land dedication or off-site affordable units, in an amount equivalent to 7.5% of the number of units constructed on-site; or (iii) if the development project has submitted a complete Environmental Evaluation application on or prior to January 12, 2016, the Project Sponsor shall pay an additional fee, or provide additional land dedication or off-site affordable units, in an amount equivalent to 10% of the number of units constructed on-site. Notwithstanding the foregoing, a development project shall not pay a fee or provide off-site units in a total amount greater than the equivalent of 30% of the number of units constructed on-site. * * * * (d) Notwithstanding the provisions set forth in Section 415.3(b), or the inclusionary affordable housing requirements contained in Sections 415.5, 415.6, and 415. 7, such requirements shall not apply to any project, consisting of 25 dwelling units or more, that has Supervisors Ronen: Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 12 not submitted a complete Environmental Evaluation Application on or before January 12, 2016, if the project is located within the Eastern Neighborhoods Mission Planning Area, the North of Market Residential Special Use District Subarea 1 or Subarea 2, or the SOMA Neighborhood Commercial Transit District, because inclusionary affordable housing levels for those areas will be addressed in forthcoming area plan processes or an equivalent community planning process. Until such planning processes are complete and new inclusionary housing requirements for projects in those areas are adopted, projects consisting of 25 dv,·elling units or more shall (1) pay a fee or provide off-site housing in an amount equivalent to 30% if the principal housingproject Principal Project is a Rental Housing Project, or 33% if the principal housingprojeet Proposed Project is an Ownership Housing Project consists of Owned Units, or (2) provide cifferdable units Affordable Units in the amount of 25% of the number of Rental Units units constructed on-site in a Rental Housing Project, or 27% of the number of Owned Units units constructed on-site in an Ownership Housing Project. For Rental Housing Projects tJn#.s, 15% of the on-site affordable units A(fordable Units shall be affordable to low-income households, 5% shall be affordable to moderate-income households and 5% shall be affordable to middle- income households. For Ownership Housing Projects Owned Units, 15% of the on-site affordable units Affordable Units shall be affordable to low-income households, 6% shall be affordable to moderate- income households and 6% shall be affordable to middle-income households. * * * * (f) Section 415.1 et seq., the lnclusionary Housing Program, shall not apply to: * * * * (5) A Student Housing project that meets all of the following criteria: * * * * (C) MOHCD Tlw },fayer 's Office ofHousing and Community Development (MDHCD) is authorized to monitor the Student Housing program described in this subsection Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 13 (f)(5) and shall develop a monitoring form. An annual monitoring fee of $792 per building exempted from the lnclusionary Housing Program pursuant to this Section 415.3(f)(5) shall be paid to MOHCD by the owner of the real property or the Post-Secondary Educational Institution or Religious Institutions, as defined in Section 102 of this Code. Beginning with the setting of fees for fiscal year 2018-2019, the Controller shall annually adjust the base monitoring fee amount referenced in this subsection (f)(5)(C) without further action by the Board of Supervisors, to reflect changes in the two-year average Consumer Price Index (CPI) change for the San Francisco/San Jose Primary Metropolitan Area (PMSA). This process shall occur as follows: * * * * SEC. 415.5. AFFORDABLE HOUSING FEE. 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 housingprojectPrincipal Project. (A) For housing development projects consisting of 10 dwelling units or more, but less than 25 dwelling units, the applicable percentage shall be 20%. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 14 (B) For development projects consisting of 25 dwelling units or more, the applicable percentage shall be 33% if such units are Owned Units. (C) For development projects consisting of 25 d~welling units or more, the applicable percentage shall be 30% if such units are Rental Units in the development project is a Rental Housing Project. In the event one or more o,fthe Rental Units in the principal g_Rental Housing Project becomes an Ownership Housing Project ownership units, for each 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 lnclusionary Affordable Housing Fee, which would be equivalent to the current lnclusionary Affordable Housing Fee requirement for Ownership Housing Projects Ovmed Units, or (B) provide additional on-site or off- site affordable units Affordable Units equivalent to the current inclusionary requirements for Ownership Housing Projects 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. Any additional Affordable Units provided on-site or off-site shall comply with Section 415 and the Procedures Manual. * * * * (f) Use of Fees. All monies contributed pursuant to the lnclusionary 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 afferdable to qualijjiing households Affordable to Quali&ing Households subject to the conditions of this Section; and Supervisors Ronen; Chan, Peskin. Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 15 * * * * (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 Qualifj;ing Households afferdable to qualifying households on-site of the principalproject Principal Project pursuant to the requirements of Section 415.6. (8) Alternative #2: Off-Site Units. Project sponsors may elect to construct units Affordable to Qualifj;ing Households aj]Ordable to qual&ljiing 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 satisfj; Section 415.1 et seq through one ofthe alternatives described in Section 415. 5 (g)(l ), must provide written notice of their election 3 0 days prior Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 16 to project approval bv the Planning Commission or Department, as applicable. The Planning Commission or the Department may not require a project sponsor to select a specific Alternative. If a project sponsor elects to meet the Program requirements through one of the Alternatives described in subsection (g)(l), they must choose it 30 days prior to anyproject apprm'als from the Planning Commission or Department. The Alternative will be a condition of project approval and recorded against the property in a Notice of Special Restrictions. an 1'1SR. Any subsequent change by a project sponsor that results in the reduction in the number of on site units shall require public notice for a hearing and approvalfrom the Planning Commission. (3) Jfat any time, the project sponsor eliminates the on site or a.ff site affordable units, then the project sponsor must immediately inform the Department and A10HCD andpay the applicable Affordable Housing Fee plus interest and any applicable penalties provided for under this Code. If a project sponsor requests a modification to its conditions of approval for the sole purpose of complying 'rvith this Section, the Planning Commission shall be limited to considering issues related to Section 415 et seq. in considering the request for modification. (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.S(g)(l), 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 ofa 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 Supervisors Ronen; Chan. Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 17 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) !fa 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 ifit 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,· (BJ 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 tram 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) !fa Rental Housing Project is converting to an Ownership Housing Project, the amount ofAffordable Housing Fee or number of On-Site Units complies with Section 415.6(a)0): (E) For projects that chose to provide On-site or Otfsite units and seek a modification oft he 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 Otfsite 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 ofthe conditions of approval to pay the Affordable Housing Fee after the issuance oft he first construction document, the project sponsor or its successor shall pay the Affordable Housing Fee Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 18 equivalent to the loss of On-site or Off-site A[fordable Housing units that were approved in the original conditions of approval, plus interest and anv applicable penalties provided for under this Code. 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: * * * * (2) For any Ownership Housing Project housing development project consisting of 1 O 25 or more units O,vned Units, the number of Affordable Units 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 A[fordable Units afferdable 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 A[fordable Units affordable units with purchase prices set at 130% of Area Median Income, the units shall have a minimum occupancy of two persons. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 19 This unit requirement shall be outlined within the Mayor's Office of Housing Preferences and Lottery Procedures Manual no later than February 26, 2018. 6 months follorving tlw effective date &jthe Ordinance contained in Board ofSupervisor.s I"ile }lo. 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 units Rental Units, the number of Affordable Units 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 1 O the units affordable to middle-income households. In no case shall the total number of Affordable Units 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 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. 6 monthsfollov,·ing the effective date o,fthe Ordinance contained in Board ofSupenisors -F'ile No. 161351. MOH CD may reduce Area Median Income pricing and the minimum income required for eligibility in each rental category. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 20 * * * * (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 Owned or Rental Units, the required on-site affordable ownership housing to satisfy this Section 415.6 shall increase by 1:4% 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 housing developments with 25 or more units shall increase by 0.5% annually, with such increases allocated equally for rental and ovmership 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 Ownership Housing Projects developmentprojects consisting o.fOwned Units or 24% for Rental Housing Projects development projects consisting o.fRental 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 DBl'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 MOH CD, of all units constructed on the project site shall be Affordable to Qualifj;ing Households Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 21 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 principalprojectPrincipal 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 qfj-0rdable 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. fl)@ In the event that a Rental Housing Project converts to an Ownership Housing Project, one or more of the Rental []nits in the principal Rental Housing Project becmne 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 Ownership Housing Projects, or (B) provide additional on-site or off-site Affordable Units aiferdable units equivalent to the then- current inclusionary requirements for Owned Units 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)(l 0) below, Affordable Units in Rental Housing Projects shall be Rental Units, and Affprdable 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% o[the total units in the Principal Project operate as a Rental Housing Project, on-site Affordable Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 22 Units shall be offered as Rental Units. Affordable Units may only be sold as Owned Units ifmore than 50% of the units in the building shall be sold to unaffiliated third-party homebuyers and are operated as an Ownership Housing Project. (I 0) A development project consisting of multiple buildings may include both a Rental Housing Project and an Ownership Housing Project with vvritten notice to the Department and MOHCD, at least 30 days prior to approval ofthe project by the Planning Commission or the Planning Department. (811) 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. f9Hl11 If the principal project 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 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. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 23 (MJ3) 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 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. * * * * (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 principalproject 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 affordable units constructed under this Section 415.6 shall be comparable in number of bedrooms, exterior appearanceL and overall quality of construction to market rate units in the principalpr€fject Principal Project. A Notice of Special Restrictions shall be recorded prior to issuance of the first construction document architectural addendum to the Site Permit for the project or building permit for the project, whichever is earlier and shall specify the number, locationL and sizes for all Affordable Units affordable units required under this subsection (f). The Affordable Units afferdable 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 Affprdable Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 24 Units 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 A[fordable Units afferdable units should be generally the same as those of the market rate units in the principal project 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 Affprdable Units 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 A(fordable Units affordable units are 1 O 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 Tyzz_e One-bedroom Two-bedroom Three-bedroom Four-bedroom Minimum Unit Size (jn gross square f§et2 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 Principal Project, provided that a 10% variation in floor area is permitted. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 25 (g) Marketing the Units. The A1ayor 's Office ofHousing and Community Development pMOHCD~ shall be responsible for overseeing and monitoring the marketing of Affordable Units by the Project Sponsor qfferdable 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 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 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 1 O marketing firms that market Affordable Units 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 o[the minimum qualifications. ,Vo developer marketing units under the Program shall be able to market affordable units except through afirm meeting all (}f tlw 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 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 o[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 tram MOH CD at least 8 months prior to issuance ofa 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 ofthe project. The estimated construction timeline must assume Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 26 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. (-1-2__) Lottery. At the initial offering of affordable units Affordable Units in a housing project and when mmer~hip units 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. (-2-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. * * * * SEC. 415.7. OFF-SITE AFFORDABLE HOUSING ALTERNATIVE. If the project sponsor elects pursuant to Section 415.5(g) to provide off-site units to satisfy the requirements of Sections 415.1 et seq., the project sponsor shall notify the Planning Department and MOHCD the klayor 's Office afHousing and Community Development ("J,10HCD") of its intent as early aspossible prior to approval ofthe project by the Planning Commission or Department. The Planning Department and MOHCD shall provide an evaluation of the project's compliance with this Section 415.7 prior to approval by the Planning Commission or Planning Department. The development project shall meet the following requirements: (a) Number of Units: The number of units constructed off-site shall be as follows: * * * * Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 27 (2) For housing development projects consisting of 10 dwelling units or more but less than 25 units, the number of Affordable Units afferdable units constructed off-site shall be 20%, so that a project applicant shall construct .20 times the total number of units produced in the principalpr(}ject Principal Protect. If the total number of units is not a whole number, the project applicant 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 affordable units required exceed the number required as determined by the application of the applicable off-site requirement rate to the total project units. 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. (3) For any Ownership Housing Project housing de·velopmentproject consisting of 25 or more units Owned Units, the number of Affordable Units affordable units constructed off-site shall be 33% of all units constructed on the project site, with a minimum of 18% of the units affordable to low-income households, 8% of the units affordable to moderate-income households, and 7% of the units affordable to middle income households. In no case shall the total number of Affordable Units affordable units required exceed the number required as determined by the application of the applicable off-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 Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 28 150% of Area Median Income eligible to apply for middle-income units. For any Affordable Units affordable units with purchase prices set at 100% of Area Median Income or above, 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. 6 months follortdng the effective date of the Ordinance contained in Board of Supervisors F'ile l'lo. 161351. MOHCD may reduce Area Median Income pricing and the minimum income required for eligibility in each rental category. * * * * (5) In the event that a Rental Housing protect converts to an Ownership Housing project one or more (}jthe Rental Units in the principal Rental Housing Project become orvnership units, for each 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 lnclusionary Affordable Housing Fee, which would be equivalent to the then-current lnclusionary Affordable Housing Fee requirement for Ownership Housing Projects Owned Units, or (B) provide additional on-site or off-site Affordable Units affordable units equivalent to the then-current inclusionary requirements for Ownership Housing Projects 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. * * * * (e) Marketing the Units: The Project Sponsor shall submit a proposed marketing plan to MOHCD to begin marketing the Affordable Units at least six months prior to the beginning of marketing for any unit in the Principal Project. MOH CD shall approve the marketing plan for the Affordable Units prior to the Project Sponsor marketing any unit in the Principal Project. Failure to comply shall be deemed a violation o[the Planning Code subject to enforcement and penalties as set .forth in Section 415.9. MOHCD shall be responsible for overseeing and monitoring the Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 29 marketing of Affordable Units affordable units under this Section 415.7. 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 Af!prdable Units 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 Affprdable Units afferdable un#s. 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 affordable units under Section 415.1 et seq., referred to in the Procedures Manual as Below Market Rate (BMR units). No project sponsor marketing units under the Program shall be able to market BMR 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 affordable units in the project. (1) Lottery: At the initial offering of affordable units in a housing project and when Affordable Units ovmership units become available for resale or re-lease 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. * * * * SEC. 415.8. DURATION AND MONITORING OF AFFORDABILITY. (a) For any units permitted under the Program: (1) All units constructed pursuant to Sections 415.6 (on site alternative On-site Alternative) and 415.7 (affsite alternative Off-site Alternative) must be owner-occupied, as Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 30 defined in the Procedures Manual, in the case of Owned Units mvrwrship units or occupied by qualified households in the case of Rental Units rental units. (2) Units shall not remain vacant for a period exceeding 60 days without the written consent of MOHCD. (3) All units constructed pursuant to Sections 415.6 and 415. 7 must remain Affordable to Qualifj;ing Households afferdable to qualifying households for the life of the project. (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 1 O 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 ownership unit, up to a maximum of 120% of AMI; (8) 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 ownership 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 mvnership 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 ownership units may be set at 10% above the income level stated in the Notice of Special Restrictions or conditions of approval. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 31 * * * * (b) For any units permitted to be Owned Units o-wnership units under the Program, the MOHCD },1ayor's Office o.fHousing shall: ( 1) establish Establish and implement a process for reselling an affordable unit in the Procedures Manualf,_ (2) provide 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 Provide that owners must comply with refinancing procedures and limitations as published in the Procedures Manual. (4) provide 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 rental units permitted by the Commission to be converted to Owned Units o-wnership 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 Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 32 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 ownership 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. 1 O (6) For Owned Units or+·ner~hip 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 principalproject's 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 Afferdable Units 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 Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 33 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 Afferdable Units ajf{)rdable 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 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 MOH CD to 1 O analyze the following issues and, if it deems appropriate, to propose amendments to the Procedures Manual to address the issues: (A) 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 Affprdable Units 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 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; Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 34 (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 1 O 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 a 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 tlze A4ayor's Office ofHousing 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 Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 35 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 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 Affordable Unit that is converted from a Rental Unit to an Owned Unit rental to ovmership 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 Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 36 Project Owner may not take advantage of any increases that were not applied until the Unit is vacant and re-rented. SEC. 415.9. ENFORCEMENT PROVISIONS AND MONITORING OF PROGRAM. (a) A first construction document or first Certificate of Occupancy, whichever applies, shall not be issued by the Director of DBI to any unit in the prirwipalproject Principal Project until all of the affordable housing requirements of Sections 415.1 et seq. are satisfied. (b) If, after issuance of the first Certificate of Occupancy, the Commission or Department determines that a project sponsor has failed to comply with any requirement in Section 415.1 et seq. or any reporting requirements detailed in the Procedures Manual, or has violated the Notice of Special Restrictions, the Commission, Department, or DBI may, until the violation is cured, (el) revoke the Certificate of Occupancy for the principalproject Principal Project or required Affordable Units affordable units, (l72..) impose a penalty on the project pursuant to Section 176(c) of this Code, and/or (el) the Zoning Administrator may enforce the provisions of Section 415.1 et seq. through any means provided for in Section 176 of this Code. (c) The Department shall notify MOHCD of any housing project subject to the requirements of Section 415.1 et seq., including the name of the project sponsor and the number and location of the Affordable Units afferdable units, within 30 days of the Department's approval of a building, or site permit for the project. MOHCD shall provide all project sponsors with information concerning the City's first-time home-buyer assistance programs and any other related programs MOHCD shall deem relevant to the lnclusionary Affordable Housing Program. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 37 (d) The Department shall, as part of the annual Housing Inventory, report to the Board of Supervisors on the results of Section 415.1 et seq. including, but not limited to, a report on the following items: (1) The number of, location of, and project applicant for,_ housing projects which came before the Commission for a Conditional Use Authorization or Planned Unit Development, and the number of, location of, and project applicant for housing projects which were subject to the requirements of Section 415.1 et seq.; (2) The number of, location of, and project sponsor for,_ housing projects which applied for a waiver, adjustment, or reduction from the requirements of Section 415.1 et tf£fr 1 O seq. pursuant to Section 406 of this Article, and the number of, location of, and project sponsor for,_ housing projects which were granted such a waiver, adjustment, or reduction and, if a reduction, to what percentage; and (3) The number of, location of, and project sponsor for,_ every housing project to which Section 415.1 et seq. applied and the number of market rate units and the number of affordable on- and off-site units provided, including the location of all of the affordable unitsf (e) A study is authorized to be undertaken under the direction of MOHCD approximately every five years to update the requirements of Section 415.1 et seq. MOHCD shall make recommendations to the Board of Supervisors and the Commission regarding any legislative changes. MOHCD shall specifically evaluate the different inclusionary housing requirements for developments of over 120 feet approximately five years from the enactment of the requirement or as deemed appropriate by MOHCD. MOHCD shall coordinate this report with the five-year evaluation by the Director of Planning required by Section 410 of this Article. (f) Annual or Bi-annual Monitoring+~ Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 38 (1) MOH CD shall monitor and require occupancy certification for Owned Units and Rental Units affordable ovmership and rental units on an annual or bi-annual basis, as outlined in the Procedures Manual. (2) MOHCD may require the owner of an a Rental Unit, ajfordabfo rental unit, the owner's designated representative, or the tenant in an affordable unit to verify the income levels of the tenant on an annual or bi-annual basis, as outlined in the Procedures Manual. SEC. 415.10. REPORTING TO BOARD OF SUPERVISORS. * * * * (b) Triennial Economic Feasibility Analysis. With the support of independent consultants as deemed appropriate by the Controller and with advice on setting qualifications and criteria for consultant selection from the lnclusionary Housing Technical Advisory Committee established in Administrative Code Chapter 5, Article XXIX, the Controller, in consultation with relevant City Departments and the lnclusionary Housing Technical Advisory Committee, shall conduct a feasibility study of the City's inclusionary affordable housing obligations set forth in Planning Code Section 415 et seq., including but not limited to the affordable housing fee and on site On-site and off site Off-site Alternatives alternatives, and shall submit a report to the Board of Supervisors by July 31, 2016 and by October 31 for subsequent years. Thereafter, the Controller, in consultation with the Department and the lnclusionary Housing Technical Advisory Committee, shall repeat this process at least every 36 months, or more frequently as deemed necessary by the Controller in response to a significant shift in economic or market conditions. * * * * (d) Report to Board of Supervisors. The Board of Supervisors may review the feasibility analyses, as well as the periodic updates to the City's Nexus Study evaluating the Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 39 necessary affordable housing in order to mitigate the impacts of market rate housing. The Board of Supervisors will review the feasibility analyses within three months of completion and may consider legislative amendments to the City's lnclusionary Housing in-lieu fees, on site On-site or, ajfsite Off-site or other altemati-ves Alternatives, and in so doing will seek consultation from the Planning Commission, adjusting levels of inclusionary or affordable housing obligations and income levels up to maximums as defined in Section 415.2, based on the feasibility analyses, with the objective of maximizing affordable lnclusionary Housing in market rate housing production, and with guidance from the City's Nexus Study. Any adjustment in income levels shall be adjusted commensurate with the percentage of units required so that 1 O the obligation for inclusionary housing is not reduced by any change in income levels. The Board of Supervisors may also utilize the Nexus Study in considering legislative amendments to the lnclusionary Housing requirements. Updates to the City's lnclusionary Housing requirements shall address affordable housing fees, on site On-site affordable housing and eff- s#e Off-site affordable housing, as well as the provision of affordable housing available to low- income households at or below 55% of Area Median Income for Rental Units rental units and up to 80% of Area Median Income for Owned Units mFnership units, and moderate/middle-income households from 80% to 120% of Area Median Income. SEC. 416. MARKET AND OCTAVIA AREA PLAN AND UPPER MARKET NEIGHBORHOOD COMMERCIAL DISTRICT AFFORDABLE HOUSING FEE. Sections 416.1through416.5, hereafter referred to as Section 416.1 et seq., set forth the requirements and procedures for the Market and Octavia Area Plan and Upper Market Neighborhood Commercial District Affordable Housing Fee. The effective date of these requirements shall be either May 30, 2008, which is the date that the requirements originally became effective, or the date a subsequent modification, if any, became effective. SEC. 416.3. APPLICATION OF AFFORDABLE HOUSING FEE REQUIREMENT. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 40 * * * * (b) Other Fee Provisions. This additional affordable housing fee shall be subject to the inflation adjustment provisions of Section 409 and the waiver and reduction provisions of Section 406. This additional affordable housing fee may not be met through the in-kind provision of community improvements or Community Facilities (Mello Roos) financing options of Sections 421.3(d) and (e). Pursuant to Section 249.33, in the Van Ness & Market Residential Special Use District this fee may be paid in any of the alternatives Alternatives set forth in Section 415.5(g). SEC. 416.5. USE OF FUNDS. The additional affordable housing requirement specified in this Section 416.5 for the Market and Octavia Plan Area and the Upper Market NCT District shall be paid into the Citywide Affordable Housing Fund, established in Administrative Code Section 10.100-49, but the funds shall be separately accounted for. MOHCD shall expend the funds according to the following priorities: First, to increase the supply of housing afferdable to qualifying households A-ffordable to Qualifying Households in the Market and Octavia Plan Area and the Upper Market NCT District; second, to increase the supply of housing afferdable to qualifying households Affgrdable to Qualifying Households within -J one mile of the boundaries of the Plan Area and the Upper Market NCT District; third, to increase the supply of housing affordable to qualifying households in the City and County of San Francisco. The funds may also be used for monitoring and administrative expenses subject to the process described in Section 415.5(f). SEC. 417. EASTERN NEIGHBORHOODS AREA PLAN AFFORDABLE HOUSING REQUIREMENT. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 41 Sections 417.1 through 417.5, hereafter referred to as Section 417.1 et seq., set forth the requirements and procedures for the Eastern Neighborhoods Area Plan Alternate Affordable Housing Fee. The effective date of these requirements shall be either January 19, 2009, which is the date that the requirements originally became effective, or the date a subsequent modification, if any, became effective. SEC. 417.5. USE OF FUNDS. The Eastern Neighborhoods Area Plan Alternate Affordable Housing Fee shall be paid into the Citywide Affordable Housing Fund, but the funds shall be separately accounted for. MOH shall expend the funds according to the following priorities: First, to increase the supply of housing afferdable to qualifj!fng households Affordable to Qualifying Households in the Eastern Neighborhoods Project Areas; second, to increase the supply of housing afferdable to qualifying households Affgrdable to Qualifying Households within .Jone mile of the boundaries of the Eastern Neighborhoods Project Areas; third, to increase the supply of housing afferdable to qualifj·ing households Affordable to Qualifying Households in the City and County of San Francisco. The funds may also be used for monitoring and administrative expenses subject to the process described in Section 415.5(e). All monies contributed pursuant to the Eastern Neighborhoods Area Plan Alternate Affordable Housing Fee 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. SEC. 419. HOUSING REQUIREMENTS FOR RESIDENTIAL DEVELOPMENT PROJECTS IN THE UMU ZONING DISTRICTS OF THE EASTERN NEIGHBORHOODS Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 42 AND THE LAND DEDICATION ALTERNATIVE IN THE UMU DISTRICT, MISSION NCT DISTRICT, AND CENTRAL SOMA SPECIAL USE DISTRICT. Sections 419.1 through 419.6, hereafter referred to as Section 419.1 et seq., set forth the housing requirements for residential development projects in the UMU Zoning Districts of the Eastern Neighborhoods and the Land Dedication Alternative in the UMU District, Mission NCT District, and Central SoMa Special Use District. The effective date of these requirements shall be either December 19, 2008, which is the date that the requirements originally became effective, or the date a subsequent modification, if any, became effective. SEC. 419.1. FINDINGS. * * * * (c) Requirements for New Development To Contribute Towards Housing Objectives. A key policy goal of the Eastern Neighborhoods Plans is to provide a significant amount of new housing affordable to low, moderateL and middle income families and individuals, along with "complete neighborhoods" that provide appropriate amenities for these new residents. The Plans obligate all new development within the Eastern Neighborhoods to contribute towards these goals, by providing a contribution towards affordable housing needs and by paying for a reasonable share of their impact on the neighborhood's infrastructure. They further require new development in transitioning formerly industrial areas to contribute a higher share towards the City's exponentially high affordability needs. To address the full range of housing needs of all income categories, including low, moderateL and middle income families and individuals, the Plans provide programs which address all of these income levels, as follows: Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 43 (1) Low: Current housing programs funded by federal and State funds, private equity raised through Low-Income Housing Tax Credits, and local funds such as inclusionary in-lieu and Jobs-Housing Linkage fees and run by MOHCD and the San Francisco Redevelopment Agency fund affordable housing primarily at very low and low income levels, to households making below 80% of the area median income; but due to the low supply and high costs of land in the City, are at a disadvantage for sites upon which to provide such housing. An alternative to the city's lnclusionary Housing Program will allow developers to dedicate sites for very low and low income level units. * * * * SEC. 419.2. DEFINITIONS. (a) In addition to the definitions set forth in Section 401 of this Article: (1) "Rental Housing Project" shall mean a project consisting solely o.frental housing units, as defined in Section /101 that meets the follor+iing requirements: ~4) The units shall be rental housing for not less than 30 yearsfrom the issuance of the certificate of occupancy pursuant to an agreement between the developer and the City. This agreement shall be in accordance ·with applicable State law governing rental housing; (B) A }fotice a/Special Restrictions (NSR), ·with the City as a thirdparty beneficiary and subject to ·written approval of the Director, shall be recorded on the title of the property prior tofinal map approval containing the terms of the agreement described above in subsection (1). Once the agreement is recorded against the property, the 1'1SR shall terminate. (±1) "Tier A." (i) All development on sites within the UMU District which received a height increase of eight feet or less, or received a reduction in height, as part of the Eastern Neighborhoods Plan (on file with the Clerk of the Board of Supervisors in File No. 081154), Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 44 and all sites within the Mission NCT District utilizing the land dedication alternative specified in Section 419.5(a)(2). (ii) All changes of use within existing structures. (J-2.) "Tier B." All development on sites within the UMU District which received a height increase of nine to 28 feet as part of the Eastern Neighborhoods Plan (on file with the Clerk of the Board of Supervisors in File No. 081154). (41) "Tier C." All development on sites within the UMU District which received a height increase of 29 feet or more as part of the Eastern Neighborhoods Plan (on file with the Clerk of the Board of Supervisors in file No. 081154). SEC. 419.4. IMPOSITION OF UMU AFFORDABLE HOUSING REQUIREMENTS. * * * * (c) Sponsor's Choice to Fulfill Requirements. Prior to issuance of a building or site permit for a development project subject to the requirements of Section 419.1et seq., the sponsor of the development project shall select one of the options described in Section 419.3 above or the alterna#ves Alternatives described in Section 419.5 below to fulfill the affordable housing requirements and notify the Department of their choice. * * * * SEC. 419.5. ALTERNATIVES TO THE INCLUSIONARY HOUSING COMPONENT. (a) Alternatives to the lnclusionary Housing Component. In addition to the alternatives Alternatives specified in Section 415.5(9g) the project sponsor may elect to satisfy the requirements of Section 415.5 by one of the alternati'v'es Alternatives specified in this Section. The project sponsor has the choice between the alternatives Alternatives and the Planning Commission may not require a specific alterna#ve Alternative. The project sponsor Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 45 must elect an alternative Alternative before it receives project approvals from the Planning Commission or Planning Department and that alternative Alternative will be a condition of project approval. The alternatives Alternatives are as follows: (1) Middle Income Alternative. On sites with less than 50,000 square feet of total developable area, applicants may provide units as affordable to qualifying "middle income" households as follows: (A) A minimum percent of the total units constructed shall be affordable to and occupied affordable to qualifying "middle income" households upon initial sale, according the schedule in Table 419.5. If the total number of units is not a whole number, the 1 O project applicant shall round up to the nearest whole number for any portion of .5 or above. Units shall be affordable to households between 120% percent and 150% percent of the San Francisco Area Median Income, with an average affordability level of 135% percent for all units provided through this Alternative alternative. (B) Where market rate sales prices exceed restricted sales prices, the difference between the market rate sales prices and the restricted sales prices shall be held by the Akryor's Office ofHousing MOHCD as a silent second mortgage according to the Procedures Manual. The City shall hold a deed of trust and promissory note for the second mortgage. MOHCD shall hold this mortgage and shall release it when the original note and proportional share of the appreciation are paid in full to the City. (C) Units shall initially be sold at or below prices to be determined by MOHCD in the Conditions of Approval or Notice of Special Restrictions according to the formula specified in the Procedures Manual to make them affordable to middle income households. Upon resale, the seller shall be permitted to sell the units at their market price. The City will waive its right of first refusal to the seller when the promissory note and deed of Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 46 trust are paid, along with the City's share of the appreciation of the unit. The promissory note shall accrue no interest and shall require no monthly payments. (D) Upon first resale, the seller shall have a right to keep a percentage of the total appreciation of the unit proportional to every year the original seller owns the unit as an owner occupant. The remainder of the proceeds of the sale, after the first mortgage, the second mortgage, and any other subordinate financing is paid off, shall be repaid to MOHCD. Detailed resale procedures shall be specified in the Middle Income Housing Procedures Manual published by MOHCD and approved by the Planning Commission. The Director of MOHCD shall amend the Procedures Manual as needed with the Commission's approval. 1 O (E) The City shall monitor units provided under this option during the 2- and 5-year Monitoring Report specified in Section 342 of this Code and in separate resolution. Should this monitoring report indicate that units constructed under this program do not meet the programs program's stated goals of providing affordable housing to Middle Income Households, the Planning Department and MOHCD shall consider changes to this program, including, but not limited to, legislative changes. (F) If the project sponsor elects to satisfy the requirements of Section 415.5 and of this Section by the Alternative alternati'.i'e specified above, the dwelling unit mix required by Section 207 .6 may be waived provided the minimum percent of total units affordable to qualifying "middle income" households as required by Table 419.5 is increased by 10%. (2) Land Dedication Alternative. Applicants may dedicate a portion of the total developable area of the principal site to the City and County of San Francisco for the purpose of constructing units A[{ordable to Qualifying Households afferdable to qualijj;ing households. A minimum percentage of developable area, representing an equivalent percent of total potential units to be constructed, shall be dedicated to the City according the schedule in Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 47 Table 419.5. To meet the requirements of this Alternative alternative, the developer must convey title to land in fee simple absolute to MOHCD according to the Procedures Manual, provided the dedicated site is deemed of equivalent or greater value to the principal site per those procedures and is in line with the following requirements: (A) The dedicated site will result in a total amount of inclusionary units not less thanfe¥t3t-{40} units. MOHCD may conditionally approve and accept dedicated sites which result in no less than Aventyfive (25} units at its discretion. (B) The dedicated site will result in a total amount of inclusionary units that is equivalent or greater than the minimum percentage of the units that will be provided on the 1 O principal site, as required by Table 419.5. MOH CD may also accept dedicated sites that represent the equivalent of or greater than the required percentage of units for all units that could be provided on a collective of sites within a one-mile radius, provided the total amount of inclusionary units provided on the dedicated site is equivalent to or greater than the total requirements for all principal sites participating in the collective, according to the requirements of Table 419.5. (C) The dedicated site is suitable from the perspective of size, configuration, physical characteristics, physical and environmental constraints, access, location, adjacent use, and other relevant planning criteria. The site must allow development of affordable housing that is sound, safeL and acceptable. (D) The dedicated site includes infrastructure necessary to serve the inclusionary units, including sewer, utilities, water, light, street accessL and sidewalks. (E) The developer must submit full environmental clearance for the dedicated site before the land can be considered for conveyance, and before a first site or building permit may be conferred upon the principal project Principal Project. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 48 (F) The City may accept dedicated sites that vary from the minimum thresholdL provided such a dedication is deemed generally equivalent to the original requirement by the Mayor's Office &jHousingMOHCD. (G) The City may accept dedicated sites that meet the above requirements in accordance with the Procedures Manual, in combination with fees or on-site units, provided such a combination is deemed generally equivalent by MOHCD to the original requirement. (H) The project applicant has a letter from MOHCD verifying acceptance of site before it receives project approvals from the Planning Commission or Planning Department, which shall be used to verify dedication as a condition of approval. 1 O (I) If the project sponsor elects to satisfy the requirements of Section 415.5 and of this Section by the Alternative alternative specified above, the dwelling unit mix required by Section 207.6 may be waived. (J) The Land Dedication Alternative may be satisfied through the dedication to the City of air space above or adjacent to the project, upon the approval of MOHCD, or a successor entity, and provided the other requirements of subsection (a)(2)(A)-(I) are otherwise satisfied. * * * * SEC. 419.6. LAND DEDICATION ALTERNATIVE IN THE MISSION NCT DISTRICT AND CENTRAL SOMA SPECIAL USE DISTRICT. (a) Mission NCT District. The Land Dedication Alternative alternati;;e is available for any project within the Mission NCT District under the same terms and conditions as provided for in Section 419.5(a)(2)(A)-(J). (b) Central SoMa Special Use District. The Land Dedication Alternative alternatt-ve is available for projects within the Central SoMa Special Use District under the same terms and conditions as provided for in Section 419.5(a)(2), except that in lieu of the Land Dedication Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 49 Alternative requirements of Table 419.5, projects may satisfy the requirements of Section 415.5 by dedicating land for affordable housing if the dedicated site will result in a total amount of dedicated Gross Floor Area that is equal to or greater than 45% of the potential Gross Floor Area that could be provided on the principal site, as determined by the Planning Department. Any dedicated land shall be within the area bounded by Market Street, the Embarcadero, King Street, Division Street, and South Van Ness Avenue. * * * * SEC. 424. VAN NESS AND MARKET AFFORDABLE HOUSING AND NEIGHBORHOOD INFRASTRUCTURE FEE AND PROGRAM. Sections 424.1 through 424.5, hereafter referred to as Section 424.1 et seq., set forth the requirements and procedures for the Van Ness and Market Affordable Housing and Neighborhood Infrastructure Program. The effective date of these requirements shall be either May 30, 2008, which is the date that the requirements original became effective, or the date a subsequent modification, if any, became effective. SEC. 424.4. VAN NESS & MARKET RESIDENTIAL SPECIAL USE DISTRICT AFFORDABLE HOUSING FUND. (a) That portion of gross floor area subject to the $30,..()g per gross square foot fee referenced in Section 424.3(b)(1) above shall be deposited into the special fund maintained by the Controller called the Citywide Affordable Housing Fund established by Section 413.9. Except as specifically provided in this Section, collection, management, enforcement, and expenditure of funds shall conform to the requirements related to in-lieu fees in Planning Code Section 415.1 et seq., specifically including, but not limited to, the provisions of Section 415.7. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 50 (b) Priorities for SUD Affordable Housing Fees Implementation. In order to increase the supply of housing affordable to qualifjJing households Affordable to Qualifj;ing Households in the Market and Octavia Plan Area, the Upper Market NCT District, and to the City, the following is the prioritization of the use of these fees; (1) First, to increase the supply of housing affordable to qualifji'ing households in Affordable to Qualifj;ing Households in the Van Ness & Market Residential Special Use District; (2) Second, to increase the supply of housing A{[ordable to Qualifj;ing Households affordable to qualifjdng households within -Jone mile of the boundaries of the Market and Octavia Area Plan; (3) Third, to increase the supply of housing Affgrdable to Qualifj;ing Households affordable to qualifj>'ing households in the City and County of San Francisco. SEC. 428.3. APPLICATION OF AFFORDABLE HOUSING FEE REQUIREMENT. (a) For any project for which a complete development application has been submitted before October 1, 2018, the lnclusionary Affordable Housing Program set forth in Planning Code Sections 415.1 et seq. shall apply in the Divisadero Street NCT, except the temporary provisions of Planning Code Section 415.3(b) shall not apply and except as set forth in Section 428.3(a). For any development site for which the Planning Department determines that the residential development potential within the Divisadero Street NCT has been increased through the adoption of the NCT rezoning set forth in Ordinance No. 127-15, as detailed in Section 428.1(e) herein, the requirements of Sections 415.1 et seq of the Planning Code shall apply, except as set forth in subsections (a)(1 ), (a)(2L and (a)(3), below, and the temporary provisions of Planning Code Section 415.3(b) shall not apply. (1) Fee. For a development project of 10 or more dwelling units that is subject to the lnclusionary Affordable Housing Program, the development project shall pay an Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 51 affordable housing fee equivalent to a requirement to provide 33% of the units in the principal project Principal Project as affordable units if those units are Owned Units, or 30% of the units if the project is a Rental Housing Project, using the method of fee calculation set forth in Section 415.5(b). (2) On-site. For a development project of 10 or more units that is subject to the lnclusionary Affordable Housing Program that elects to construct units Affordable to Qualifying Households affordable to qualif)·ing households on-site of the principal project Principal Project as set forth in Planning Code Section 415.5(g), the development project shall comply with all otherwise applicable requirements of Section 415.6, except that for all housing development 1 O projects consisting of 10 or more units, the following requirements shall apply. (A) For a housing developmentproject consistiHg of Owned Units an Ownership Housing Project, the number of affordable units constructed on site shall be 23% of all units constructed on the site. A minimum of 12% of the units shall be affordable to low- income households, 5.5% of the units shall be affordable to moderate-income households, and 5.5% 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. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 52 * * * * (3) Off-site. If the project sponsor of a housing development project of 10 or more units that is subject to the lnclusionary Affordable Housing Program elects to provide units afferdable to qualifj!ing households Affordable to Qualifying Households off-site of the principalpr&ject Principal Project as set forth in Section 415.5(g), the project sponsor shall construct or cause to be constructed affordable housing equal to 33% of all units constructed on the principal project Principal Project site as affordable housing if the units in the principal project Principal Project are owned units, and 30% if the project is a Rental Housing Project. (b) For any project for which a complete development application has been submitted 1 O on or after October 1, 2018, the lnclusionary Affordable Housing Program set forth in Planning Code Sections 415.1 et seq. shall apply in the Divisadero Street NCT except as set forth in this subsection (b). For any development site for which the Planning Department has determined that the residential development potential has been increased through the adoption of the NCT rezoning set forth in Ordinance No. 127-15, as detailed in Section 428.1 (e) herein, the requirements of Planning Code Sections 415.1 et seq. shall apply, except that the following affordable housing requirements shall be applied to residential development on such sites: (1) Fee. For a development project of 10 or more dwelling units that is subject to the lnclusionary Affordable Housing Program, the development project shall pay an affordable housing fee equivalent to a requirement to provide 33% of the units in the principal project Principal Project as Affordable Units ciffordable units if those units are Owned Units, or 30% of the units if the project is a Rental Housing Project, using the method of fee calculation set forth in Section 415.5(b). (2) On-site. If the housing development project of 10 or more dwelling units that is subject to the lnclusionary Affordable Housing Program elects to construct units Affordable Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 53 to Qualifj;ing Households qfferdable to qualifjJing households on-site of the principalpr&ject Principal Project as set forth in Planning Code Section 415.5(g), the project sponsor shall comply with all otherwise applicable requirements of Section 415.6, except that for all housing development projects consisting of 10 or more units, the number of Affordable Units affordable units constructed on-site shall be provided as follows. (A) A project that consists of Owned Units shall provide 23% of units as Affordable Units affordable units at the following levels: 10% shall have an average affordable purchase price set at 80% of Area Median Income; 8% shall have an average affordable purchase price set at 105% of Area Median Income; and 5% shall have an average affordable 1 O purchase price set at 130% of Area Median Income. (8) A project that consists of Rental Units shall provide 23% of units as Affordable Units affordable units at the following levels: 10% shall have an average affordable rent set at 55% of Area Median Income; 8% shall have an average affordable rent set at 80% of Area Median Income; and 5% shall have an average affordable rent set at 110% of Area Median Income. (C) Notwithstanding subsections (b)(2)(A) and (b)(2)(8), the percentage and affordability levels of Affordable Units affordable units constructed on-site as set forth in subsections (b )(2)(A) and (b )(2)(8) shall be the same percentage and affordability levels as set forth in Section 206.3(f)(2)(A), as it may be amended from time to time, and in no case shall the percentage of Affordable Units affordable units constructed on-site pursuant to this subsection (b)(2) be less than the percentage required by Section 415.6 for projects consisting of 25 or more units. If the percentage of Affordable Units affordable units constructed on-site pursuant to this subsection (b)(2) would be less than the percentage set forth in Section 415.6 for projects consisting of 25 or more units, the percentage of Aff!Jrdable Units afferdable units set forth in Section 415.6 for projects consisting of 25 or more units shall apply. Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 54 (3) Off-site. If the project sponsor of a housing development project of 10 or more units is eligible and elects to provide units Affgrdable to Qualifj;ing Households afferdabfo to qualijjiing households off-site of the principalproject Principal Pro;ect as set forth in Section 415.5(g), the project sponsor shall construct or cause to be constructed affordable housing equal to 33% of all units constructed on the principal project Principal Project site as affordable housing if the units in the principal project Principal Project are owned units, and 30% if the project is a Rental Housing Project. SEC. 428.5. USE OF FUNDS. The affordable housing fee specified in Sections 428.1 et seq. for the Divisadero Street NCT shall be paid into the Citywide Affordable Housing Fund, established in Administrative Code Section 10.100-49, and the funds shall be separately accounted for. The Mayor's Office of Housing and Community Development shall expend the funds to increase the supply of housing Affordable to Qualifj;ing Households afferdable to qualifying households in the City. The funds may also be used for monitoring and administrative expenses subject to the process described in Planning Code Section 415.5(f). Section 3. 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. Section 4. 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 Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 55 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: DENNIS J. HERRERA, City Attorney By: /s/ ~A~U~D~RE=Y~W~.~P~EA~R~S~O~N-,-- Deputy City Attorney n:\legana\as2021\2100455\01558537.docx Supervisors Ronen; Chan, Peskin, Preston, Melgar, Mandelman, Safai, Haney BOARD OF SUPERVISORS Page 56 City and County of San Francisco Tails Ordinance City Hall I Dr. Carlton B. Goodlett Place San Francisco, CA 94102-4689 File Number: 210868 Date Passed: November 09, 2021 Ordinance amending the Planning Code to update inclusionary housing program requirements; affirming the Planning Department's determination under the California Environmental Quality Act; and making findings of consistency with the General Plan, and the eight priority policies of Planning Code, Section 101.1, and findings of necessity, convenience, and welfare under Planning Code, Section 302. October 25, 2021 Land Use and Transportation Committee - RECOMMENDED November 02, 2021 Board of Supervisors - PASSED ON FIRST READING Ayes: 11 - Chan, Haney, Mandelman, Mar, Melgar, Peskin, Preston, Ronen, Safai, Stefani and Walton November 09, 2021 Board of Supervisors - FINALLY PASSED Ayes: 11 - Chan, Haney, Mandelman, Mar, Melgar, Peskin, Preston, Ronen, Safai, Stefani and Walton File No. 210868 London N. Breed Mayor City and County of San Fmncisco P11ge 1 I hereby certify that the foregoing Ordinance was FINALLY PASSED on 11/9/2021 by the Board of Supervisors of the City and County of San Francisco. Date Approved Printed at 11:26 am 01111110121