o0251-19

AMENDED IN BOARD FILE NO. 190548 10/29/2019 ORDINANCE NO. 251-19 [Planning Code - Jobs Housing Linkage Fee and lnclusionary Housing] Ordinance amending the Planning Code to modify the Jobs Housing Linkage Fee by allmMing clarifying the indexing of the fee, adding options for complying with the fee, phasing increases to the feerequiring payment of the fee no later than at the time of first certificate of occupancy, dedicating funds for permanent supportive housing and the preservation and acquisition of affordable housing, requiring periodic evaluation of the nexus study and fee, and to remove the monetary limit for the Small Sites Funds under the lnclusionary Housing Program; affirming the Planning Department's determination under the California Environmental Quality Act; making findings of consistency with the General Plan, and the eight priority policies of Planning Code, Section 101.1; and making findings of public necessity, convenience, and welfare pursuant to 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 l'lew 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 Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 1 the Board of Supervisors in File No. 190548 and is incorporated herein by reference. The Board affirms this determination. (b) On September 19, 2019, the Planning Commission, in Resolution No. 20522, 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. 190548, and is incorporated herein by reference. (c) Pursuant to Planning Code Section 302, the Board finds that this Planning 1 o Code amendment will serve the public necessity, convenience, and welfare for the reasons set forth in Planning Commission Resolution No. 20522, and the Board incorporates such reasons herein by reference. (d) The Jobs Housing Nexus Analysis. in Board File No. 190548 concluded that all new Office, Laboratory. Retail. Entertainment. Hotel. Production Distribution and Repair. Medical and Institutional land uses in San Francisco will generate an increased demand for affordable housing. The Nexus Study establishes a maximum level of affordable unit demand to be mitigated by the Jobs-Housing Linkage Fee Program for each of the eight building types. The Board finds that it is in the public interest to assess fees for smaller Office uses (up to 49.999 gross square feet) at a lower rate due to the feasibility and financing for such smaller Office uses. Section 2. Article 4 of the Planning Code is hereby amended by revising Sections 249.78. 329. 409, 413.1, 413.4, 413.6, 413.7, 413.8, 413.9, 413.10, 413.11. aA-El--415.5, and 424.4. and deleting Section 413.5, to read as follows: SEC. 249.78. CENTRAL SOMA SPECIAL USE DISTRICT. Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 2 (e) Community Development Controls. * * * * (2) land Dedication. (A) Residential projects in this SUD may opt to fulfill the lnclusionary Housing requirement of Section 415 through the Land Dedication alternative contained in Section 419.6. Ill Ill (B) Non-Residential projects in this Special Use District may opt to fulfill their Jobs-Housing Linkage Fee requirement of Section 413 through the Land Dedication alternative contained in Section 413.~+. * * * * SEC. 329. LARGE PROJECT AUTHORIZATION IN EASTERN NEIGHBORHOODS MIXED USE DISTRICTS. * * * * (e) Exceptions for Key Sites in Central SoMa. * * * * (3) Controls. Pursuant to this Section 329(e) and the Key Site Guidelines adopted as part of the Central SoMa Area Plan, the Planning Commission may grant exceptions to the provisions of this Code as set forth in subsection (d) above and may also grant the exceptions listed below for projects that provide qualified amenities in excess of what is required by the Code. (A) Qualified Amenities. Qualified additional amenities that may be provided by these Key Sites include: affordable housing beyond what is required under Section 415 et seq.; land dedication pursuant to Section 413.~+ by non- Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 3 residential projects for construction of affordable housing in partial or full satisfaction of the Jobs-Housing linkage Fee, or in excess of that required to satisfy the Jobs-Housing linkage Fee, provided that if the land dedication is in partial satisfaction of that Fee, the balance of the Fee shall be paid with the land value calculated as set forth in Section 413.~-7-; land dedication pursuant to Section 413.~-7- by residential projects for construction of affordable housing in partial or full satisfaction of the Alternatives to the lnclusionary Housing Fee, or in excess of that required to satisfy the Alternatives to the lnclusionary Housing Fee, pursuant to Section 419.5, to the extent permitted by state law, provided that if the land dedication is in partial satisfaction of that Fee, the balance 1 o of the Fee shall be paid with the land value calculated as set forth in Section 413.~-7-; PDR at a greater amount and/or lower rent than is otherwise required under Sections 202.8 or 249.78(c)(5); public parks, recreation centers, or plazas; and improved pedestrian networks. SEC. 409. CITYWIDE DEVELOPMENT FEE REPORTING REQUIREMENTS AND COST INFLATION FEE ADJUSTMENTS. (a) Citywide Development Fee and Development Impact Requirements Report. In coordination with the Development Fee Collection Unit at DBI and the Director of Planning, the Controller shall issue a report within 180 days after the end of each even-numbered fiscal year that provides information on all development fees established in the Planning Code collected during the prior two fiscal years organized by development fee account and all cumulative monies collected over the life of each development fee account, as well as all monies expended. The report shall include: (1) a description of the type of fee in each account or fund; (2) the beginning and ending balance of the accounts or funds including any bond funds held by an outside trustee; (3) the amount of fees collected and interest earned; (4) an Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page4 identification of each public improvement on which fees or bond funds were expended and amount of each expenditure; (5) an identification of the approximate date by which the construction of public improvements will commence; (6) a description of any inter- fund transfer or loan and the public improvement on which the transferred funds will be expended; and (7) the amount of refunds made and any allocations of unexpended fees that are not refunded. The report shall also provide information on the number of projects that elected to satisfy development impact requirements through the provision of "in-kind" physical improvements, including on-site and off-site BMR units, instead of g paying development fees. The report shall also include any annual reporting information 1 o otherwise required pursuant to the California Mitigation Fee Act, California Government Code Sections 66001 et seq. The report shall be presented by the Director of Planning to the Planning Commission and to the Land Use & Economic Dee•elopment Transportation Committee of the Board of Supervisors. The Rz::eport shall also contain information on the Controller's annual construction cost inflation adjustments to development fees described in subsection (b) below, as well as information on MOHCD's separate adjustment of the Jobs Housing Linkage and lnclusionary Affordable Housing.fEees described in Sections 413.6(b) and 415.5(b)(3). (b) Annual Development Fee Infrastructure Construction Cost Inflation Adjustments. Prior to issuance of the Citywide Development Fee and Development Impact Requirements Report referenced in subsection (a) above, the Controller shall review the amount of each development fee established in the &tn Francisco Planning Code and, with the exception of the Jobs Housing Linkage Fee in Section 413 et seq. and the lnclusionary Affordable Housing Fee in Section 415 et seq., shall adjust the dollar amount of any development fee on an annual basis every January 1 based solely on the Annual Infrastructure Construction Cost Inflation Estimate. The Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 5 Office of the City Administrator's Capital Planning Group shall publish the Annual Infrastructure Construction Cost Inflation Estimate, as published by the Office &j the City Administrator's Capital Planning Group and approved by the City's Capital Planning Committee,_ no later than November 1 every year, without further action by the Board of Supervisors. The Annual Infrastructure Construction Cost Inflation Estimate shall be updated by the Capital Planning Group on an annual basis and no later than November 1 every year, in consultation 'rvith the Capital Planning Committee, in order to establish a reasonable estimate of construction cost inflation for the next calendar year for a mix of g public infrastructure and facilities in San Francisco. The Capital Planning Group may 1 o rely on past construction cost inflation data, market trends,_ and a variety of national, state,_ and local commercial and institutional construction cost inflation indices in developing fhei::p. its annual estimates for San Francisco. The Planning Department and the Development Fee Collection Unit at DBI shall provide notice of the Controller's development fee adjustments, including the Annual Infrastructure Construction Cost Inflation Estimate formula used to calculate the adjustment, and MOHCD's separate adjustment of the Jobs Housing Linkage and lnclusionary Affordable Housing Fees on the Planning Department and DBI website~ and to any interested party who has requested such notice at least 30 days prior to the adjustment taking effect each January 1. The Jobs Housing Linkage F'ee and the lnclusionary Affordable Housing JEees shall be adjusted under the procedures established in Sections 413.6(b) and 415.5(b)(3). SEC. 413.1. FINDINGS. The Board hereby finds and declares as follows: A:-{g)_ Large-scale entertainment, hotel, office, laboratoryresearch and development, and retail developments in the City and County ofSan Francisco have attracted and continue to attract additional employees to the City, and there is a causal connection Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 6 between such developments and the need for additional housing in the City, particularly housing affordable to households of lower and moderate income. Such commercial uses in the City benefit from the availability of housing close by for their employees. However, the supply of housing units in the City has not kept pace with the demand for housing created by these new employees. Due to this shortage of housing, employers will have difficulty in securing a labor force, and employees, unable to find decent and affordable housing, will be forced to commute long distances, having a negative impact s on quality of life, limited energy resources, air quality, social equity, and already g overcrowded highways and public transport. 1 o .:&@ There is a low vacancy rate for housing affordable to persons of lower and moderate income. In part, this lmv vacancy rate is due to factors unrelated to large scale commercial development, such as high interest rates, high land costs in the City, immigration 1 3 from abroad, demographic changes such as the redttction in the number of persons per household, andpersonal, subjective choices by hoitseholds that San Francisco is a desirable place to live. This low vacancy rate is OOG-due in part to large-scale commercial developments,_ which have attracted and will continue to attract additional employees and residents to the City. Consequently, some of the employees attracted to these developments are competing with present residents for scarce, vacant affordable housing units in the City. Competition for housing generates the greatest pressure on the supply of housing affordable to households of lower and moderate income. In San Francisco, office or retail uses of land generally yield higher income to the owner than housing. Because of these market forces, the supply of these affordable housing units will not be expanded. Furthermore, Federal and State housing finance and subsidy programs are not sufficient by themselves to satisfy the lower and moderate income housing requirements of the City. Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 7 G(c) The City has consistently set housing production goals to address the regional and citywide forecasts for population, households, and employment. Although San Francisco has seen increased housing production each successive decade since the 1970s, the City has not been able to close the gap between its housing production goals and actual production. As demonstrated in the "Jobs Housing 1'lexus Ana"/y'Bis "prepared by Key'8er f/larston Associates, Inc. in June 1997, construction ofnew howdng units in the City decreased to a low of288 units in 1993 compared to an average annualproduction ofl,330 units during the years 1980 through 1995. Overall housing production in the City should average approximately 2,200 units a year to keep up evith the City's share of regional housing demand. 1 o A@ There is a continuing shortage of low- and moderate-income housing in San Francisco. Affordable housing production in the City averaged approximately 3 40 units per year during the years 1980 through 1995. However, the demand for neev affordable housing '/e'ill be approximately 1,300 unitsperyearfor the years 2000 through 2015. E. Objective 1, Policy 7 of the Residence Element of the San Francisco General Plan calls for the provision of additional housing to accommodate the demands ofnC'rV residents attracted to the City by expanding employment opportunities caused by the growth of large scale commercial ac#;;ities in the City·. Such development projects should assist in meeting the City•'s housing needs by contributing to the provision o.fhousing . .p.!2-. --It is desirable to impose the cost of the increased burden of providing housing necessitated by large-scale commercial development projects directly upon the sponsors of the development projects by requiring that the project sponsors contribute land or money to a housing developer or pay a fee to the City to subsidize housing development as a condition of the privilege of development and to assist the community in solving those of its housing problems generated by the development. Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 8 G. The required housing exaction shall be based upon formulas derived in the report entitled "Jobs Housing I'lexus Analysis" prepared by Keyser i\1arston Associates, Inc. in June 1997. The "Jobs Housing I'lexus Analysis" demonstrates the validity of the nexus between new, large scale entertainment, hotel, office, research and development, and retail development and the increased demand for housing in the City, and the numerical relationship between such developmentprojects and the formulas for provision o.fhousing set forth in Section 413.1 et seq. H In lieu fees for new office construction to tlie City's Office Affordable Housing Production Program, were last increased in 1994 to $7. 05 per square foot, based on the g "Analysis of the OAHPP Formula prepared by the Department of City Planning in }>fovember 1 O 199 4. "Existing la1•,; provides for potential increases to such fees up to 20% annually based on increases to the Av·erage Area Purchase Price Safe Harbor Limitations for I'kvv Single Family Residences for the San Francisco Primary iWetropolitan Statistical Area ("PA1SA '')published by 1 3 the Internal Revenue Service. 1. T The Internal Revenue Service lastpublished its Average Area Purchase Price Safe Harbor Limitations for Nmv Single Family Residences for the San Francisco PA1SA in 199 4.In 1998 and again in 2000, the City contracted for an analysis ofa'verage area purchase price for the San Francisco P},fSA, in lieu off RS publication of the index. The 2000 report prepared by Vernazza W-0(fe Associates for mortgage purposes, ',vhich was certified by Orrick, Herrington & Sutcliffe, indicates that the 1999 updated purchase price figures for new construction are $431,568, a 73.3% increase over the 1994purchaseprice o/$248,969. T J, IfOAHPP fees had been increased consistent H'ith these increases in the Average Area Purchase Price Safe Harbor Limitations for l'lmv Single Family Residences for the San Francisco P1\1SA, the OAHPP in lieu fee for net new office construction would be $12. 22 per square foot, or approximately 54% o.fthe maximum derived by the "Jobs Housing Nexus Analysis"prepared by Keyser },farston Associates, Inc. in June 1997. Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 9 K::{g)__Since preparation of the Keyser },1arston "Jobs Housing }kxits Analysis, " tl'te The Bay Area has seen dramatic increases in land acquisition costs for housing, the cost of new housing development and the affordability gap for low to moderate income workers seeking housing. Commute patterns for the region have also changed, with more workers who work outside of San Francisco seeking to live in the City, thus increasing demand for housing and decreasing housing availability. (/) As the regional job center, San Francisco has historically had the highest ratio of jobs-to-housing units in the Bay Area. (g) The required housing exaction shall be based upon formulas derived in a periodic 1 O jobs housing nexus analysis. Consistent with the requirements of the California Mitigation Fee Act, the jobs housing nexus analysis shall demonstrate the validity of the nexus between new, large scale entertainment, hotel, office, laboratory, and retail development and the increased demand for housing in the City, and the numerical relationship between such development projects and the formulas for the provision of housing set forth in Section 413. l et seq. (h) The Board of Supervisors has reviewed the Jobs Housing Nexus Analysis prepared by Keyser Mars ten Associates, Inc., dated May 2019, which is on file with the Clerk of the Board in Board File No. 190548, and adopts the findings and conclusions of that study, and incorporates the findings by reference herein to support the imposition o[the fees under Section 413.1 et seq. b. Because the shortage of afferdable housing created by large scale commercial development in the City can be expected to continue for many years, it is neceBBary to maintain the afferdability of the housing units constructed by developers of such projects under this program. In order to maintain the long term affordability ofsuch housing, the City is authorized to enforce affordability requirements through mechanisms such as shared Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 10 appreciation mortgages, deed restrictions, el'/:forcement instruments, and rights <>}first rcfasal exercisable by the City at the time <>/resale of housing units built under the program. Objective 8, Policy 2 &/the Residence Element &/the San Francisco General Plan encourages the Commission to periodically reassess requirements placed on large scale commercial development under the Office Affordable Housing Production Program ("OAHPP''), predecessor to the Jobs Housing Linkage Program. SEC. 413.4. IMPOSITION OF HOUSING REQUIREMENT. * * * * (c) Sponsor's Choice to Fulfill Requirements. Prior to issuance of a 1 o building or site permit for a development project subject to the requirements of Section 413.1 et seq., the sponsor shall elect one of the three-options listed below to fulfill any requirements imposed as a condition of approval and notify the Department of their choice of the following: (1) Contribute land of value at least equivalent to the in-lieu fee, according to the formulas set forth in Section 413.1 et seq., to MOHCD pursuant to Section 413.§i+.· or Contribute <>fa sum or land ofvalue at least equivalent to the in lieu fee, according to the formulas set forth in Section 413.1, to one or more housing dee•elopers v,;ho ·will use the fonds or land to construct housing units pursuant to Section 413. 5; or (2) Pay an in-lieu fee to the Development Fee Collection Unit at DBI according to the formula set forth in Section 413.~e; or (3) Combine the above options pursuant to Section 413.zs. * * * * SEC. 413.5. COllfPLL4NCE BYPA E~fENT TO HOUSING DEVELOPER. (a) With the ·written approval <>f the Director of},{QH, the project sponsor may elect to pay a sum or contribute land of",;alue at least equivalent to the in lieu fee to one or more housing Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 11 developers to meet the requirements ofSection 413. let seq. If the sponsor elects this option and the Director oj},{QH approves it, the housing developer or developers shall be required to construct at least the number of housing units determined by the follmving formulas for each type of space proposed as part of the de'v·elopmentproject and subject to Section 413.1 et seq.: Net Addition Gross Sq. Ft. Entertainmertt Space 1Vet Addition Gross Sq. Ft. H-etel Space Net Addition Gross Sq. Ft. Qjfice &pace 1Vet Addition Gross Sq. Ft. R&DSpace Z1ktAddition Gross Sq. Ft. Retail Space x . 000140 - Housing Units x . 000110 - Housing Units x . 000270 - Housing Units x . 000200 - Housing Units x . 000140 - Housing Units The housing units required to be constructed under the above formula must be affordable to qualijj;ing households continuously/or 50years. Ifthe sponsor elects to contribute to more 1 7 than one distinct housing development under this Section, the sponsor shall not receive credit for its monetary contribution to any one development in excess of the amount of the in lieufee, as adjusted under Section 413. 6, multiplied by the number of units in sttch housing development. (b) Prior to the issuance by DBI ofthefirst site or building permit for a de'v·elopment project subject to Section 413 .1 et seq. the sponsor shall submit to the Department, 1vith a copy to i\{QH: (1) A vrritten hm1sing development plan identijjiing the housing project or projects to recei'v'efimds or landfrom the sponsor and theproposed mechanism for enforcing the Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 12 requirement that the housing units constructed will be afferdable to qualifying households for 50 years; and (2) A certification that the sponsor has made a binding commitment to contribute an amount of money or land of value at least equiv·alent to the amount of the in lieu fee that ',vould othervrdse be required under Section 413. 6 to one or more housing developers and that the housing developer or developers shall use such funds or landy to devel&p the housing subject to this Section. (3) A self contained appraisal report as defined by the Uniform Standards of· Professional Appraisal Practice prepared by an },1.A.l appraiser of the fair market vahw o.fany 1 O land to be contributed by the sponsor to a housing developer. The date of value of the appraisal shall be the date on ',vhich the sponsor submits the housing developmentplan and certification to the Department. If the sponsor fails to comply with these requirements Vv'ithin one year of thefinal determination or revisedfinal determination, it shall be deemed to have elected to pay the in lieu fee under Section 413. 6, and any deferral surcharge, in order to comply "vi th Section 413.1 et seq. In the event that the sponsor fails to pay the in lieu fee 1vithin the time required h)• Section 413. 6, DBI shall deny any and all site or buildingpermits or certificates o.foccbf[Jancy for the development project until the such payment has been made or land contributed, and the Development Fee Collection Unit at DBI shall immediately initiate lien proceedings against the sponsor'spropertypursuant to Section 408 o.fthisArticle and Section 107A.13 ofthe San Francisco Building Code to recover the fee. (c) Within 30 days after the sponsor has submitted a written housing dee•elopment projectplan and, if necessary, an appraisal to the Department and },«JH under Subsection(b) of this Section, the Department shall notify the sponsor in writing of its initial determination as to 1vhether the plan and appraisal are in compliance rvith this Section, publish the initial Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 13 determincttion in the next Commission cctlentkzr, ctnd cctuse ct public notice to be published in ctn officictl nmvspaper ofgeneml circulcttion stctting #wt such housing developmentplctn hcts been received ctnd stctting tlw Dcpctrtment's initictl determincttion. In 11wking the initictl determincttion for ctn applirntion rvhere the sponsor elects to contribute fond to ct housing dev·eloper, the Dcpctrtment shctll consult with the Director of Property ctnd inchtde within its initictl determincttion ct finding cts to the fair 11wrket vcthte of the lctndproposed fer contribution to ct housing developer. Within 10 dct)'B after such 'r'v'ritten notification and published notice, the sponsor or any other person may request a hearing be.fore the Commission to contest such initial g determination. If the Department receives no request for a hearing ',vi thin such 10 day period, 1 O the determination &f the Department shall become a final determination. Upon receipt of any time!)• request for hearing, the Depertment shall schedule a hearing before the Commission ',vithin 30 da)'S. The scope of the heering shall be limited to the compliance of the housing developmentplctn and appraisal with this Section, and shall not inchtde a challenge to the amount oftlw housing requirement imposed on the development project by the Department or tlw Commission. At the hearing, the Commission may either make sttch revisions to the Department's initial determination as it may deem just, or corifirm the Department's initiel determination. The Commission's determination shall then become a final determination, and the Department shell provide written notice o.fthefinal determination to the sponsor, ~MOH, and to anyperson ',vho timely requested a hearing of the Department's determination. The Department shall also provide ',vritten notice to MYJH that tlw housing units to be constructed pursuant to such plan are sulrject to Section 413.1 et seq. (d) Prior to the issuance by DBI Cff the first construction document for a dev1elopment project subject to this Section, the sponsor must: Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 14 (1) Provide r'v'ritten evidence to the Department that it has paid infull the sum or transferred title of the land required by Subsection (a) of this Section to one or more housing developers; (2) }{otijy· the Departl'lient that construction of the housing units has commenced, evidenced by: (A) The City's issuance ofsite and building permits fer the entire housing development project, (B) Written authorization from the housing developer and the g construction lender that construction may proceed, 1 O (C) An executed construction contract between the housing developer and a general contractor, and (D) The issuance ofa pe1formance bond enforceable by the construction lender for JOO percent o.fthe replacement cost ofthe housingproject; and (3) Provide evidence satis-factory to the Departl'lient that the units required to be constructed 1vill be affordable to qualifying households for 50 years through an enforcement mechanism approved by the Departl'lwntpursuant to Subsections (b) through (d) of this Section. (c) Wliere the sponsor elects to pay a sum or contribute land of value equivalent to the in lieu fee to one or more housing developers, the sponsor's responsibility for completing construction o.fand maintaining the affordability· of housing units constructed ceases from and after the date on which.· (1) The conditions of(l) through (3) ofSubsection (d) ofthis Section have been met; and (2) A mechanism has been apprm·ed by the Director to enforce tlw requirement that the housing units constructed will be afferdable to qualify·ing hm1seholds continuously for SO years. Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 15 (/) If the pr&ject sponsor fails to comply ·with these requirements prior to issuance o.f the first certificate &j occupancy by DBI, it shall be deemed to have elected to pay the in lieu fee under Section 413. 6 and the deferrEJ:l surcharge in order to comply ·with Section 413.1 et seq. DBI shall deny miy EJ:nd all certijirntes ofoccupmicy for the de'v·elopmentproject until such payment has been made. SEC. 413.~6. COMPLIANCE WITHJOBSHOUSllVGLllVKAGl?PROGRA,~fBY PAYMENT OF IN-LIEU FEE. (a) The amount of the fee which may be paid by the sponsor of a development project subject to this Section in lieu ofdeveloping EJ:ndproviding the housing 1 O required by Section 413.5 shall be determined by the following formulas for each type of space proposed as part of the development project and subject to this Article 1_. (1) For applicable projects (as defined in Section 413.3), any net addition shall pay per the Fee Schedule in Table 413.~eA, and (2) For applicable projects (as defined in Section 413.3), any replacement or change of use shall pay per the Fee Schedule in Table 413.~68. * * * * TABLE 413.~6A FEE SCHEDULE FOR NET ADDITIONS OF GROSS SQUARE FEET Use Fee per Gross Square Foot Entertainment $18.62 Hotel $14.95 ·Integrated -P-f)R $15.(§1). Institutional $0:-00 Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 16 $:!9.9ee9.@QSee subsection (c) Office (50,000 gsf and above) below. Office (LIQ to 49,999 gsf) See subsection (d) below. PDR $0:49 $B.,W4e.4aSee subsection (ee2 LaboratoryResearch & Development below. Residential $0:49 Retail $18.62 Small Enterprise Workspace $15.69 TABLE 413.~&B FEE SCHEDULE FOR REPLACEMENT OF USE OR CHANGE OF USE Previous Use New Use Fee per Gross Square Foot Entertainment, Hotel, ftmef!'f'afe1£H:.4::J+r.-, Office, l&e''rfetffflffl:em, Retail, or Small Enterprise Workspace PDR which received its First Certificate of Occupancy on or before April 1, 2010 Entertainment, Hotel, 1HH-ew'£tfe£H'~r.-, Office, Retail, or Small Enterprise Workspace Entertainment, Hotel, 1HH-efR''£tfeT:l-r'±::H<r.-, 0 ff ice , $0:49 Use Fee from Table 413.~eA minus $14.09 Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 17 Small Enterprise Workspace Entertainment, Hotel, Institutional which received -:,.. J ~n!}~n__, Office, its First Certificate of Laboraton Research & Occupancy on or before 1t:n-Jt~q,i.·e1 ~ "6-: rTTm:ent. ·, Reta i I , or April 1, 2010 Small Enterprise Workspace Institutional or PDR which Institutional, PDR, received its First Certificate LaboratonResearch & of Occupancy on or before :::, Residential ~pril 1, 2010 Institutional or PDR which received its First Certificate $0:-00 $0:-00 Any Use Fee from Table 413.~e of Occupancy after April 1, 2010 Entertainment, Hotel, T ~•~JnnnOffice -o _... - .... , ' PDR, LaboratoryResearch & Residential Use Fee from Table 413.~e '!:'~ ::'::r- _ t, Retail, or Small Enterprise Workspace ,Vo later than January 1 &}each year, AfOHCD shall adjust the in lieu fee payment option. I'lo later than l'lovember 1 of each year, lr10HCD shall provide the Planning Department, DBI, and the Controller '1Vith information on the adjustment to the in lieu fee Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 18 payment option so that it can be included in the Planning Department's and DBI's Vv'ebsite notice oftlw fee adjustments and the Controller's City·1vide Development .F'ee and Development Impact Requirements Report described in Section 409(a). },1QHCD is authorized to develop an appropriate methodology for indexing the fee, based on adjustnwnts in the costs of constructing housing and in the price ofhousing in San Francisco consistent rvith the indexing for the Residential Inclusionary Affordable Housing Program in lieu fee set out in Section 415. 6. The method of indexing shall be published in the Procedures },1anual for the Residential Inclusionary Affordable Housing Program. In making a determination as to the amount of the fee to be paid, the Department shall credit to the sponsor any excess Interim Guideline credits or excess credits 1 O which the sponsor elects to apply against its housing requirement. (Q.e) Any in-lieu fee required under this Section 413.5@ is due and payable to the Development Fee Collection Unit at DBI at the time of and in no event later than issuance of the first construction document, with an option for the project sponsor to defer payment to prior to issuance of the first certificate of occupancy upon agreeing to pay a deferral surcharge that would be deposited into the Citywide Affordable Housing Fund in accordance with Section 107 A.13.3 of the San Francisco Building Code. (c) Office Fees for Large Capital Proiects. Notwithstanding any other provision ofthis Code, fees for the net addition of 50.000 gross square feet and above of Office Use shall be paid as follows: ""'( 1=-)====Ffor anv project that (I) received an approval from the Planning Commission or Planning Department on or before December 31 September 10, 2019, stating that the pro;ect shall be subject to any new, changed, or increased Jobs Housing Linkage Fee adopted prior to that project's procurement o(a Certificate of Occupancy or Final Completion, and (2) has not procured a Certificate of Occupancy or Final Completion as o(the effective date Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 19 of the ordinance in Board File No. 190548, amending this Section 413.59, such project shall pay $57.14 per gross square foot, and pay the difference between the amount of the fees assessed at the time of site permit issuance and any additional amounts due under the new, changed, or increased fee up to $52.20 before the City may issue a Certificate of Occupancy or Final Completion. (2) For any project that has submitted a complete Preliminary Project Assessmentonvironmental evaluation application on or before September 10. 2019. and has not had received its building or site permit issued as of the effective date of this ordinance in Board File No. 190548. such project, regardless of when it 1 o submitted its complete Development Application, shall pay $52.20&7-M per gross square foot. Any fees shall be assessed and paid consistent with this Article 4. (3) For any project that has submitted a complete environmental evaluation Development aApplication between the dates of September 11, 2019. and January 1, 20212:, and has not had received its building or site permit issued as of the effective date of this ordinance in Board File No. 190548, such project shall pay $60.90~ per gross square foot. Any fees shall be assessed and paid consistent with this Article 4. (4) For any project that has submitted a complete environmental ovaluationDovelopment aApplication after January 1, 20212:. shall pay $69.60 per gross square foot. Any foes shall be assessed and paid consistent with this Article 4. (d) Office Fees for Small Capital Proiects. Notwithstanding any other provision of this Code, fees for the net addition up to 49,999 gross square feet of Office Use shall be paid as follows: (1) For any project that has submitted a complete Preliminary Project Assessment on or before September 10, 2019, and has not had its building or Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 20 site permit issued as of the effective date of this ordinance in Board File No. 190548, such project, regardless of when it submitted its complete Development Application, shall pay $46.98 per gross square foot. Any fees shall be assessed and paid consistent with this Article 4. (2) For any project that has submitted a complete Development Application between the dates of September 11, 2019, and January 1, 2021~, and has not had its building or site permit issued as of the effective date of this ordinance in Board File No. 190548, such project shall pay $54.81 per gross square foot. Any fees shall be assessed and paid consistent with this Article 4. (3) For any project that has submitted a complete Development Application after Januarv 1, 2021~, shall pay $62.64 per gross square foot. Any fees shall be assessed and paid consistent with this Article 4. (e) Laboratory Fees. Notwithstanding any other provision of this Code, fees for the net addition of Laboratory Use shall be paid as follows: -(1) For any project that has submitted a complete Preliminary Project Assessmentenvironmental evaluation application on or before September 10, 2019. and has not had received its building or site permit issued as of the effective date of this ordinance in Board File No. 190548, such project. regardless of when it submitted its complete Development Application, shall pay $31.43J&.G.e per gross square foot. Any fees shall be assessed and paid consistent with this Article 4. ~-6) For any project that has submitted a environmental evaluation Development aApplication between the dates of September 11, 2019, and Januarv 1, 2021~. and has not had received its building or site permit issued as of the effective date of this ordinance in Board File No. 190548, such project shall pay Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 21 $34.90~ per gross square foot. Any fees shall be assessed and paid consistent with this Article 4. Q4) For any project that has submitted a environmental evaluation Development aApplication after Januarv 1. 2021c2:, shall pay $38.374&.46~ aross square foot. Any fees shall be assessed and paid consistent with this Article 4. SEC. 413.§.f.. COMPLIANCE BY LAND DEDICATION WITHIN THB CE;\7TRAL SOAIA SPECL4L USE DISTRICT. (a) Controls. Within the Central SoAfa Special Use District, ryrojects may satisfy all or a portion of the requirements of Section 413.1 et seq. 5, 413.6 and 413.8 via 1 O dedication of land to the City for the purpose of constructing units affordable to qualifj;ing households. Projects may receive a credit against such requirements up to the value of the land donated, calculated pursuant to subsection (b) below. (b) Requirements. ( 1) The value of the dedicated land shall be determined by the Director of Property pursuant to Chapter 23 of the Administrative Code, but shall not exceed the actual cost of acquisition by the project sponsor of the dedicated land in an arm's length transaction. Prior to issuance by DBI of the first site or building permit for a development project subject to Section 413.1 et seq. the sponsor shall submit to the Department, with a copy to MOHCD and the Director of Property, documentation sufficient to substantiate the actual cost of acquisition by the sponsor in an arm's length transaction of any land to be dedicated by the sponsor to the City and Cmtnty a/San Francisco, and any additional information that would impact the value of the land. (2) Projects are subject to the requirements of Section 419.5(a)(2)(A) and (C):.through (J). Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 22 SEC. 413.Z&. COMPLIANCE BY COMBINATION OF PAYAfEiVTTOHOUSING DEVELOPER AND PAYMENT OF IN-LIEU FEE AND LAND DEDICATION. With the written approval of the Director of MOH CD, the sponsor of a development project subject to Section 413.1 et seq. may elect to satisfy its housing requirement by a combination of paying money or contributing land to the City under Section 413.67one or more housing developers under Section 413.5 and paying a partial amount of the in-lieu fee to the Development Fee Collection Unit at DBI under Section 413 . .5.e. In the case of such election, the sponsor must pay a sum such that each gross g square foot of net addition of each type of space subject to Section 413.1 et seq. is 1 O accounted for in either the payment &fa sum or contribution of land to the City under Section 413.67one or more housing developers or the payment of a fee to the Development Fee Collection Unit. The housing tmits constructed by a hottsing developer must conform to all requirements &}Section 413.1 et seq., including, but not limited to, the proportion that must be affordable to qualijj;ing households as set forth in Section 413.5. All of the requirements of Sections 413.5 and 413.J et seq . .e shall apply, including the requirements with respect to the timing of issuance of site and building permits, first construction documents, and certificates of occupancy for the development project and payment of the in-lieu fee. SEC. 413.§,9. LIEN PROCEEDINGS. A project sponsor's failure to comply with the requirements of Sections 41+.-5, 413.lie and 413.fl+ shall be cause for the Development Fee Collection Unit at DBI to institute lien proceedings to make the in-lieu fee, as adjusted under Section 413.lie, plus interest and any deferral surcharge, a lien against all parcels used for the development project, in accordance with Section 408 of this Article .{_and Section 107 A.13.15 of the San Francisco Building Code. SEC. 413.ll.:W. CITYWIDE AFFORDABLE HOUSING FUND. Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 23 (a) Use of Fees. All monies contributed pursuant to the Jobs Housing Linkage Fee Program in Section 413.1 et seq. Sections 413. 6 or 413. 8 or assessed pursuant to Section 413.9 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 413J_ et seq. shall be used solely to increase the supply of housing affordable to qualifying households subject to the conditions of this Section 413.9..'.l-O. 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. The A1ayor's Office &}Housing and Community Development ("MOHCD-9 shall develop 1 o 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. Cl) Preservation and Acquisition Funds. (A) Designation of Funds. MOH CD shall designate and separately account for 10% of all fees that it receives under Section 413.1 et seq. that are deposited into the Fund to support the acquisition and rehabilitation of rent restricted affordable rental housing. (B) Use of Preservation and Acquisition Funds. The fitnds shall be used exclusively to acquire and preserve existing housing with the goal of making such housing permanently affordable, including but not limited to acquisition of housing through the City's Small Sites Program. Units supported by monies from the Fund shall be designated as housing affordable to qualified households for the life ofthe project. Properties supported by the Preservation and Acquisition Funds must be: (i) rental properties that will be maintained as rental properties; Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 24 (ii) vacant properties that were formerly rental properties as long as those properties have been vacant for a minimum of two years prior to the effective date of the ordinance in Board File No. 190548, amending this Section 413.~4-G,:. (iii) properties that have been the subject o[foreclosure,· or (iv) a Limited Equity Housing Cooperative as defined in Subdivision Code Sections 1399.1 et seq. or a property owned or leased by a non-profit entity modeled as a Community Land Trust. (C) Annual Report. At the end of each fiscal year, MOHCD shall 1 O issue a report to the Board of Supervisors regarding the total amount of Preservation and Acquisition Funds received, and how those funds were used. (D) Intent. In establishing guidelines for Preservation and Acquisition Funds, the Board of Supervisors does not intend to preclude MOH CD from expending other eligible sources o[funding on Preservation and Acquisition as described in this Section 413.94-G (2) Permanent Supportive Housing. MOH CD shall designate and separately account for 30% of all fees that it receives under Section 413.l et seq. that are deposited into the Fund to support the development of permanent supportive housing that meets the requirements of Section 413. l et seq. (b) Accounting o(Funds in Central SoMa Special Use District. Pursuant to Section 249.78(e)(1 ), all monies contributed pursuant to the Jobs-Housing Linkage Program and collected within the Central SoMa Special Use District shall be paid into the Citywide Affordable Housing Fund, but the funds shall be separately accounted for. Consistent with the allocations in subsection (a), s&uch funds shall be expended within the Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 25 area bounded by Market Street, the Embarcadero, King Street, Division Street, and South Van Ness Avenue. SEC. 413.11. DIRECTOR OF PLANNING'S EVALUATION OF FEE. (a) It in the discretion of the Director of Planning* there has been a substantial change in the San Francisco and/or regional economies since the effective date of the requirements of Section 413.1 et seq., the Director may recommend to the Commission, the Board of Supervisors, and the Mayor that Section 413.1 et seq. be amended or rescinded to alleviate any undue burden on commercial development in the City that Section 413.1 et seq. may impose. (b) At the next comprehensive evaluation of all development fees and development impact requirements, pursuant to Section 410, the Controller, in consultation with the Department and MOHCD and any necessary consultants, consistent with the civil service provisions of the Charter, and everv five years thereafter, shall commission an update to the Jobs-Housing Nexus Analysis. The comprehensive evaluation of the Jobs-Housing Linkage Fee. pursuant to Section 410, shall include an evaluation of office projects in a range of sizes and an assessment of the availability of office allocation. SEC. 415.5. AFFORDABLE HOUSING FEE. * * * * (f) Use of Fees. All monies contributed pursuant to the lnclusionary Affordable Housing Program shall be deposited in the Citywide Affordable Housing Fund ("!he-Fund"), established in Administrative Code Section 10.100-49, except as specified below. The i\/ayor's Office ofHousing and Community De'v·elopment ("MOHCD-!.j- shall use the funds collected under this Section 415.5 in the following manner: * * * * Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 26 (2) "Small Sites Funds." (A) Designation of Funds. MOHCD shall designate and separately account for 10% of all fees that it receives under Section 415.1 et seq. that are deposited into the Citywide AjffJrdable Housing Fund, established in Administrative Code Section 10.100 49, excluding fees that are geographically targeted such as those referred to in Sections 249.78(e)(1), 415.5(b)(1), and 827(b)(1), to support acquisition and rehabilitation of Small Sites ("Small Sites Funds"). hfOHCD shall continue to divert 10% (}f all fees for this purpose until the Small Sites Funds reach a total (}f $15 million, at vvhich point A10HCD will stop designatingfands for this purpose. At such time as designated Small Sites 1 O Funds are expended and dip belmv $15 million, MOHCD shall start designatingfitnds again for tliis purpose, such that at no time the Small Sites Funds shall exceed $15 million. When the total amount of fees paid to the City under Section 415.1 et seq. is less than $10 million over the preceding 12-month period, MOHCD is authorized to temporarily divert funds from the Small Sites Fund§: for other purposes. MOHCD shall keep track of the diverted funds, however, such that when the amount of fees paid to the City under Section 415.1 et seq. meets or exceeds $10 million over the preceding 12-month period, MOHCD shall commit all of the previously diverted funds and 10% of any new funds, subject to the cap above, to the Small Sites Fund§:. * * * * (E) Intent. In establishing guidelines for Small Sites Funds, the Board of Supervisors does not intend to preclude MOHCD from expending other eligible sources of funding on Small Sites as described in this Section 415.5, orfrom allocating or expending more than $15 million (}fotlier eligiblefimds on Small Sites. * * * * Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton, Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 27 SEC. 424.4. VAN NESS AND MARKET DOWNTOWN RESIDENTIAL SPECIAL USE DISTRICT AFFORDABLE HOUSING FUND. That portion of gross floor area subject to the $30.00 per gross square foot fee referenced in Section 424.3(b)(i) above shall be deposited into the special fund maintained by the Controller called the Citywide Affordable Housing Fund established by Section 413.~40. 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 g not limited to, the provisions of Section 415.7. 1 o 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 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: ~>>" / ,,,/' # /'~/ AUSTIN M. YANG / Deputy City Attorne~ n:\legana\as2019\1900478\01402511.docx Supervisors Haney; Fewer, Ronen, Mar, Peskin, Walton , Yee, Mandelman, Safai, Brown BOARD OF SUPERVISORS Page 28 City and County of San Francisco Tails Ordinance City Hall I Dr. Carlton B. Goodlett Place San Francisco, CA 94102-4689 File Number: 190548 Date Passed: November 05, 2019 Ordinance amending the Planning Code to modify the Jobs Housing Linkage Fee by clarifying the indexing of the fee, adding options for complying with the fee, phasing increases to the fee, dedicating funds for permanent supportive housing and the preservation and acquisition of affordable housing, requiring periodic evaluation of the nexus study and fee, and to remove the monetary limit for the Small Sites Funds under the lnclusionary Housing Program; affirming the Planning Department's determination under the California Environmental Quality Act; making findings of consistency with the General Plan, and the eight priority policies of Planning Code, Section 101.1; and making findings of public necessity, convenience, and welfare pursuant to Planning Code, Section 302. October 21, 2019 Land Use and Transportation Committee -AMENDED, AN AMENDMENT OF THE WHOLE BEARING SAME TITLE October 21, 2019 Land Use and Transportation Committee - RECOMMENDED AS AMENDED October 29, 2019 Board of Supervisors -AMENDED, AN AMENDMENT OF THE WHOLE BEARING NEW TITLE Ayes: 11 - Brown, Fewer, Haney, Mandelman, Mar, Peskin, Ronen, Safai, Stefani, Walton and Yee October 29, 2019 Board of Supervisors - PASSED ON FIRST READING AS AMENDED Ayes: 11 - Brown, Fewer, Haney, Mandelman, Mar, Peskin, Ronen, Safai, Stefani, Walton and Yee November 05, 2019 Board of Supervisors - FINALLY PASSED City and County of San Francisco Ayes: 10 - Fewer, Haney, Mandelman, Mar, Peskin, Ronen, Safai, Stefani, Walton and Yee Excused: 1 - Brown Pagel Printed at 11:03 am on 1116119 File No. 190548 Unsigned London N. Breed Mayor I hereby certify that the foregoing Ordinance was FINALLY PASSED on 11/5/2019 by the Board of Supervisors of the City and County of San Francisco. 11/15/19 Date Approved I hereby certify that the foregoing resolution, not being signed by the Mayor within the time limit as set forth in Section 3.103 of the Charter, or time waived pursuant to Board Rule 2.14.2, became effective without her approval in accordance with the provision of said Section 3.103 of the Charter or Board Rule 2.14.2. City and County of San Francisco Page2 Printed al 11:03 am on 1116119