423.5

SEC. 423.5. THE EASTERN NEIGHBORHOODS COMMUNITY IMPROVEMENTS FUND. (a) Purpose. There is hereby established a separate fund set aside for a special purpose entitled the Eastern Neighborhoods Community Improvements Fund ("Fund"). All monies collected by the Development Fee Collection Unit at DBI pursuant to Section 423.3(e) shall be deposited in the Fund maintained by the Controller. The receipts in the Fund shall be appropriated in accordance with the normal budgetary process to fund Community Improvements subject to the conditions of this Section. Monies collected by the Development Fee Collection Unit at DBI pursuant to Section 423.3 shall be deposited as follows: (1) For projects located in any zoning districts in the Eastern Neighborhoods Program Area, excluding Designated Affordable Housing Zones, DBI shall deposit 100% of the funds in the Eastern Neighborhoods Community Improvements Fund maintained by the Controller. (2) For projects located in Designated Affordable Housing Zones, DBI shall deposit 25% of the funds in the Eastern Neighborhoods Community Improvement Fund and 75% in the Citywide Affordable Housing Fund, established in Administrative Code Section 10.100-49, but the funds shall be separately accounted for and expended as provided in this Section. (b) Use of Funds. The Fund shall be administered by the Board of Supervisors. (1) All monies deposited in the Fund or credited against Fund obligations shall be used to design, engineer, acquire, improve, and develop public open space and recreational facilities; transit, streetscape and public realm improvements; and child care facilities. Funds may be used for childcare facilities that are not publicly owned or publicly-accessible. (A) Funds collected from all zoning districts in the Eastern Neighborhoods Program Area, excluding Designated Affordable Housing Zones shall be allocated to accounts by improvement type according to Table 423.5. (B) Funds collected in Designated Affordable Housing Zones, as defined in Section 401, shall be allocated to accounts by improvement type as described in Table 423.5A.

Table 423.5 BREAKDOWN OF USE OF EASTERN NEIGHBORHOODS COMMUNITY IMPROVEMENTS FEE/FUND BY IMPROVEMENT TYPE* Improvement Type Dollars Received From Residential Development Dollars Received From Non- Residential/Commercial Development Complete Streets: Pedestrian and Streetscape Improvements, Bicycle Facilities 31% 34% Transit 10% 53% Recreation and Open Space 47.5% 6% Childcare 6.5% 2% Program Administration 5% 5%

* Does not apply to Designated Affordable Housing Zones, which are addressed in Table 423.5A

Table 423.5A BREAKDOWN OF USE OF EASTERN NEIGHBORHOODS COMMUNITY IMPROVEMENTS FEE/FUND BY IMPROVEMENT TYPE FOR DESIGNATED AFFORDABLE HOUSING ZONES Improvement Type Dollars Received From Residential Development Dollars Received From Non- Residential/Commercial Development Affordable Housing preservation and development 75% n/a Complete Streets: Pedestrian and Streetscape Improvements, Bicycle Facilities 4% 36% Transit 6% 53% Recreation and Open Space 10% 6% Program administration 5% 5%

(2) Program Administration. No portion of the Fund may be used, by way of loan or otherwise, to pay any administrative, general overhead, or similar expense of any public entity, except for the purposes of administering this Fund in an amount not to exceed 5% of the total annual revenue. Administration of this fund includes maintenance of the Fund, time and materials associated with processing and approving fee payments and expenditures from the Fund (including necessary hearings), reporting or informational requests related to the Fund, and coordination between public agencies regarding determining and evaluating appropriate expenditures of the Fund. Monies from the Fund may be used by the Planning Commission to commission economic analyses for the purpose of revising the fee, or to complete a nexus study to demonstrate or update the relationship between development and the need for public facilities, or to commission landscape, architectural or other planning, design and engineering services in support of the proposed public improvement. All interest earned on this account shall be credited to the Eastern Neighborhoods Community Improvements Fund. (c) Funds shall be allocated to accounts by improvement type as described below: (1) Funds collected from all zoning districts in the Eastern Neighborhoods Program Area, excluding Designated Affordable Housing Zones shall be allocated to accounts by improvement type according to Table 423.5. Funds collected from MUR Zoning Districts outside of the boundaries of either the East SoMa or Western SoMa Area Plans shall be allocated to accounts by improvement type according to Table 423.5. (2) Funds collected in Designated Affordable Housing Zones, as defined in Section 401, shall be allocated to accounts by improvement type as described in Table 423.5A. For funds allocated to affordable housing, MOHCD shall expend the funds as follows: (A) All funds collected from projects in the Mission NCT shall be expended on housing programs and projects within the Mission Area Plan boundaries. (B) Collectively, the first $10 million in housing fees collected between the two Designated Affordable Housing Zones shall be utilized for the acquisition and rehabilitation of existing housing. (d) The Planning Department shall work with other City agencies and commissions, specifically the Department of Recreation and Parks, DPW and MFA to develop a proposed expenditure plan, and to develop agreements related to the administration of the improvements to existing public facilities and development of new public facilities within public rights-of way or on any acquired public property. The proposed expenditure plan shall be approved by the Board of Supervisors.

(e) Acquisition of New Open Space. A public hearing shall be held by the Recreation and Parks Commissions to elicit public comment on proposals for the acquisition of property using monies in the Fund that will ultimately be maintained by the Department of Recreation and Parks. Notice of public hearings shall be published in an official newspaper at least 20 days prior to the date of the hearing, which notice shall set forth the time, place, and purpose of the hearing. The Parks Commissions may vote to recommend to the Board of Supervisors that it appropriate money from the Fund for acquisition and development of property acquired for park use. (f) Within 60 days of receiving the Eastern Neighborhoods Capital Expenditure Evaluation Report as specified in Administrative Code Section 10E.2(c), the Office of the Controller shall assess whether funds collected from the Eastern Neighborhoods Community Improvement Fee are being effectively utilized for capital projects serving the Eastern Neighborhoods, and whether such projects are successfully advancing towards implementation, as set forth in the abovementioned Section. Based on this assessment, the following shall occur: (1) If the Controller determines that the funds have been effectively utilized as set forth in Section 10E.2(c) of the Administrative Code, the Controller shall issue an affirmative finding to the Board of Supervisors and the Planning Commission certifying that the intent of this aforementioned Section is being met. No further Controller action is necessary for purposes of this Subsection. (2) If the Controller fails to issue the certification described in Subsection (f)(1) above or if the Controller determines that the fees are not being effectively utilized as set forth in Administrative Code Section 10E.2(c) and notifies the Board of Supervisors and Planning Commission of this determination, then the following shall occur: (A) Any project specified below within the Eastern Neighborhoods Area Plan that has not already received final and effective approvals from the Planning Department, Zoning Administrator, and/or the Planning Commission, shall require a conditional use authorization, in addition to any other approvals necessary under the Planning Code: (i) Residential projects containing more than 10 new units that have not received issuance of their first site or building permit; or (ii) Non-residential projects containing a net new addition or new construction of 10,000 square feet or more that have not received issuance of their first site or building permit. (3) Elimination of interim conditional use requirement. (A) At any time after the Controller has determined that Eastern Neighborhood impact fees are not being effectively utilized as set forth in Section 423.5(f)(2) above, or fails to certify that they are being effectively utilized as set forth in Section 423.5(f)(1), the Planning Department may provide the Controller with a newly updated or revised Eastern Neighborhoods Capital Expenditure Evaluation Report. (B) Within 60 days of receiving an updated or revised Report, the Office of the Controller shall determine whether funds collected from the Eastern Neighborhoods Community Improvement Fee are being effectively utilized for capital projects serving the Eastern Neighborhoods consistent with the intent of the Section 10E.2(c) of the Administrative Code. (C) If, on the basis of a new, updated, or revised Eastern Neighborhoods Capital Expenditure Evaluation Report, the Controller determines that the development impact fees collected to date are being effectively utilized as set forth in Section 423.5(f)(1) above, any projects within the Eastern Neighborhoods Plan Area that required a conditional use authorization on an interim basis as set forth in Section 423.5(f)(2) shall no longer require such conditional use authorization unless the underlying use requires conditional use authorization independently. (Added by Ord. 108-10, File No. 091275, App. 5/25/2010; amended by Ord. 270-10, File No. 100917, App. 11/5/2010; Ord. 196-11 , File No. 110786, App. 10/4/2011, Eff. 11/3/2011; Ord. 42-13 , File No. 130002, App. 3/28/2013, Eff. 4/27/2013; Ord. 56-13 , File No. 130062, App. 3/28/2013, Eff. 4/27/2013; Ord. 263-13, File No. 130549, App. 11/27/2013, Eff. 12/27/2013; Ord. 50-15 , File No. 150149, App. 4/24/2015, Eff. 5/24/2015; Ord. 143-15 , File No. 150568, App. 8/6/2015, Eff. 9/5/2015; Ord. 188-15 , File No. 150871, App. 11/4/2015, Eff. 12/4/2015; Ord. 200-15 , File No. 150790, App. 11/25/2015, Eff. 12/25/2015; Ord. 222-15 , File No. 155521, App. 12/18/2015, Eff. 1/17/2016; Ord. 202-18, File No. 180557, App. 8/10/2018, Eff. 9/10/2018; Ord. 296-18, File No. 180184, App. 12/12/2018, Eff. 1/12/2019; Ord. 63-20, File No. 200077, App. 4/24/2020, Eff. 5/25/2020) AMENDMENT HISTORY Former Tables 423.6 and 423.6A redesignated as Tables 423.5 and 423.5A, respectively, and internal references adjusted accordingly; section references corrected throughout; Ord. 196-11 , Eff. 11/3/2011. Divisions (b)(1) and [former] (c)(3) amended; Ord. 42-13 , Eff. 4/27/2013. Division (a) and Table 423.5 note amended; Ord. 56-13 , Eff. 4/27/2013. Division (d) amended; Ord. 263-13, Eff. 12/27/2013. Section header and division (a) amended, new divisions (a)(1) and (a)(2) added; divisions (b) and (b)(1) amended; new divisions (b)(1)(A) and (b)(1)(B) added; Tables 423.5 and 423.5A amended; divisions (b)(2)-(c)(2)(B) amended; former division (c)(3) deleted; divisions (d) and (e) amended; former divisions (f) and (g) deleted; former divisions (h)-(h)(C)(iii) redesignated as (f)-(f)(3)(C) and internal references adjusted accordingly; current divisions (f), (f)(3)(B), and (f)(3)(C) amended; Ord. 50-15 , Eff. 5/24/2015. Division (a)(2) amended; Ord. 143-15 , Eff. 9/5/2015. Division (a), Table 423.5A, and divisions (b)(2) and (c)(2) amended; Ord. 188-15 , Eff. 12/4/2015. Table 423.5A amended; Ord. 200-15 , Eff. 12/25/2015 and Ord. 222-15 , Eff. 1/17/2016. Division (c)(2) amended; Ord. 202-18, Eff. 9/10/2018. Divisions (b)(1)(B) and (c)(2) amended; division (c)(2)(B) deleted; Ord. 296-18, Eff. 1/12/2019. Division (c)(2)(C) redesignated as (c)(2)(B); Ord. 63-20, Eff. 5/25/2020. [VAN NESS & MARKET AFFORDABLE HOUSING AND NEIGHBORHOOD INFRASTRUCTURE] SEC. 424. VAN NESS & 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. (Added by Ord. 108-10, File No. 091275, App. 5/25/2010; amended by Ord. 136-21, File No. 210674, App. 8/4/2021, Eff. 9/4/2021; Ord. 210-21, File No. 210868, App. 11/19/2021, Eff. 12/20/2021) AMENDMENT HISTORY Section header amended; Ord. 136-21, Eff. 9/4/2021. Section affirmed; Ord. 210-21, Eff. 12/20/2021. SEC. 424.1. FINDINGS SUPPORTING THE VAN NESS & MARKET AFFORDABLE HOUSING AND NEIGHBORHOOD INFRASTRUCTURE FEE AND PROGRAM. (a) Affordable Housing. The Van Ness and Market Residential Special Use District ("SUD") enables the creation of a very dense residential neighborhood through significant increases in development potential. This increase in development potential permits an increase in market rate housing development. As described in Section 415.1, affordable housing is a priority for San Francisco and additional demand for affordable housing is closely correlated to the development of new market rate housing. At the direction of the Board of Supervisors and as part of a larger analysis of development impact fees in the City, the City contracted with Keyser Marston Associates to prepare a nexus analysis in support of the Inclusionary Housing Program, or an analysis of the impact of development of market rate housing on affordable housing supply and demand. The City's Inclusionary Housing Program including the in-lieu fee provision which is offered as an alternative to building units within market rate projects, is not subject to the requirements of the Mitigation Fee Act, Government Code Sections 66000 et seq. Notwithstanding this policy, as an additional support measure, the City prepared a nexus study consistent with the Mitigation Fee Act to determine whether the Inclusionary Affordable Housing Program was supported by such analysis. The final nexus study can be found in the Board of Supervisors File and is incorporated by reference herein. The Board of Supervisors has reviewed the study and the Department's analysis and report of the study and, on that basis finds that the nexus study supports the current Inclusionary Affordable Housing Program requirements as specified in this Section 424.1 et seq. combined with this Affordable Housing Floor Area Ratio ("FAR") Bonus Program. Specifically, the Board finds that the nexus study: identifies the purpose of the fee to mitigate impacts on the demand for affordable housing in the City; identifies the use to which the fee is to be put as being to increase the City's affordable housing supply; and establishes a reasonable relationship between the use of the fee for affordable housing and the need for affordable housing and the construction of new market rate housing. Moreover, the Board finds that the current inclusionary requirements combined with the Affordable Housing FAR Bonus Program are less than the cost of mitigation and do not include the costs of remedying any existing deficiencies. The Board also finds that the study establishes that the current inclusionary requirements combined with the Affordable Housing FAR Bonus Program do not duplicate other City requirements or fees. Moreover, according to the study undertaken by Seifel Consulting at the direction of the Planning Department, increased development potential in the Van Ness and Market Downtown Residential Special Use district through the increased FAR allowance enables an increased contribution to the Citywide Affordable Housing Fund without discouraging the development of new market rate housing. A copy of said study is on file with the Clerk of the Board of Supervisors. (b) Neighborhood Infrastructure. The Van Ness & Market Residential SUD enables the creation of a very dense residential neighborhood in an area built for back-office and industrial uses. Projects that seek the FAR bonus above the maximum cap would introduce a very high localized density in an area generally devoid of necessary public infrastructure and amenities, as described in the Market and Octavia Area Plan. While envisioned in the Plan, such projects would create localized levels of demand for open space, streetscape improvements, and public transit above and beyond the levels both existing in the area today and funded by the Market and Octavia Community Improvements Fee. Such projects also entail construction of relatively taller or bulkier structures in a concentrated area, increasing the need for offsetting open space for relief from the physical presence of larger buildings. Additionally, the FAR bonus provisions herein are intended to provide an economic incentive for project sponsors to provide public infrastructure and amenities that improve the quality of life in the area. The bonus allowance is calibrated based on the cost of responding to the intensified demand for public infrastructure generated by increased densities available through the FAR density bonus program.