424.1

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.

The Board of Supervisors has reviewed the San Francisco Citywide Nexus Analysis (“Nexus Analysis”), and the San Francisco Infrastructure Level of Service Analysis, both on file with the Clerk of the Board in File No. 230764 and, under Section 401A, adopts the findings and conclusions of those studies and the general and specific findings in that Section, specifically including the Recreation and Open Space Findings, Complete Streets Findings, Childcare Findings, and Transit Infrastructure Findings, and incorporates those by reference herein to support the imposition of the fees under this Section. (c) Public Improvements. The public improvements acceptable in exchange for granting the FAR bonus, and that would be necessary to serve the additional population created by the increased density, are listed below. All public improvements shall be consistent with the Market and Octavia Area Plan. (1) Open Space Acquisition and Improvement. Open Spaces (as described in the Market and Octavia Area Plan), or other open space of comparable size and performance. Open space shall be dedicated for public ownership or permanent easement for unfettered public access and improved for public use, including landscaping, seating, lighting, and other amenities. (2) Complete Streets. Pedestrian and Streetscape improvements and Bicycle Infrastructure within the Special Use District as described in the Market and Octavia Area Plan, including Van Ness and South Van Ness Avenues, Gough, Mission, McCoppin, Market, Otis, Oak, Fell, Valencia, 11th, 12th, and 13th Streets, along with adjacent alleys. Improvements include sidewalk widening, landscaping and trees, lighting, seating and other street furniture (e.g., newsracks, kiosks, bicycle racks), signage, transit stop and subway station enhancements (e.g., shelters, signage, boarding platforms), roadway and sidewalk paving, public art and living alleys. (3) Affordable Housing. The type of affordable housing needed in San Francisco is documented in the City’s Consolidated Plan and the Housing Element of the General Plan. New affordable rental housing and ownership housing affordable to households earning less than the median income is greatly needed in San Francisco. (Added by Ord. 108-10, File No. 091275, App. 5/25/2010; amended by Ord. 50-15 , File No. 150149, App. 4/24/2015, Eff. 5/24/2015; 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. 126-20, File No. 200559, App. 7/31/2020, Eff. 8/31/2020; Ord. 193-23, File No. 230764, App. 9/15/2023, Eff. 10/16/2023) AMENDMENT HISTORY Section header amended; former divisions A.-C. redesignated as (a)-(c); divisions (b) and (c)(2) amended; Ord. 50-15 , Eff. 5/24/2015. Division (b) amended; Ord. 200-15 , Eff. 12/25/2015 and Ord. 222-15 , Eff. 1/17/2016. Section header and divisions (c)(1)-(3) amended; Ord. 126-20, Eff. 8/31/2020. Division (b) amended; Ord. 193-23, Eff. 10/16/2023. SEC. 424.2. DEFINITIONS. See Section 401 of this Article. (Added by Ord. 108-10, File No. 091275, App. 5/25/2010) SEC. 424.3. APPLICATION OF VAN NESS & MARKET AFFORDABLE HOUSING AND NEIGHBORHOOD INFRASTRUCTURE FEE AND PROGRAM. (a) Application and Timing of Fee Payments. Section 424.1 et seq. shall apply to any development project located in the Van Ness & Market Residential Special Use District, as established in Section 249.33 of this Code, except as provided under Section 406(k) of this Code. The Fee shall be paid to DBI for deposit into either the Van Ness and Market Downtown Residential Special Use District Affordable Housing Fund or the Van Ness and Market Downtown Residential Special Use District Infrastructure Fund, as applicable, at the time required by Section 402(d) of this Code. (b) Amount of Fee. (1) All uses in any development project within the Van Ness & Market Residential Special Use District shall pay $30.00 per net additional gross square foot of floor area in any portion of building area exceeding the base development site FAR of 6:1 up to a base development site FAR of 9:1. (2) All uses in any development project within the Van Ness & Market Residential Special Use District shall pay $15.00 per net additional gross square foot of floor area in any portion of building area exceeding the base development site FAR of 9:1. (c) Option for In-Kind Provision of Infrastructure Improvements and Fee Credits. Project sponsors may propose to directly provide community improvements to the City. In such a case, the City may enter into an In-Kind Improvements Agreement with the sponsor and issue a fee waiver from the neighborhood infrastructure portion ($15.00 per net additional gross square foot of floor area) of the Van Ness & Market Residential Special Use District Affordable Housing and Neighborhood Infrastructure Fee from the Planning Commission, subject to the following rules and requirements: (1) Approval Criteria. The City shall not enter into an In-Kind Agreement unless the proposed in-kind improvements meet an identified community need as analyzed in the Van Ness & Market Affordable Housing and Neighborhood Infrastructure Program and where they substitute for improvements that could be provided by the Van Ness & Market Residential Special Use District Infrastructure Fee Fund (as described in Section 424.5). The City may reject in-kind improvements if they are not consistent with the priorities identified in the Van Ness & Market Affordable Housing and Neighborhood Infrastructure Program. No physical improvement or provision of space otherwise required by the Planning Code or any other City Code shall be eligible for consideration as part of this In-Kind Improvements Agreement. (2) Valuation. The Director of Planning shall determine the appropriate value of the proposed in-kind improvements. For the purposes of calculating the total value, the project sponsor shall provide the Planning Department with a cost estimate for the proposed in-kind improvement(s) from two independent sources or, if relevant, real estate appraisers. If the City has completed a detailed site-specific cost estimate for a planned improvement this may serve as one of the cost estimates provided it is indexed to current cost of construction. (3) Content of the In-Kind Improvements Agreement. The In-Kind Improvements Agreement shall include at least the following items: (i) A description of the type and timeline of the proposed in-kind improvements. (ii) The appropriate value of the proposed in-kind improvement, as determined in subsection (2) above. (iii) The legal remedies in the case of failure by the project sponsor to provide the in-kind improvements according to the specified timeline and terms in the agreement. Such remedies shall include the method by which the City will calculate accrued interest. (4) Approval Process. The Planning Commission must approve the material terms of an In-Kind Agreement. Prior to the parties executing the Agreement, the City Attorney must approve the agreement as to form and to substance. The Director of Planning is authorized to execute the Agreement on behalf of the City. If the Planning Commission approves the In- Kind Agreement, it shall waive the amount of the neighborhood infrastructure portion of the Van Ness & Market Residential Special Use District Affordable Housing and Neighborhood Infrastructure Fee by the value of the proposed In-Kind Improvements Agreement as determined by the Director of Planning. No credit shall be made for land value unless ownership of the land is transferred to the City or a permanent public easement is granted, the acceptance of which is at the sole discretion of the City. The maximum value of the In-Kind Improvements Agreement shall not exceed the required neighborhood infrastructure portion of the Van Ness & Market Affordable Housing and Neighborhood Infrastructure Fee. (5) Administrative Costs. Project sponsors that pursue an In-Kind Improvements Agreement will be billed time and materials for any administrative costs that the Planning Department or any other City entity incurs in negotiating, drafting, and monitoring compliance with the In-Kind Improvement Agreement. (Added by Ord. 108-10, File No. 091275, App. 5/25/2010; amended by Ord. 55-11, File No. 101523, App. 3/23/2011; Ord. 50-15 , File No. 150149, App. 4/24/2015, Eff. 5/24/2015; Ord. 63-20, File No. 200077, App. 4/24/2020, Eff. 5/25/2020; Ord. 126-20, File No. 200559, App. 7/31/2020, Eff. 8/31/2020; Ord. 188-25, File No. 250680, App. 10/6/2025, Eff. 11/6/2025) AMENDMENT HISTORY Division (a) amended; Ord. 50-15 , Eff. 5/24/2015. Division (a) amended; Ord. 63-20, Eff. 5/25/2020. Section header and division (a) amended; divisions (b)(i)-(ii) redesignated as (b)(1)-(2) and amended; divisions (c), (c)(1), and (c)(4) amended; Ord. 126-20, Eff. 8/31/2020. Division (a) amended; Ord. 188-25, Eff. 11/6/2025. SEC. 424.4. VAN NESS & MARKET RESIDENTIAL SPECIAL USE DISTRICT AFFORDABLE HOUSING FUND. (a) That portion of gross floor area subject to the $30 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. (b) Priorities for SUD Affordable Housing Fees Implementation. In order to increase the supply of housing Affordable to Qualifying 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 Qualifying Households in the Van Ness & Market Residential Special Use District; (2) Second, to increase the supply of housing Affordable to Qualifying Households within one mile of the boundaries of the Market and Octavia Area Plan; (3) Third, to increase the supply of housing Affordable to Qualifying Households in the City and County of San Francisco.