AMENDED IN BOARD
FILE NO. 151258
11/13/2018
ORDINANCE NO. 295-18
rPianninq Code -Affordable Housinq Requirement and Fee in Divisadero and Fillmore
Neighborhood Commercial Transit Districts]
Ordinance amending the Planning Code to require additional affordable housing or
payment of a fee for certain sites that obtained higher residential development
potential as a result of the rezoning of the Divisadero Street Neighborhood Commercial
Transit District and the Fillmore Street Neighborhood Commercial Transit District in
2015; affirming the Planning Department's determination under the California
Environmental Quality Act; and making findings of consistency '•'-'ith the General Plan,
public convenience, necessity, and welfare under Planning Code, Section 302, and
making findinas of consistencv with the General Plan. and the eight priority policies of
Planning Code, Section 1 01.1.
NOTE:
Unchanged Code text and uncodified text are in plain Arial font.
Additions to Codes are in single-underline italics Times New Roman [ont.
Deletions to Codes are in strikethrough italics Times Ne1v 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. 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. 151258 and is incorporated herein by reference. The Board affirms
this determination.
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(b) On June 30, 2016, the Planning Commission, in Resolution No. 19679, 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 1 01.1. 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. 151258, and is incorporated herein by reference.
(c) Pursuant to Planning Code Section 302, this Board finds that the actions
contemplated in this ordinance will serve the public necessity, convenience, and welfare for
the reasons set forth in Planning Commission Resolution No. 19679 and the Board
incorporates such reasons herein by reference. A copy of the Planning Commission
Resolution No. 19679 is on file with the Clerk of the Board of Supervisors in File No.151258.
(d) The City adopted legislation rezoning the area along Divisadero Street between
Haight and O'Farrell Streets to become the Divisadero Street Neighborhood Commercial
Transit District ("NCT") in Ordinance No. 127-15 in August 2015~, and the area along Fillmore
Street between Bush and McAllister Streets to become the Fillmore Street NCT in Ordinance
No. 126 15 in /\ugust 2015. The rezoning for both NCTs removed any residential density
limits based on lot area, and instead restricted residential uses by physical envelope controls
like height, bulk, and setback requirements for each site. This removal of density limits based
on lot areas should afford allows for greater increased residential development potential on
certain sites within eaffi the Divisadero NCT.
(e) On November 6, 2012, the voters adopted Proposition C ("2012 Prop C"), the
Housing Trust Fund, which was set forth in San Francisco Charter Section 16.110. 2012 Prop
C established a limitation on the lnclusionary Housing Cost Obligation that the City could
impose on residential development projects. 2012 Prop C set forth certain exceptions to this
limitation, including but not limited to circumstances in which a project receives a 20% or
greater increase in developable residential uses, as measured by a change in height limits,
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Floor Area Ratio limits, or use, over prior zoning, or a 50% or greater increase in residential
densities over prior zoning, through a special use district or other local legislation adopted
after November 6, 2012. The Divisadero Street NCT and the Fillmore Street NCT rezonings
wefe was adopted after this date.
(f) In July 2017, the Board of Supervisors amended the lnclusionary Affordable
Housing Program, Planning Code Sections 415 et seq., and included a provision that requires
the Planning Department, in consultation with the Controller's Office, to study whether a
higher on-site inclusionary affordable housing requirement is feasible on sites that after
January 1, 2015. received a 20% or greater increase in developable residential gross floor
area or a 35% or greater increase in residential density over prior zoning. The Divisadero
Street NCT and the Fillmore Street NCT received a 20% or greater increase in developable
residential gross floor area or a 35% or areater increase in residential density over prior
zoning after January 1, 2015. Accordingly, an lnclusionary Housing Analysis of Divisadero
and Fillmore Street Rezoning was published by the Office of the Controller and the Planning
Department on March 19, 2018, and was presented at a public hearing of the Planning
Commission on March 22, 2018. The study can be found in Board of Supervisors File No.
151258. The study found that sites in the Divisadero Street NCT could feasibly provide on-
site affordable units in an amount ranging from 20% to 22% of dwelling units for Rental
Housing projects, or 23% for projects consisting of Owned Units. The study found that
increased on-site affordability requirements were not financially feasible for sites in the
Fillmore NCT district.
(g) In keeping with the intent and provisions of the Housing Trust Fund and the 2017
amendments to the lnclusionary Affordable Housing Program, projects on sites that have
received increases in developable residential gross floor area or greater density should, and
can afford to, mitigate fully their impacts on the need for affordable housing.
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({bJ The C1ty updated 1ts Nexus Study in November 2016, performed by Keyser
Marston and Associates, in support of the lnclusionary Affordable Housing Program, or an
analysis of the impact of development of market rate housing on affordable housing supply
and demand. The Board of Supervisors reviewed the Nexus Study and staff analysis and
report of the Study and, on that basis, found that the Study supported the inclusionary
affordable housing requirements combined with the additional affordable housing fee set forth
in Planning Code Sections 415 et seq.
(g) On June 7, 2016, the voters approved a Charter Amendment ("2016 Prop C")
eliminating the limits on inclusionary affordable housing set forth in Charter Section 16.110.
The Board of Supervisors also adopted legislation to implement changes to the inclusionary
affordable housing requirements, Ordinance No. 76 16, ·.vhich vvent into effect when 2016
Prop C vvent into effect.
(h) The 2015 rezoning of the Divisadero and Fillmore NCTs allowed a 50% or greater
increase in residential densities over prior zoning on certain sites contained \Nithin the two
NCTs. In keeping •~r~ith the intent and provisions of both 2012 Prop C and 2016 Prop C,
projects on such sites should, and can afford to, mitigate fully their impacts on the need for
affordable housing.
Section 2. The Planning Code is hereby amended by adding Section 428, including
Sections 428.1, 428.2, 428.3, 428.4, and 428.5, to read as follows:
SEC. 428. DIVISADEROSTREETNCTAND FillMORE STREET NCTAFFORDABLE
HOUSING FEE AND REQUIREMENTS.
Sections 428.1 through 428.5, hereafter referred to as Sections 428.1 et seq., set forth the
requirements and procedures for the Divisadero Street and Fillmore Street Neighborhood
Commercial Transit Districts Affordable Housing Fee.
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SEC. 428.1. FINDINGS.
The Board ofSupervisors hereby finds that:
(a) The additional affordable housing fee requirement oftfl.i.s Sections 428.1 et seq. is
supported by the November 2016 Nexus Study perfOrmed by Keyser Marston and Associates. The
Board ofSupervisors has reviewed the Nexus Study and other documents and, on that basis, finds that
the Study supports the inclusionary a(fordable housing requirements combined with the additional
a[fordable housing fee and requirements set forth in tJ:Hs Sections 428.1 et seq. Specifically, the Board
finds that the Study: (1) identities the purpose of the additional fee and requirements to mitigate
impacts on the demand for affordable housing in the City,· (2) identities the use o[the additional fee to
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increase the City's affordable housing supply,· and (3) establishes a reasonable relationship between
the use o[the additional fee for affordable housing and the need for affordable housing and the
construction ofnew market rate housing. Further, the affordable housing fee and requirements do not
include the costs ofremedying any existing deficiencies and do not duplicate other City requirements or
.fees.
(Q) An account has been established, funds appropriated, and a construction schedule adopted
.for affordable housing projects fimded through the Inclusionary Affordable Housing Program. The
Affordable Housing Fee will reimburse the City for expenditures on affordable housing that have
already been made and that will be made in the future.
(c) A major objective o[the Divisadero Street and Fillmore Street NCTs, set forth in Planning
Code Sections_746 759 and 747, respectively, is to encourage and promote development that
enhances the walkable, mixed-use character o[the corridor and surrounding neighborhoods and to
encourage housing development in new buildings above the ground floor. New market rate housing
development could outnumber both the number of units and potential new sites within the area for
permanently affordable housing opportunities. The City has adopted a policy in its General Plan to
meet the atfprdable housing needs ofits general population and to require new housing developments
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to produce sutficient atfordable housing opportunities tor all income groups, both otwhich goals are
not likely to be met by the potential housing development in the area. In addition, the Nexus Study
indicates that market rate housing itsel(generates additional lower income affordable housing needs
for the worliforce needed to serve the residents ofthe new market rate housing proposed for the area.
To meet the demand created [or affordable housing by the Divisadero Street NCT and Fillmore Street
NG+ zoning and to be consistent with the policy o[the City, additional affordable housing
requirements should be included [or all market rate housing development in these this NCTs,_
(d) The Divisadero Street NCT and Fillmore Street NCT rezoning& set forth in Ordinance
Nos. 126 15_arld-127-15 wi+l--allows greater residential development on certain sites within the NCTs,_
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and such residential development will create a greater need tor atfordable housing, and should provide
more affordable housing. The higher densities will also make provision o(higher levels o[affordable
housing feasible [or such sites.
(e) J[a site located in the Divisadero Street NCT or Fillmore Street NCT received an increase
in density o(50% or more fi·om the 2015 rezoning set forth in Ordinance Nos,_126 15_aA-d-127-15, a
higher inclusionary affordable housing requirement should apply. The density [or the previously
existing Divisadero Street Neighborhood Commercial District was one unit per 800 square feet oflot
area. The density for the Fillmore Neighborhood Commercial District vvas 1 unit per 600
square feet of lot area, \Nith one parcel (Block 0798, Lot 001) zoned RH 3 (3 units per lot),
another parcel (Block 0779, Lot 031) zoned RM 4 (1 unit per 200 square feet of lot area), and
one parcel (Block 0702, Lot 038) zoned RM 3 (1 unit per 400 square feet of lot area).
SEC. 428.2. DEFINITIONS.
See Section 401 ofthis Article 4.
SEC. 428.3. APPLICATION OF AFFORDABLE HOUSING FEE REQUIREMENT.
(a) Applicability. The lnclusionary Affordable Housing Program set forth in Planning
Code Sections 415.1 et seq. shall apply in the Divisadero Street NCT and Fillmore Street
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NCT, with the follovvmg reqUirements that '.viii apply to certain sites 1n these NCTs. In the
event that the Planning Department determines that the residential development potential on
a site '.vithin the Divisadero Street NCT or the Fillmore Street NCT has been increased
through the adoption of the NCT rezoning set forth in Ordinance Nos. 126 15 and 127 15, as
detailed in Section 428.1(e) herein, the requirements of Sections 415.1 through 415.9 of the
Planning Code shall apply, except that the "grandfathering" provisions of Planning Code
Section 415.3(b) shall not apply to such sites and the follo'Ning affordable housing
requirements shall be applied to residential development on such sites:
(1) Fee. For a development project that is subject to the Residential
lnclusionary Affordable Housing Program, the development project shall pay an affordable
housing fee equivalent to a requirement to provide 30% of the units in the principal project as
affordable units, using the method of fee calculation set forth in Section 415.5(b).
(2) On Site Housing. If the project sponsor of a housing development project is
eligible and elects to construct units affordable to qualifying households on site of the principal
project as set forth in Planning Code Section 415.5(g), the project sponsor shall construct a
total of 23% of all units constructed on the project site as affordable housing and shall comply
\Vith all otheRJvise applicable requirements of Section 415.6. The on site affordable units shall
be affordable as follovvs. /\ minimum of 6% of the units shall be affordable to households
earning up to 55% of Area Median Income, and 8% of the units shall be affordable to
households earning up to 120% of Area Median Income, and 9% of the units shall be
affordable to households earning up to 140% of Area Median Income.
(3) Off Site Housing. If the project sponsor of a housing development project is
eligible and elects to provide units affordable to qualifying households off site of the principal
project as set forth in Section 415.5(g), the project sponsor shall construct or cause to be
constructed affordable housing equal to 30% of all units constructed on the principal project
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site as affordable housing and shall comply \Vith all otherv1ise applicable requirements of
Section 415.7.
(a) For any project for which a complete development application has been submitted
before October 1. 2018. the lnclusionarv Affordable Housing Program set forth in Planning
Code Sections 415.1 et seq. shall apply in the Divisadero Street NCT. except the temporarv
provisions of Planning Code Section 415.3(b) shall not apply and except as set forth in section
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)(2) 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 lnclusionarv 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 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 on-site of the 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 projects consisting of 10 or more units. the following
requirements shall apply.
(A) For a housing development project consisting of Owned Units. the
number of affordable units constructed on site shall be 23% of all units constructed on the
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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.
(8) For a Rental Housing Project, the number of affordable units
constructed on site shall be 20% of all units constructed on the site. A minimum of 12% of the
units shall be affordable to low-income households, 4% of the units shall be affordable to
moderate-income households, and 4% 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. 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
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Median Income or less, with households earning from 90% to 130% of Area Median Income
eligible to apply for middle-income units.
(3) Off-site. If the project sponsor of a housing development project of 1 0 or
more units that is subject to the lnclusionary Affordable Housing Program elects to provide
units affordable to qualifying housing households off-site of the 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 site as affordable
housing if the units in the 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
on or after October 1, 2018, the lnclusionarv 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 lnclusionarv 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 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. 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
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to qualifying households on-site of the 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 constructed on-site shall be provided as follows.
(A) A project that consists of Owned Units shall provide 23% of units as
affordable units at the following levels: ten percent 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
purchase price set at 130% of Area Median Income.
(B) A project that consists of Rental Units shall provide 23% of units as-ffi
the affordable units at the following levels: ten percent 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)(B), the percentage
and affordability levels of 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 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 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 affordable units set forth in Section 415.6 for projects consisting of 25
or more units shall apply.
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(3) Off-site. If the project sponsor of a housing development project of 1 0 or
more units is eligible and elects to provide units affordable to qualifying housing households
off-site of the 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 site as affordable housing if the units in the principal project are owned
units, and 30% if the project is a Rental Housing Project.
(b) E><emption for Affordable Housing. /\project applicant shall not pay the affordable
housing fee for any space designated as a belmN market rate unit under Section 415.1 et
seq., the Citywide lnclusionary Affordable Housing Program, or any other residential unit that
is designated as an affordable housing unit under a Federal, State, or local restriction in a
manner that maintains affordability for a term no less than 50 years.
(c) If the Board adopts higher inclusionary housing requirements, the higher
requirement shall apply.
SEC. 428.4. IMPOSITION OF AFFORDABLE HOUSING REQUIREMENTS.
(a) Determination of Requirements. The Planning Department shall determine the
applicability o[Sections 428.1 et seq. to anv development project requiring a first construction
document and, i[Section§. 428.1 et seq. is applicableapplies, shall impose any such requirements as a
condition o[approval for issuance o[the first construction document. The project sponsor shall supply
any information necessary to assist the Department in this determination.
(b) Department Notice to Development Fee Collection Unit o[Fee Requirements. After the
Department has made its final determination regarding the application ofthe affordable housing
requirements to a development project pursuant to Sections 428.1 et seq., it shall immediately notifY
the Development Fee Collection Unit at DB! ofthe applicable affordable housing fee amount in
addition to the other information required by Planning Code Section 402(b).
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(c) Process for Revisions o(Determination ofRequirements. l(the Department or the
Commission takes action affecting any development project subject to Sections 428.1 et seq. and such
action is subsequently modified, superseded, vacated, or reversed by the Board ofAppeals, the Board
ofSupervisors, or a court, the procedures ofPlanning Code Section 402(c) shall be [allowed.
SEC. 428.5. USE OF FUNDS.
The atfgrdable housing fee specified in this Sections 428.1 et seq. [or the Divisadero Street
NCT and the Fillmore Street NCT shall be paid into the Citywide A([ordable Housing Fund,
established in Administrative Code Section 10.100-49, and the funds shall be separately accounted [or.
The Mayor's Office ofHousing and Community Development shall expend the fimds to increase the
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supply ofhousing affordable 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(0.
Section 3. The Planning Code is hereby amended by revising Sections 759 746 and
-74-7, to read as follows:
SEC. 146 759. DIVISADERO STREET NEIGHBORHOOD COMMERCIAL TRANSIT
DISTRICT.
The Divisadero Street Neighborhood Commercial Transit District ("Divisadero Street
NCT") extends along Divisadero Street between Haight and O'Farrell Streets. Divisadero
Street's dense mixed-use character consists of buildings with residential units above ground-
story commercial use. Buildings typically range in height from two to four stories with
occasional one-story commercial buildings. The district has an active and continuous
commercial frontage along Divisadero Street for most of its length. Divisadero Street is an
important public transit corridor and throughway street. The commercial district provides
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convenience goods and services to the surrounding neighborhoods as well as limited
comparison shopping goods for a wider market.
The Divisadero Street NCT controls are designed to encourage and promote
development that enhances the walkable, mixed-use character of the corridor and
surrounding neighborhoods. Rear yard requirements above the ground story and at residential
levels preserve open space corridors of interior blocks. Housing development in new buildings
is encouraged above the ground story. Existing residential units are protected by limitations
on demolition and upper-story conversions.
Consistent with Divisadero Street's existing mixed-use character, new commercial
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development is permitted at the ground and second stories. Most neighborhood-serving
businesses are strongly encouraged. Controls on new Formula Retail uses are consistent with
Citywide policy for Neighborhood Commercial Districts; Eating and Drinking and
Entertainment uses are confined to the ground story. The second story may be used by some
retail stores, personal services, and medical, business and professional offices. Additional
flexibility is offered for second-floor Eating and Drinking, Entertainment, and Trade Shop uses
in existing non-residential buildings to encourage the preservation and reuse of such
buildings. Hotels are monitored at all stories. Limits on late-night activity, drive-up facilities,
and other automobile uses protect the livability within and around the district, and promote
continuous retail frontage.
