San Francisco Approves Ordinance Expanding Density Bonuses for Affordable Projects

by Pillsbury - Gravel2Gavel Construction & Real Estate Law
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Almost 18 months after it was introduced, the San Francisco Board of Supervisors recently approved Ordinance 150969, which creates development bonuses for private development projects where at least 30% of the units are subject to affordability restrictions. Known as the HOME-SF Program, the legislation allows qualifying projects to exceed otherwise applicable height restrictions by up to 20 feet and allows developers to select three additional zoning modifications from a menu of options, which includes reductions in required rear-yard setbacks and modifications to parking, exposure, and open space requirements. HOME-SF projects must also include on-site family-friendly amenities, such as dedicated bicycle parking and stroller storage, open space, and yard dedicated for use by children.

The adoption of the HOME-SF Program expands the existing 100 Percent Affordable Housing Bonus Program, passed in 2016, which offers similar incentives for projects where all of the units are reserved for residents making 80% or less of area median income. The new program is aimed at helping San Francisco’s middle-income working class, who may otherwise be squeezed out of the housing market, by requiring 30% of the units in eligible projects to be reserved for residents earning 80%-130% of area median income for for-sale units and 55%-110% of area median income for rental units. These requirements offer below-market housing opportunities to a wider range of residents than most affordable housing programs, which typically benefit only very low, low, and moderate income households.

The legislation adopting the new incentives states that “San Francisco has one of the highest housing costs in the nation, but San Francisco’s economy and culture rely on a diverse workforce at all income levels.” Historically, this has been addressed through programs offering public subsidies for affordable housing. However, recognizing that the availability of subsidies is limited and citing the high per-unit cost of affordable housing, this legislation is intended to encourage private development projects that provide affordable housing using tools that do not rely on public money. The new zoning bonuses increase development potential and reduce overall costs on a per-unit basis.

Ordinance 150969 also adds the Analyzed State Density Bonus Program and Individually Requested State Density Bonus Program to the San Francisco Planning Code. The former offers an expedited review process for projects requesting density bonuses from a pre-vetted list of options and that meet certain affordability and other criteria. The latter sets forth the review and approval procedures for projects that don’t meet the requirements for the streamlined review process but are seeking density bonuses and contain below-market units. Prior to commencement of construction on any project receiving bonuses under the new programs, the City requires the recordation of a regulatory agreement that sets forth the number and applicable income levels for the restricted units and is binding for the life of the project.

After the May 23 Board meeting, Supervisor Katy Tang tweeted “HOME SF to create 5,000 units of affordable housing over 20 years” and executive director of the San Francisco Housing Action Coalition, Todd David, called the new laws a “win for those who advocate for housing at all income levels.”

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