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Mayor Lee Introduces Legislation to Create Affordable Housing Bonus Program

Legislation to Incentivize Greater Production of Needed Affordable Housing Helps Meet & Exceed Mayor’s Goal of 10,000 Permanently Affordable Units by 2020 to Address Housing Crisis; New Program Will B

Mayor Edwin M. Lee with Supervisor Katy Tang introduced legislation at the Board of Supervisors to create an Affordable Housing Bonus Program to provide new incentives for private developers to build more affordable housing units in their market-rate developments. The legislation, part of the Mayor’s Blueprint to 10,000 permanently affordable homes by 2020, will help the City better meet the needs of low and middle income families who need housing, and will, for the first time, institutionalize a program that supports middle income families.  

“We will deliver more than 10,000 affordable homes available to low and middle income families by 2020, in part, by helping private sector partners increase housing production in growing neighborhoods,” said Mayor Lee. “With this new program, smart, sensible and well-designed infill development will contribute thousands of permanently affordable homes throughout the City.”

The Affordable Housing Bonus Program (AHBP) does not rely on public subsidies, but on private developers who will include more affordable housing as part of their project. By enabling the State Density Bonus Law, the Program allows developers to receive certain incentives in exchange for producing higher numbers of on-site affordable housing. Specifically, the proposed legislation:
•    Creates a Local AHBP that will offer incentives to project sponsors that elect to provide 30 percent or more affordable housing units on-site. Of this 30 percent, 18 percent must be permanently affordable to middle-income households in addition to their inclusionary requirements of 12 percent permanently affordable to low- and moderate-income households. Projects that fulfill these requirements will be able to include more residential units and up to an additional two stories than currently allowed under existing zoning regulations. Family sized units must make up a minimum of 40 percent of the total number of housing units in the building.
•    Creates a 100 percent Affordable Housing Bonus Program, so projects with 100 percent affordable units will be able to build more residential units and up to three additional stories of residential development than currently allowed under existing zoning regulations.
•    Creates a State AHBP that locally implements the State Density Bonus Law and incorporates one of the options available through the Inclusionary Housing Program. To participate in the State AHBP, projects must include a minimum of 12 percent on-site affordable housing units, and can receive additional density for increased affordability beyond that minimum.

The Affordable Housing Bonus Program does not apply to single family residential neighborhoods such as RH-1 (parcels with one housing unit per lot in Residential, House Character Districts) and RH-2 (parcels with two housing units per lot in Residential, House Character Districts) zoning districts.  

“Our City has not made enough investments in supporting middle income families, but this program will allow us to do more while respecting the general neighborhood characteristic,” said Supervisor Katy Tang. “Middle income housing is essential to not only the diversity, but the survival of San Francisco, and we set our minds to enable a higher level of affordable housing while maintaining the neighborhood character that is so unique to this City.”

“We need to meet San Francisco’s affordable housing goals for all income levels,” said Planning Director John Rahaim. “The State Density Bonus Law does not fully meet needs specific to San Francisco, and does not incentivize middle-income housing. The Affordable Housing Bonus Program has the potential to create up to 16,000 units overall with 5,000 units of housing affordable to low and middle income households over the next 20 years.”

“This legislation will enable faster, more efficient entitlement of 100 percent affordable projects, said Mayor’s Office of Housing and Community Development Director Olson Lee. “Combined with the ability to increase the number of units on publicly-funded sites such as 490 South Van Ness, we will be able to house many more San Francisco families. This program, along with other City programs designed to create and encourage higher levels of affordable housing through development incentives, further ensures we will fully meet our affordable housing goals.”

The Affordable Housing Bonus Program was a central focus of Mayor’s Housing Working Group, convened in 2014 and comprised of key stakeholders in the housing community: affordable and market-rate housing developers and financers, City staff, housing advocates, and related stakeholders. The group was tasked with developing a number of recommendations to help produce additional affordable units more quickly through process changes, legislation and funding directives. The Legislative Subcommittee was comprised of stakeholders who included market-rate and affordable housing developers, housing advocates, property managers, and City staff. Specific components were developed with the benefit of form modeling by David Baker Architects (DBA), economic analysis and modeling conducted by Seifel Consulting, San Francisco Housing Action Committee’s (SFHAC) Regulatory Committee, and Council of Community Housing Organizations (CCHO) staff.

The legislation is expected to go to the Planning Commission this November. San Francisco Planning is currently hosting a series of public outreach events about the Affordable Housing Bonus Program. For more information, go to: sf-planning.org/AHBP.

The Mayor’s Blueprint to 10,000 requires the introduction of five critical pieces of affordable housing legislation throughout the month of September including rehabilitating public housing, preserving affordable housing, stabilizing neighborhoods by keeping people in their homes, and keeping neighbors living in their communities, building more affordable units within market rate developments and accelerating and incentivizing the production of more permanently affordable units.  

These policies and programs will work in concert with a $310 million affordable housing bond that does not raise property taxes proposed for approval by voters in November to ensure delivery of at least 10,780 units by 2020. Mayor Lee is committed to using every tool, including leveraging local, State, and Federal resources, to build more housing. Mayor Lee’s planned $2.7 billion investment from the Housing Trust Fund, tax increment and fees over the next 20 years, make up the Mayor’s long-term plan to fight the affordability crisis and shift the balance of housing in the City so that San Francisco remains affordable for low and middle income families over the long term.