The City-appointed Technical Advisory Committee (TAC) has finished their analysis of how the San Francisco inclusionary housing requirements should be set. The City Controller will make their formal recommendation to the Board of Supervisors. The TAC, made up of eight market-rate and non-profit affordable housing professionals, has been working with the City’s Controller and Chief Economist, plus independent consultants, on how to best set the City’s Inclusionary Ordinance.
In June 2016, voters passed Prop C, which increased the on-site inclusionary percentages from 12 to 25 percent and allowed the Supervisors to adjust the percentages moving forward, as opposed to requiring it to be voter-approved. Legislation accompanying the ballot measure called for the creation of this group to determine what percentage was actually feasible. After months of meetings, the recommendations will be introduced publicly (though all TAC meetings were public) at the Planning Commission on March 9th.
The final analysis recommends the feasible percentage for on-site below-market-rate (BMR) units ranges from 14 to 18 percent for rental homes and 17 to 20 percent for ownership homes. The TAC also recommends that the percent increases by half-a-percent every year until the rental percentage hits 25 percent for BMR units, though a new analysis will be done every three years to adjust the laws when needed. Much of the conversation centered around the state’s density bonus law, since the local version was halted last year at the Land Use Committee. The main questions were around the regularity of a developer using the state’s density bonus law and how often the full 35 percent density bonus will be captured.
This resulted with John Elberling of the TODCO Group, amongst other members of the TAC, to advocate for a higher percentage on the base project so, after the density bonus is applied, the overall project maintains a higher affordability percentage. They also recommended that there should be additional impact fees for the bonus units to range from 18 to 23 percent for rental and 25 to 28 percent for ownership. Though, there are questions regarding the legality of that proposal because according to the state’s density bonus law, all of those “bonus units” are required to be market-rate and the fees would have to be the same as the fees on the base project units.
Other members of the TAC, including SFHAC Executive Committee members Eric Tao and Lydia Tan, concurred with the Controller’s proposal to require on-site inclusionary units for the base units, and then charge an impact fee for the bonus units, thereby generating additional fee income for subsidized affordable housing projects. They commented a desire to capture data first and in the meantime, keep the percentage at a level that will encourage housing creation.
There is also a conversation regarding the event in which a project is vested into a set of requirements, since the proposal includes an annual increase in affordability level by half-a-percent per year and percentage of affordability changes over the development process.
SFHAC believes the process should create certainty for housing and that the final rules should be locked in when the project Preliminary Project Assessment is filed, the first time it is registered with the Planning Department.