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SF seeks to further incentivize developers to build below-market-rate homes

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City officials plan to encourage private developers to build more below-market-rate units in exchange for increased height limits and other perks.

Mayor Ed Lee and Supervisor Katy Tang introduced legislation at the Board of Supervisors meeting Tuesday to create the Affordable Housing Bonus Program, which would allow developers of projects with 30 percent of on-site housing permanently offered at below market-rate to build up to two additional stories than allowed under zoning regulations.

The Affordable Housing Bonus Program would also allow developers of projects with 100 percent below-market-rate units to add up to three stories than allowed under zoning regulations. It would not apply to single-family residential neighborhoods.

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Per the legislation, a rental housing development must include 12 percent of the units that are affordable to households that earn 55 percent of the area median income, and 18 percent of the units for households earning 120 percent of the AMI. Developments that sell units would include 12 percent of units affordable to households that earn 90 percent of the AMI, and 18 percent for households that earn 140 percent of the AMI.

The legislation is a component of the mayor’s goal to build more than 10,000 permanently below-market-rate homes by 2020, and piggybacks on other recent city efforts to boost below-market-rate housing development as San Francisco grapples with a major housing crisis.

“With this new program, smart, sensible and well-designed infill development will contribute thousands of permanently affordable homes throughout The City,” Lee said in a statement.

Tang emphasized the importance of encouraging the development of homes available to middle-income families as well.

“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,” Tang said in a statement.

But Peter Cohen, co-director of the SF Council of Community Housing Organizations, said the program should include below-market-rate housing at 90 percent of the area median income.

“What’s missing in their proposal is getting affordable units at multiple different income levels,” Cohen said. “What they really should be doing if they’re trying to get 30 percent affordable [units] is a combination of low-, moderate- and middle-income households.“

He added, “That more realistically reflects the range of our city’s workforce that is shut out of the housing development market and for whom no housing is being built.“

In another effort to tackle the housing crisis, Lee and Supervisor Mark Farrell earlier this month introduced amendments to The City’s Inclusionary Housing Ordinance that strive to speed up the production of thousands of below-market-rate homes.

The amendments include incentives for developers to build more below-market-rate homes within the same neighborhoods as market-rate projects, and encouragement for developers to build such units specifically for moderate- and middle-income residents.

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