New affordable housing rules head to Planning Commission

Should residential projects already planned in the Mission and South of Market neighborhoods have more affordable housing?

Such is the question that will go before the Planning Commission today as city lawmakers seek to increase the number of affordable homes in the pipeline.

Housing advocates are at odds with the proposal, however, with some arguing that forcing projects already in the works to adhere to the new affordable housing requirements could harm development. Others counter that requiring projects in those neighborhoods to produce the more affordable housing will help prevent more displacement.

The potential increase in below-market-rate requirements, also known as inclusionary housing, will go before voters June 7 in the form of a charter amendment. If approved, developments of at least 25 units would have to include 25 percent of the homes as below-market-rate.

The cost of below-market-rate homes is determined by The City’s area median income, which in 2015 was $71,350 for one person and $101,900 for a four-person household.

Legislation that would take effect pending voter approval of the charter amendment may, however, allow some projects already in the planning stages to produce less affordable housing. The grandfathering provision would set up different expectations for affordable housing requirements based upon the date an environmental application was filed with the Planning Department.

But according to the ordinance, that provision exempts some projects in the Mission and South of Market neighborhoods, where tales of displacement and affordability have swelled in recent years. Such projects, as well as those that demolish Production/Distribution/Repair sites, would have to build the new amount of affordable housing defined in the charter amendment.

That has some housing advocates crying foul that the measure could actually harm the production of new housing, including much-needed affordable homes, when it’s intended to do the opposite.

“We’re concerned that the trailing legislation has the potential to harm a lot of projects that have been in the process for years with the last-minute change of fundamental rules,” said Tim Colen, executive director of the nonprofit Housing Action Coalition.

Though the Planning Department as of Wednesday had not yet released a list of projects that would be exempt to the grandfathering provision, Colen said a number of projects
could be killed as a result of the increased inclusionary requirements and grandfathering exemptions.

The list is expected to be released by today’s Planning Commission meeting, when commissioners will be asked to recommend approval of the legislation to the Board of Supervisors. City planners have estimated there may be as many as 2,600 homes excluded from the grandfathering provision, though a more exact number is expected to be released today.

Peter Cohen, co-director of the SF Council of Community Housing Organizations, emphasized the grandfathering provision is intended to quell displacement concerns exacerbated in hot-development neighborhoods like the Mission and SoMa.

“These are areas where you’ve seen a lot of major development activity and folks really concerned about displacement impact and lack of affordability,” Cohen said.

The charter amendment also includes a two-tier system for determining the amount of affordable homes required in certain developments.

Currently, projects with at least 10 residential units must include either 12 percent of its homes on-site as below-market-rate or 20 percent off-site. Developers may also pay a fee instead.

The charter amendment would keep the 12 percent of on-site affordable homes required for projects with 10 to 24 units, but require more of such homes in projects with at least 25 units.

Projects with at least 25 homes would have to include at least 25 percent of its on-site homes as below-market-rate, including 15 percent of those homes available to low or very low income households and 10 percent affordable to low or middle-income households.

The proposed two-tier system would mark the first time San Francisco has added more than one category for its inclusionary housing program, including a middle-income bracket.

“We’ve always seen inclusionary housing as just the next layer above what we do with publicly subsidized affordable housing,” Cohen said. “What this measure does is add [another] layer of middle income housing, recognizing a lot more people are shut out of the housing market.”

The legislation would also require economic feasibility studies to be conducted every three years to examine how San Francisco should continue to set its inclusionary housing requirements.

The legislation was introduced March 22 by Supervisors Jane Kim and Aaron Peskin. The charter amendment that will go before voters would also transfer back authority to the Board of Supervisors to change inclusionary housing requirements.

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