April 4, 2016 Rob Poole

Planning Commission Debates the Inclusionary Housing Trailing Legislation

Construction cranes, San Francisco CALast week, the Planning Commission voted on the trailing legislation that would enact the Sups Kim- Peskin June charter amendment. The stakes of this discussion are very high since it affects thousands of homes that are in the planning process pipeline, but not yet finally approved. The SFHAC has serious concerns about some last-minute additions to the trailing legislation that would clearly threaten the economic feasibility of this housing. The SF Planning Department’s staff had similar concerns and proposed a series of recommendations, the Staff Report, to the Planning Commission that identified how to lessen this threat. The process to determine what rules apply to the existing proposed projects is called “grandfathering”.

The Commission voted 4-3 (Commissioners Moore, Wu and Richards opposed) to adopt Planning staff’s recommendations.


Supervisors Kim and Peskin, introduced a ballot measure in January that would remove the Inclusionary Housing Ordinance from the City charter and increase the current on-site affordability levels from 12 to 25 percent; from 20 to 33 percent for off-site; and from 20 to 33 percent for in lieu fees. If the voters approve this measure, these percentages could later be amended legislatively by the Board of Supervisors through a process that requires an economic feasibility analysis to be completed on July 31. Requiring a formal economic feasibility analysis was one of Mayor Ed Lee’s key demands to support the Kim-Peskin charter amendment.


One of the central sticking points in the debate between the community activists and the housing builders is which projects in the pipeline would have to adhere to the new rules and which ones would be exempt. The community activists want virtually every project larger than 25 units in the pipeline to be subject to higher Inclusionary rates. The SFHAC believes that projects in the planning process that have already filed their environmental application (EA) and made significant financial commitments based on existing rules should be exempt, or grandfathered, from the new Inclusionary levels. It’s not fair nor good policy to change the rules at the last minute when projects were already following policies that the City set years ago.

Prior to Thursday’s hearing, Supervisors Kim and Peskin added new demands to the trailing legislation that upset a delicate compromise reached between the two sides. This compromise, called the “term sheet” recently was approved by a 11-0 vote at the Board of Supervisors. The last-minute additions to the trailing legislation were never part of the term sheet or considered by the supervisors. The most significant new demands include:

  • Geographic “carve-outs”. This demands that projects in certain zoning areas be required to pay the maximum Inclusionary rate, regardless of how long they had been in the planning process. These zoning areas include Urban Mixed Use that eliminate any PDR space; any project along the Mission NC-T; and those within the SoMa Youth and Family Zone.
  • Exclusion of grandfathering for projects over 120 feet in height.
  • Drastic timelines to complete projects or risk losing entitlements.
  • Eliminating protection of projects that had previously obtained formal City approval

The SFHAC believes these demands pose a significant threat to existing pipeline projects. SF Planning staff estimated that 2,600 unbuilt units are at risk. This would cause incalculable damage to a City struggling with a housing affordability crisis. On the other hand, the demands likely originate from community members who believe that preventing the housing from being built, especially in the geographic carve-out zones, is a desirable outcome and in the City’s best interests.

The Hearing

The SFHAC rallied many of its members to speak at the hearing and support the Planning Department’s recommendations. Bruce Fairty of Thompson Dorfman used their site as a case study of the unintended consequences of the geographic carve-outs. Their project at 350-5th Street, located in the SoMa Youth and Family Zone and in the process for two years would have to raise its on-site affordability level from 12 percent on-site to the full 25-percent proposed in the legislation, which Fairty said could make the development financially infeasible. However, a similar project just one block away would not be subject to those new rates.

While we understand that the intention of this measure is to build more permanently affordable housing, SFHAC is alarmed that the sudden new Inclusionary burdens could result in their not getting built, which means much less market-rate and affordable housing overall.

The Vote

The Planning Commission’s recommendations were as follows:

  1. Establish June 7, 2016 as the exemption date for projects that have received an entitlement from Planning;
  2. Consider the earliest Environmental Application date as the date to grandfather projects; and
  3. Consider special circumstances for the grandfathering clause, by looking at other application filing dates.

While the 4-3 vote to adopt the Planning staff’s recommendations might be seen as a victory, it’s troubling because it really just means that the decision will be made by the full Board of Supervisors where there appears to be a 6-5 majority favoring the more draconian positions.  

Next Steps

The trailing legislation next goes to the Supervisor’s Land Use Committee on April 18 and then the full Board on the 19th for its final vote. When a final draft of the trailing legislation is released, we’ll take stock and notify our members. The SFHAC will let you know how to make your voices heard at those hearings in support of smart housing policy. Stay tuned….

Rob Poole

Rob is the former Development and Communications Manager at SFHAC.

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