March 30, 2015 Housing Action Coalition

Draft Legislation for Inclusionary Reform Expected in April

There was a full room last Friday to hear Sarah Dennis-Phillips, a senior policy advisor in the Office of Economic and Workforce Development (OEWD). The big news is we’ll be seeing two pieces of draft legislation in April to modify the Inclusionary Housing Ordinance to make it more attractive for builders to produce middle income housing. One will significantly change the Off-Site option and the other will add a “Dial” that allows changes to the income requirements for residents of the below-market-rate (BMR) housing. Copies of the drafts are not yet available.

Off-Site Inclusionary
The timing of delivery of the principal and off-site projects will be extended to at least one year with the possibility of an additional year. The geographic radius for the off-site project would be slightly increased from 1.0 to 1.25 miles from the principal project. There would be no TCAC penalty for projects that deliver 20 percent affordability. Most significantly, the Mayor’s Office of Housing (MOH) would keep the right to “review” a project’s pro forma for any joint venture agreements between market-rate and non-profit builders. Read our suggestions for reforming the off-site option here.

The Inclusionary Dial
This program is intended to be augmented by future density bonus legislation to increase the production of middle-income housing. Under new rules, the range of qualifying incomes for rental BMRs will be extended from the current 55 percent of Area Median Income (AMI) to 90 percent AMI. The amount of BMR housing provided in rental projects would increase from the current 12 percent to 13 percent at 70 percent AMI and to 16 percent at 90 percent AMI. For condos, the income range will be extended from 90 percent to 120 percent AMI with 15 percent condo BMRs being included for 120 percent AMI residents. The Dial could be applied to off-site projects, too. Its most important feature is that it should be at the project sponsor’s option and that it should be financially neutral as to whether it’s used. In a response to a question from Habitat for Humanity, Ms. Dennis-Phillips noted that the Dial was planned to also allow fewer BMRs, but at lower than current AMI levels.

The intent was that the off-site and inclusionary dial legislations would run for one to three years after which time there would be a review to see if it was working or needed modification.

Density Bonus
Ms. Dennis-Phillips noted that, while this is moving more slowly than either the Off-Site or Dial legislation, work is underway to draft legislation. It is intended to exceed the state’s 35 percent density bonus and will apply to ‘non-plan areas”, i.e., it would not apply to Eastern Neighborhoods or Market & Octavia Plan Areas. Learn more about what a density bonus could mean for San Francisco here.

Housing Bond
All signs are that Mayor Ed Lee is committed to a $250M general obligation bond this November. Obviously, there are many more pressing needs for the money than can be funded. The likeliest uses are to help rebuild public housing; jump-start HOPE-SF; build new low-income housing; and provide assistance to first-time home-buyers.

Accelerator Fund
The Mayor has been looking for businesses to match the City in starting a fund that would assist building middle-income housing. The likeliest source is from financial institutions that need to satisfy CRA requirements. Initial indications are that the City would contribute $10M in first-loss funding and banks would provide $40M in “patient capital”. If the accelerator fund could demonstrate success, it could be increased in size.

Middle-Income EIFDs
Ms. Dennis-Phillips described a new program called “enhanced infrastructure finance districts” that would allow the increased property taxes from new development within certain defined areas to be used for building middle-income housing. This would replicate, to some extent, the funding for housing affordability that used to come from the SF Redevelopment Agency. A future RegComm meeting will explore this topic in more detail.

The members of SFHAC’s RegComm will be directly involved in evaluating any new housing legislation to determine if it supports our mission and goals. We urge you to join us at these excellent policy discussions!

Image credit: KC Custom Builders

Housing Action Coalition

The Housing Action Coalition is a member-supported non-profit that advocates for the creation of well designed, well-located housing at all levels of affordability. We believe more housing means more choices and better solutions.

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