Client Alert – Proposed Changes to HOME-SF Density Bonus Program


Legislation introduced by Supervisor Katy Tang would potentially allow a broader range of projects to use San Francisco’s local density bonus program, called HOME-SF. Supervisor Tang—who championed the original program—is proposing a three-tier system that links affordability percentages to the height increase a project seeks, along with other changes meant to speed up the entitlement process and provide more certainty to project sponsors that elect to do a HOME-SF program. It is being considered by the Planning Commission this afternoon, with the Planning Department suggesting a few additional refinements and modifications.

The overarching idea behind the modifications is to find a way to make HOME-SF more feasible, while still ensuring the city’s desired number of on-site affordable units. Sponsors considering or currently processing residential projects on sites where HOME-SF is available should pay close attention to the legislation to see if the modified HOME-SF program makes sense for their project.

To provide greater flexibility and encourage sponsors to utilize the HOME-SF program, a three-tier system would be put in place that requires between 20% and 30% affordability, depending on the amount of additional height. Cutting through some of the details: a HOME-SF project that proposes 20% on-site affordability (at three AMI levels) would get relief from numerical density limits but no height increase. One additional story of height is allowed in exchange for 25% affordability, or two additional stories with 30% affordability. The three-tier system—illustrated in the table below—is proposed for a trial period through the end of 2019, with the city revisiting the program at that time to assess its effectiveness


For background, the HOME-SF program was approved unanimously by the Board of Supervisors about a year ago, in June 2017, along with legislation implementing the state density bonus law and a hybrid program. HOME-SF allows unlimited residential density, in contrast to the state law which only allows a bonus up to 35%. Presumably, the hope was that projects in zoning districts with set numerical density limits would choose HOME-SF instead of the state law so they could have more units. However, since the programs became law, only four residential projects have selected HOME-SF, with many eligible projects using the state program instead.

The legislation also proposes a very important procedural change: a 120-day processing period, starting on the day a “complete” HOME-SF application and plan set is submitted. This would be a significant shift from the current processing timeline of HOME-SF projects, which are given priority status but not guaranteed a hearing within 120 days. The Planning Department is recommending removing the strict 120-day limit, on the grounds that it is infeasible given staffing levels and CEQA processing requirements, and instead continuing to give HOME-SF projects priority processing.

We have found that staff is indeed doing what it can to process HOME-SF projects quickly, and they are moving faster than other residential projects; priority processing is assuredly not an empty promise. And the Planning Department does have a new policy to “target” hearings for most infill projects within one year of the Department determining it has all information needed to process the project. But a strict deadline enshrined in the Planning Code as opposed to a “target” hearing date—even if it’s not 120 days—would provide a much-needed degree of certainty currently only available to just a few kinds of housing developments, such as SB 35 or AB 73 projects.

We will continue to monitor this important piece of legislation as it makes its way through the approval process.

 

Authored by Reuben, Junius & Rose, LLP  Attorney, Mark Loper

The issues discussed in this update are not intended to be legal advice and no attorney-client relationship is established with the recipient.  Readers should consult with legal counsel before relying on any of the information contained herein.  Reuben, Junius & Rose, LLP is a full-service real estate law firm.  We specialize in land use, development, and entitlement law. We also provide a wide range of transactional services, including leasing, acquisitions and sales, formation of limited liability companies and other entities, lending/workout assistance, subdivision, and condominium work.