No Grandfathering and Increased Affordable Housing Rates for Divisadero and Fillmore NCTs

Back in December 2015, Supervisor Breed introduced legislation that would eliminate the Affordable Housing Program grandfathering provisions of Proposition C and impose increased affordable housing rates for certain properties in the Divisadero and Fillmore Neighborhood Commercial Transit (NCT) Districts. The higher requirements would apply to sites in those two districts that received at least a 50% increase in development potential as a result of the rezoning of those two districts in 2015. After stalling last summer, an updated version of the ordinance was substituted and assigned to the Land Use and Transportation Committee on March 21, 2017.

The legislation follows the August 2015 rezoning of the Divisadero and Fillmore Street corridors. Ordinance No. 127-15 rezoned the area along Divisadero Street between Haight and O’Farrell Streets to become the Divisadero Street NCT, and Ordinance No. 126-15 rezoned the area along Fillmore Street between Bush and McAllister Streets to become the Fillmore Street NCT. The rezoning eliminated any previously applicable residential density limits based on lot area. Meaning that after the rezoning, sites within the new NCTs could add any number of residential dwelling units permitted by the physical envelope controls like height, bulk, and setback requirements—affording greater development potential on certain sites within those districts.

Since the legislation was introduced at the end of 2015, San Francisco voters passed Proposition C in June 2016—which, as everyone knows, made a number of changes to the Affordable Housing Program, including raising the affordable housing requirements for on-site affordable housing, off-site affordable housing, and the in-lieu fee. The current city-wide affordable housing requirements (excluding UMU districts) are as follows:

Affordable Housing Requirements

Ordinances proposed by Supervisors Safai, Breed, and Tang (available here) and by Supervisors Kim and Peskin (available here) would amend these city-wide requirements.

In the meantime, the increased affordable housing requirement proposed by Supervisor Breed’s legislation would apply to any property in either the Divisadero Street NCT or Fillmore Street NCT that received at least a 50% increase in density from the 2015 rezoning of those districts (previously the Divisadero Street Neighborhood Commercial District and Fillmore Street Neighborhood Commercial District, respectively). The density limit in the previously existing Divisadero Street NCD was 1 unit per each 800 square feet of lot area and the density limit in the previously existing Fillmore Street NCD was 1 unit per each 600 square feet of lot area—with a few exceptions for certain parcels previously zoned RH-3, RM-4, and RM-3. The rezoning eliminated those density limits, allowing any number of units to be constructed, with building sizes restricted instead by applicable building envelope controls.

For sites covered by the ordinance, the otherwise applicable citywide affordable housing requirements would apply, except that the grandfathered rates available to projects that submitted an Environmental Evaluation Application by January 12, 2016, would not be available. Instead, the following requirements would apply:

  • Affordable Housing Fee: 30%Off-Site Housing: 30%
  • Off-Site Housing: 30%
  • On-Site Housing: 23%—with 6% of the units affordable to households earning up to 55% AMI, 8% of the units affordable to households earning up to 120% AMI, and 9% of the units affordable to households earning up to 140% AMI.

Notably, the legislation includes a provision stating that if the Board of Supervisors adopts citywide affordable housing requirements higher than those imposed by this ordinance, the higher requirements will apply.

The legislation is scheduled to be heard by the Land Use Committee on Monday, April 3.

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.