Recent Developments in Land Use:  Affordable Housing, PDR Districts, and Residential Expansion

​Controller’s Office Releases Inclusionary Housing Final Report

In June 2016, San Francisco voters passed Proposition C, a Charter Amendment which made significant changes to the City’s established Inclusionary Housing program. Proposition C made a number of changes to the program, including raising the affordable housing required for on-site affordable housing, off-site affordable housing, and the in-lieu fee.  Following the passage of the Charter Amendment, the Board of Supervisors charged the Controller’s Office with preparing a report on the economic feasibility of increased inclusionary housing requirements.

The Controller’s Office convened a Technical Advisory Committee (TAC), with representatives appointed by the Mayor and Board of Supervisors, to assist with the report.  The report was issued this week.  The general thrust of the report’s recommendations is to treat rental and for-sale housing differently, and to reduce the affordable housing requirements.  The report recognizes that increased inclusionary housing requirements result in reductions in the supply of market rate housing, and increases in housing prices.  A summary of the report’s recommendations is as follows:

  • The City should impose different inclusionary housing requirements on rental and for-sale (ownership) properties.
  • The City should set the initial onsite requirements from 14%-18% for rental projects and 17%-20% for ownership projects.
  • The City should set the inclusionary fee option at 18-23% for rental and 25-28% for ownership to maintain equivalence with previous on-site recommendations.
  • The City should commit to a 15-year schedule of increases to the inclusionary housing rate of 0.5% per year.
  • The City should impose additional affordability requirements for any 80/20 project financed through the City’s financing approval process.
  • Consistent with current practice for any project to which inclusionary requirements apply, the City should allow projects that are utilizing the State Density Bonus to combine provision of on-site units for the base portion of the project with payment of the fee for bonus portion of the project.
  • The Controller and TAC should reconvene in 3 years to reconsider feasibility, density bonus, and other issues, and produce an updated report.

Two members of the TAC submitted a dissent to the report’s recommendations.  A copy of the report, including the dissent, is available here:  Final Inclusionary Housing Report February 2017

Prohibition of gym and massage uses in PDR Districts

City policy makers are considering yet another restriction on uses in Production, Distribution and Repair (PDR) zoning districts.  The Mayor and Supervisor Ronen have introduced legislation amending the Planning Code to prohibit gym and massage uses in the PDR districts.  Existing law allows gym and massage (foot/chair) uses in these districts, and permits with a conditional use authorization massage establishment uses.

Planning Code Section 210.3C currently allows the Planning Commission to permit certain otherwise prohibited uses (specifically office and institutional uses) within the PDR-1-D (Design) and PDR-1-G (General) zoning districts, if the proposed project also includes new PDR uses, covering at least 1/3 of the total gross floor area developed.  The proposed legislation would allow new gym uses within the PDR districts as provided in Planning Code Section 210.3C.

Residential Expansions

Planning Code Section 317 controls the loss of residential units through merger, conversion and demolition.  The demolition provisions of Section 317 have been problematic.  If a residential unit is being demolished, a conditional use authorization from the Planning Commission is required (with certain exceptions in the RH-1 Districts), even if the unit is being replaced with one or more dwelling units.  Trying to avoid this conditional use requirement has led to problems determining whether a dwelling unit is actually being demolished, or is “tantamount” to demolition.

To address this problem, the Planning Department is considering doing away with the tantamount to demolition standards, and instead linking the conditional use requirement to the floor area of the proposed dwelling unit.  The Department originally had set the floor area requirement at 3,000 square feet, but that proved to be problematic City-wide, with the varying sizes of residences and properties.  Now, the Planning Department is considering an FAR-based standard.  A new standard such as this should be helpful in simplifying the Section 317 conditional use requirements and, hopefully, helping avoid unnecessary conditional use hearings.

The Planning Department is targeting this summer for adoption of the new controls.  We will continue to monitor the proposals, and keep readers apprised of developments.

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.