Small Housing Projects Could Get Boost In November

​Mayor Ed Lee has proposed an ordinance to initiate amendments to the Planning Code’s Affordable Housing Requirements for new residential construction to apply only to projects of 10 units or more, in place of the existing trigger of 5 units. The Affordable Housing Program requires housing developers to provide a fixed amount of subsidized housing at each project, or to pay an in-lieu fee to the City.

The purpose of the Mayor’s proposal is to stimulate production of smaller scale

residential projects on infill sites. 

Construction of new housing from 5 to 9 units has waned in recent years,

partially as a result of the high burden of the affordable housing program,

also known as the below market rate housing program, on smaller scale projects.  Mayor Lee’s proposed ordinance will take

effect on January 1, 2013 if adopted by the Board of Supervisors. 

Pre-Condition for Operation

of the Proposed Ordinance


increase in the threshold for application of the affordable housing

requirements to projects of 10 units or more, rather than 5 units or more, would

be dependent on the voters’ adoption of the Housing Trust Fund Charter

Amendment that will appear on the November 6, 2012 election ballot.  The Housing Trust Fund would dedicate a

certain portion of the General Fund each year, for the next 30 years, to provide

financing for affordable housing.  The

Housing Trust Fund Charter Amendment also proposes to lower the requirements

for the provision of on-site below market rate units.  The Housing Trust Fund is intended to replace

the former Redevelopment Agency, which was recently eliminated by the

Legislature, as a source of financing for affordable housing in San

Francisco.  The proposal for the Housing

Trust Fund was placed on the ballot for the November 6, 2012 elections by the

Board of Supervisors on July 24, 2012.

 The Housing Trust Fund

is comprised of three major components, as follows:



an annual contribution from the General Fund to the Housing Trust Fund for the

next 30 years.  The first year

contribution would be $20 million, plus an additional $2.8 million each year,

until $50.8 million per year is reached.



the existing on-site inclusionary housing requirement by 20%, with a minimum of

12% of units in any project provided for below market rate, or payment of a

corresponding in-lieu fee to the City. 

This would represent a reduction from the current requirement of 15% of

the total number of units in any project.



future increases to the Planning Code’s inclusionary housing requirements with

certain exceptions. 


essence, the proposed ordinance would revert the threshold for inclusionary housing

requirements to that which was in place before the Board of Supervisors’ legislative

amendments in 2006.

 It is

projected that over the next 30 years, the Housing Trust Fund would provide

approximately $1.2 billion for affordable housing production in San Francisco.

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, 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.

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