Affordable Housing Bonus Program (AHBP)
Update March 3, 2016
Milestones and Next Steps
It’s no secret: San Francisco needs more housing. Housing for everyone - of all ages, and all income levels.
In addition, San Francisco must come into compliance with the State Density Bonus Law. Simply put, this law states that all California cities must offer density bonuses, incentives and waivers to housing developments that include affordable units.
The State Density Bonus Law does not go far enough to meet the needs specific to San Francisco, and does not incentivize middle-income housing. So the City set out to design a Program to encourage higher levels of affordable housing development, including middle-income units, while providing a streamlined application, review, and approval process.
Basically, this program provides incentive for developers to build a higher percentage of affordable housing on vacant or under-utilized lots, or soft-sites.
Now, this is a pretty complicated Program that has two options: the Local Program and the State Program. We have all the information relevant to both programs available here on the website.
Here are some fast facts to help you get a general idea of what’s involved – and what isn’t.
I’ve heard this Program is up zoning most of the City. Is that true?
This Program applies to about 30,000 parcels throughout San Francisco in key mixed-use and commercial corridors. To clarify, parcels of land are not the same thing as housing units.
While this seems like a lot, the overwhelming majority of these parcels already have healthy buildings with existing housing units. On most of these sites, the existing buildings and the revenue they provide, such as rent, are more valuable than any of the development benefits offered under this Program. This is especially true when the significant costs of demolition and redevelopment of the building are considered.
This is a standard approach when making changes to the planning code – planners make changes on a district level, but they are designed so that the benefits will only be recognized on specific parcels.
Bottom line, the Program is expected to benefit approximately 240 parcels throughout the City over a 20 year period. These 240 parcels are soft sites, like vacant or underutilized lots. So for example, sites that are currently parking lots and old gas stations are excellent candidates for new affordable housing through this Program.
Put another way: There are over 240 sites in the area with zero housing units. If developed under current standards, there could be a maximum of 900 new affordable units. If they are developed under the local Program, that number would go up to 5,000 new affordable units. That is a 4,000 unit increase in the supply of affordable housing.
Actually, you could consider it up to a 5,000 unit increase, as many of the soft sites in San Francisco are currently not feasible for development under the current zoning controls.
Check out our interactive map to see which zoning districts are eligible to take part in the Program.
Does this mean we’re going to start seeing skyscrapers in the Outer Neighborhoods?
Absolutely not. Projects will be allowed to build up to an additional two stories beyond current zoning regulations. Only buildings with 100 percent affordable units will be offered up to three additional stories beyond current regulations.
The heights permitted by this program are 20 feet taller than currently permitted on a particular site, and only when affordable units are built on-site. In most cases, this program would allow parcels that are currently permitted to build to 40 feet to build to 60 feet. This height is already permitted in most parts of the city, and a height that many older buildings in San Francisco already meet or even surpass.
I’m concerned that new development will look out of place in my neighborhood.
We hear you, and we don’t want that either. Each building will be required to go through a design review process and conform with design guidelines specific to the program, ensuring it meets with the character of its neighborhood areas or commercial corridors.
I’ve heard this Program eliminates any kind of public process or noticing. Is that correct?
No. Any project participating in the Local AHBP must have a public hearing at the Planning Commission to receive entitlements, in addition to the standard public noticing processes. So this could actually increase the public process for smaller projects.
People are comparing this Program to the Redevelopment Era and what happened to the Fillmore in the 50s and 60s.
We’ve heard those comparisons too, and they are one hundred percent incorrect and misleading. This Program, in no way whatsoever, has any similarity to the redevelopment and displacement that took place in the Western Addition and Fillmore neighborhoods.
There are many differences. Here are some of the most important:
- The government directly funded housing project deals, including affordable and market-rate housing with public funding sources, including Tax Increment Financing (TIF). TIF has since been banned by the state of California.
- The government required property owners to sell the units through something called Eminent Domain, which gives government the power to seize private property. Eminent Domain is no longer used by San Francisco government.
- Entire neighborhoods were demolished and thousands of people were displaced.
- Sites must be acquired by private actors in negotiations with property owners.
- This program does not involve any public subsidies. Projects are required to provide 13 – 30 percent affordable housing and receive increased development potential to help subsidize those units.
- The Program encourages infill development on individual parcels within healthy neighborhoods, and is the first Program in San Francisco to prioritize middle-income housing to help families stay in the City. The goal of the AHBP is to incentivize additional affordable housing.
I’m in a rent controlled apartment. What happens to me if my building is torn down to build a bigger one through this Program?
Supervisor Breed has introduced a friendly amendment that limits the AHBP to projects that will not result in the demolition of a rent controlled unit. Further, the amendment directs the Department to collaborate with community groups, housing activists, housing developers, and others to study the City’s rent control housing supply.
So in other words, any building that contains one or more rent controlled units is not eligible for this Program.
What about small businesses being displaced?
Regardless of the program, whether a commercial use is redeveloped or rented to a higher paying use, there is no rent control for commercial tenants in San Francisco.
While there is no one cohesive program, there are existing policies and programs to support displaced businesses, primarily: Invest in Neighborhoods, the Small Business Redevelopment Center, and the Office of Small Business. The Mayor’s Office of Economic and Workforce Development is currently working with small businesses to identify strategies and develop programs to expand those efforts.
The AHBP program will add two provisions for businesses that might be impacted by projects participating in the program:
- A requirement that any project that participates in the AHBP would be required to submit documentation to the Planning Department that they have alerted all residential and commercial tenants of their intent to file for demolition. This notification would be required before environmental review commences – meaning that businesses would have a minimum of a 1-2 year notification. Often landlords increase rents or evict commercial tenants with very little notice, and one of the largest hurdles for small businesses is having adequate time to refine their business plan and successfully relocate.
- Priority processing - expedited review and approval of permits for relocation.
Still have questions?
Learn more about the State Density Bonus Law, the 2014 Housing Element, the Inclusionary Housing Ordinance and Proposition K.
The AHBP’s goals are to:
- Increase the numbers of on-site affordable units
- Improve feasibility of underutilized sites
- Increase availability of middle-income housing
- Expedite entitlement of 100 percent affordable housing units
The proposed AHBP includes two options: the Local Program and the State Program.
The Local AHBP
The Local AHBP will offer incentives to project sponsors that elect to provide 30 percent or more affordable housing units on-site. Of this 30 percent, 12 percent must be permanently affordable to low- and moderate-income households and 18 percent permanently affordable to middle-income households. Learn more about the definition of income levels here. If a project has nine or fewer housing units it is not subject to inclusionary housing requirements; therefore it must include a minimum of 30 percent of units affordable to middle-income households.
Projects that include 30 percent or more affordable units for low and middle-income households will be able to build more residential units and up to an additional two stories than currently allowed under existing zoning regulations. Two-bedroom units must make up a minimum of 40 percent of the total number of housing units in the building. The Local AHBP does not have a minimum housing unit threshold.
Projects with 100 percent affordable units will be able to build more residential units and up to three additional stories of residential development than currently allowed under existing zoning regulations.
The following graphic summarizes the Local Program.
Click on image to enlarge.
The State AHBP
The State AHBP incorporates one of the options available through the Inclusionary Housing Program. To participate in the State AHBP, projects must include 12 percent on-site affordable housing units and up to an additional eight percent affordable housing units on-site for very low-, low- or moderate-income households. These projects will be offered specific incentives: an increased density bonus and up to two additional stories, but only when it is necessary to accommodate increased density. Incentives are offered on a graduated scale, commensurate with the amount of affordable housing included.
This program is referenced as ‘The State Program’ because it is intended to locally implement the State Density Bonus Law. Under this program, projects cannot exceed a 35 percent increase in potential residential density.
The following graphic summarizes the AHBP State Program.
Click on image to enlarge.
Required Minimum Percentage of Affordable Housing Units On-Site to Participate in the Program
30 percent affordable housing units, including:
Option 2: If project has nine or fewer units it is not subject to inclusionary housing requirements:
5 – 20 percent affordable housing units, including:
Option 2: If project has nine or fewer units it is not subject to inclusionary housing requirements and must include one or more of the following options:
Additional Affordable Housing Units Required to Qualify for AHBP Density Bonus and Incentives
Up to a cumulative of 20 percent for very low, low, and moderate-income households
Total Affordable Housing Units On-Site
5 – 20 percent
Minimum Total Number of Housing Units Required
No minimum unit threshold; 40 percent or more must be two bedroom units
Five housing units
Density Bonus and Incentives Available
Density bonus based on height and bulk controls; up to two additional stories of residential uses
7-35 percent density bonus; up to two additional stories as needed to accommodate additional density
Learn more about the key chapters in the planning process.
Maps on where the Affordable Housing Bonus Program applies in the City.
Learn more about affordable housing under the AHBP.
Learn more about upcoming and past meetings and events here.
Read news articles related to the Affordable Housing Bonus Program.
Learn more about the Affordable Housing Bonus Program and affordable housing efforts in the City.
Menaka Mohan, Lead Planner
Paolo Ikezoe, Planner