By Thomas K. Pendergast

District 4 Supervisor Katy Tang’s program for incentivizing developers to build “affordable” or below-market-rate (BMR) housing in San Francisco has found no takers since it was announced last year, so adjustments were made.

Dubbed Home-SF, projects seeking to use the city program to construct new rental or condominium units were previously required to provide a minimum of 30 percent of new units as BMR on-site units to qualify, using a standard called Area Median Income (AMI). The AMI standard used by San Francisco is based on the overall average income of three counties: San Mateo, San Francisco and Marin.

Using that standard, Tang claims, the Home-SF program will create affordable homes for families making between $60,000 and $140,000 per year for a family of four. These are households for which no subsidized public housing programs previously existed, she said.

A breakdown of the original program showed that in order to  qualify, 12 percent of the units would have rented at 55 percent of the AMI, or sold at 80 percent of the AMI; 9 percent of the units would be rented at 80 percent of the AMI, or sold at 105 percent of the AMI; and another 9 percent of the units would be rented at 110 percent of the AMI, or sold at 130 percent of the AMI.

At a SF Board of Supervisors meeting on July 17, Tang introduced legislation to amend the Home-SF program in the hope that it will be more attractive to developers.

“Since the passage of Home-SF we have found that many project sponsors have opted to either build projects under the state’s Density Bonus Law, which is far more generous and doesn’t have nearly as many requirements,” Tang explained to the Board.

“So, of course you can understand why project sponsors want to opt for the state density bonus law, or they’re just building projects that don’t even meet the (volunteer) inclusionary housing requirements.”

Under the Home-SF program, developers who meet Home-SF housing requirements can add up to two additional floors to their projects, and if they make it 100-percent affordable they can add up to three floors.

By contrast, the state law only requires 5 percent of units to be affordable to very-low income households (those that earn less that 50 percent of the AMI), 10 percent of units to be affordable to households earning less than 80 percent of the AMI, and 10 percent of units affordable to households with incomes up to 120 percent of the AMI.

The revised Home-SF program passed by the Board of Supervisors in July uses a new three-tiered system:

Tier 1 of the program would relieve density controls, which are implemented by the city to control population densities, but give no extra height if the project is 20 percent affordable. The breakdown would be 10 percent of the units being offered at 55 percent of the AMI for rentals, or 80 percent of AMI for sales; 5 percent of the units being offered at 80 percent of the AMI for rentals, or 105 percent of the AMI for sales; and 5 percent of units offered at 110 percent of the AMI, or 130 percent of the AMI for sales.

Tier 2 would also relieve density controls plus allow for one extra story if the project is 25 percent affordable. This breaks down to 10 percent of the units being offered at 55 percent of the AMI for rentals, or 80 percent of the AMI for sales; 8 percent of the units being offered at 80 percent of the AMI for rentals, or 105 percent of the AMI for sales; and 7 percent of the units being offered at 110 percent of AMI for rentals, or 130 percent of the AMI for sales.

Tier 3 would relieve density controls as well, plus allow for two extra stories if the project is 30 percent affordable. This breaks down to 10 percent of the units being offered at 55 percent of the AMI for rentals, or 80 percent of the AMI for sales; 10 percent of the units being offered at 80 percent of the AMI for rentals, or 105 percent of the AMI for sales; and 10 percent of the units being offered at 110 percent of the AMI for rentals, or 130 percent for sales.

At the July 17 Board of Supervisors meeting District 11 Supervisor Ahsha Safai commented on the revamped Home-SF program, which has been dubbed Home- SF 2.0.

“It has been somewhat frustrating to see developers not opt into this program,” Safai said. “I think this is a thoughtful amendment. This is a way to incentivize developers to choose this option over the (state) Density Bonus Program. The new amendments that are made here are essentially giving options for density decontrol and one floor or two floors … I think that’s a very creative and thoughtful solution as a way to incentivize this as an option over the Density Bonus Program.”

The changes to the Home-SF program were approved on July 31 by a unanimous vote of the Board of Supervisors.