inflationary indexes -- according to inflationary index, as others are. where value is created through changes in zoning, fixing or stabilizing fees is lifted. so the city and policymakers are able to recognize increased value and reflect that i and impact fees -- in impact fees. quick note about the fee stabilization and the exemption through this provision -- special use district or other project-specific zoning changes that significantly increase zoning and development are exempted from this fee cap, and significance is defined as 20% increase in developable residential floor area or 50% increase in density.

then, the changes in zoning for areas 40 acres or more -- these would be more like plan areas or zoning changes to a series of districts -- the definition of upzoning or significance is defined outside the charter. a committee will be established by the director of the mayor's office of housing, economic and workforce development, and planning department to establish a threshold of significance to apply when doing larger reasonings -- rezonings and to examine those from these fees. we felt it was not appropriate to articulate that definition in the charter itself. finally, the charter will support growth in areas that are zoned for growth but lacks certain infrastructure or public realm amenities -- but lack certain infrastructure or public

realm amenities. this would be up to 10% of the fund can be used to support neighborhood improvements, community amenities such as pocket parks come streetscape amenities, pedestrian improvements, community-serving child care, things that are essential for the livability of a neighborhood but may not be in existence in some of the areas where new residential growth will be occurring. the housing trust fund will help to solve projects that have been negatively impacted by the downturn in the economy. additional with have been proposed as part of the package of measures, but outside the charter amendment itself, extending the program -- additional developments have been proposed. we intend to pursue again

separately and outside of the charter an extension -- a limited extension for high-rise development of the current fee deferral program. within the charter, it is specified that project sponsors who have been entitled but had yet to initiate construction or receive their first construction document may return to this body to request that the reduction in on-site obligation be applied to their project, so they could, if they had chosen to provide their inclusion very requirement on site, they may come back to the planning commission and request a reduction of 20%. or they may come back and modify their selection to meeting their obligation on site. again, projects that have already received their building permit will not be eligible for

this request for modification to their entitlement. finally, and perhaps most significantly, the reduction in the on-site requirement is intended to stimulate and provide incentives to market rate developers to tuesday on- site requirement. our programs that we manage at the mayor's office and housing are generally targeted at residents who make 60% a mike or below -- 60% ami or below. the inclusion their program is really our primary mechanism for creating moderate income housing in san francisco. so the housing trust fund reduces the on-site obligation while maintaining the current levels for the other options -- the fee or the offsite option.

we will also again outside of the charter be pursuing a program which will provide us -- when it is usually beneficial to the developer and to the city, the option to purchase additional bmr units, which will be critical for those units that are pursuing state financing, such as tax-exempt bond financing. we can provide further incentives to increase their affordable housing component up to 20%. it is a tool that we hope to have to allow us to increase that -- that bmr production. finally, and again, this is a programmatic component and it will be legislation we will pursue outside the charter, but it was part of our conversation in the working group.

the charter amendment will do a couple of things that we talked about -- it will reduce the on- site obligation by 20%, and it will also stabilize the affordable housing obligations for 30 years. the reduction is calibrated both in the percentage of units that are required, but also to an ami or affordability level. for ownership, our current program requires that 50% of on- site units be affordable to residents who make 90% of median income. but we also want the flexibility to, where appropriate, increase the ami level. rather than sell units at 90% ami, in some cases, it might make sense to sell units at 110%

ami, a higher rate. because that higher income targeting will increase the sales price and reduced the gap between the sales price and production cost, this program will allow us to require a developer to provide more units, more than 12%. conversely, when it is appropriate to provide deeper availability -- let's say, 70% ami -- they would be required to provide fewer units. under future alternatives, and hire am -- at a higher ami level, we could provide or units or fewer units in the cases where we are looking at deeper affordability. this would be a modification of our program that would occur outside the charter.

given that there is a lot going on here -- i have talked about a lot of stuff. quick summary -- on the revenue side, these are allegations based on -- allocations based on projecting new revenue sources. ongoing funding for our below- market rate housing production, affordable housing production, up to 120% ami. it authorizes the establishing of a complete neighborhoods program. it reduces the on site obligation and caps that. it allows for mayoral veto should new revenue sources not be available, and it is a 30- year term. outside of the charter amendment, we are looking at returning the inclusion ary threshold for up to 10 units, eliminating the five to nine requirement, a citywide bmn --

bmr buy-up program, and extending fee deferral for high- rise developments for affordable housing fees. finally, administratively, we will be implementing an extension and developing our housing loan extension program. that is the big picture. happy to address any questions that you have, but thanks for your time. commissioner fong: thank you. do you have any specific questions, or keep moving on and we will wait for questions at the end? thank you. are there any other presenters? that is it? ok, opening up for public comment at this time. public comment on this item.

no speaker cards on this item? ok, commissioner antonini. commissioner antonini: thank you. i have a few questions for the speaker. part of what i have heard is that in regards to the first responders, that the downpayment assistance would not be limited to those who are below the 120th percentile. i am not sure if that is -- >> that is correct. i am glad you brought that up. >-commissioner antonini: looking at the numbers, particularly if you had two members of a household, they would almost be by definition over the threshold. then a great question. supervisor -- >> great question. supervisor farrell offered an amendment. the programs are defined broadly in the housing trust

fund as limited to households to make up to 120% ami, but includes the provision of a and first responders, and defines those as emergency personnel -- provision of "and first responders." >> there is an understanding that as the ami increases, the subsidy becomes less. you can ask more units produced at a higher ami level, which makes sense. >> exactly. tension is that the obligation would remain consistent, even as the percentages are diminishing. commissioner antonini: in terms of funding, i understand the sources of funds, but the one part i do not understand is where bonds have been approved,

and they have a time of 30 years, perhaps, but once the bond is paid off, then i am not quite sure where the revenue source continues after the bond is expired. >> ultimately, our director can jump in as appropriate, but the revenue source is property tax within redevelopment areas that is currently directed toward servicing debt, and that debt was issued in order to generate economic activity and provide infrastructure and build housing. that is the source. it is just property tax. commissioner antonini: i understand. property-tax continues and will only get higher as the parties are sold. it is not really lengthening the time of the bond but rather using the tax increment which remains, but instead of it having to be used specifically

in the project area, it can now be used for the housing trust fund. >> that is correct. commissioner antonini: then there is the issue about the gross receipts tax, which is a separate issue that will be part of the ballot measure, but i believe i heard a figure of $13 million is the part that would have to come out of the gross receipts. at least i guess that is the initial figure. is that a figure that would grow as time went on? >> that is correct. it is not linked to the housing trust fund, the gross receipts tax measure. the general fund revenues at the discretion of the board through the budgetary process, but for the purposes of our sizing of the housing trust fund, we use a figure of $13 million in year one that would be revenue generated from the gross receipts tax. >> -- commissioner antonini: ok.

we do not need to do this today, but i think you had a very good presentation. i think it might have been instructive if we could in the future of the public or anyone what those figures are in today's dollars. i know it varies between whether there is one person, two persons -- the number of persons in the household, but it would be good to do that. >> to that point, i think that is agreed recommendation. a nice shorthand would be for a family of four, the income amount roughly correlates to the percentage. but it is a good point. commissioner antonini: ok, thank you, and lower amounts if the unisize is lower, one would presume. although, generally, many of the family members are not contributing to the income, so it probably does not drop much

for two members. >> it varies. commissioner antonini: it depends. it could be four adults that are all working or something. on loan assistance, i understood that would be done at the time the house is sold. >> that is correct. it sits as a second mortgage or soft second that is repaid with a share of the appreciation on retail. >> it would include a share of appreciation in addition to just the gross amount. ok. that is very fair because some of these systems in the past have been -- the home owner has not had any benefit because it has basically been essentially renting, but they technically are going, and some of the inclusion very systems with this

one is actually allowing the appreciation to be realized. ok, that is good. let's see -- i think the only other thing i was going to talk about is the 10% for parks, streets, child care, and other -- that is not to exceed 10%? it does not necessarily have to include that. >> precisely. commissioner antonini: that sounds pretty good. one other thing that was not mentioned and may not be part of this measure -- is there any incentive to incentivize homes with more bedrooms? our housing stock, only about 20% or 20% of our homes have three or more bedrooms, which are more for families. does it in any way incentivize building homes for larger families? >> it does not. commissioner hillis: thank you

for the presentation. you mentioned some of this is geared to getting projects out more. what percentage of projects choose that option now? >> it varies year to year. we have seen a steady decline over the last decade. i do not have the statistics in front of me, but i think -- oh, yes i do. [laughter] it is amazing. from 2002, 2011, -- from 2000 to through 2011, completed projects around 60% -- from 2000 to -- from 2002 through 2011. we would like to get that percentage of. the intention is to improve upon that. >> then the ami targets --

commissioner hillis: then the ami targets, you said moh target 60% or below. affordability gaps tend to be lower in this targets. who decides who target? >> that would be a policy decision. it is not specified over then an overall cap of 120% with the exemption or the exception for the first responders. many of our programs often target lower income than 60%. 60% is a threshold that corresponds to tax credit programs, which is a principal source of leverage funds. very quickly for the program -- >> excuse me, if i could interrupt, i think the staff

person answered the question about what the charter amendment would achieve, and if the commission would like to have a separate discussion about the goals or policy decisions that the mayor's office of housing is making in its other capacity, then that would probably be better to have that as a separate discussion at another time. commissioner hillis: one last question -- can you bond with these funds? >> yes. commissioner sugaya: the 25% rda on the infrastructure bonds once the bonds are retired will be used in this program. >> we use that figure as a calculation to size our allocation within the general fund. again, there is no direct allocation of that as a specific revenue source, but when we were

calculating the size of the initial calculation and its growth over time, we looked at and assumed 25% of the revenue that currently goes to supporting the infrastructure. commissioner sugaya: is the mayor's office or other agency -- agencies looking at the 25%? not that you know? the second question is, being a new program but trailing on existing programs and improving those -- has the mayor's office determine what the cost of this is going to be administratively? >> we have not done a budget -- administrative budget for the management, but we will do that. commissioner sugaya: thank you. commissioner fong: i need to call public comment. we have questions from commissioners, and that we have this one speaker card, so i will

go a little bit out of order. i did call public comment? public, was close. we went to commissioner comments and questions. ok. >> [inaudible] commissioner fong: thank you. commissioners, any other questions or comments? thank you. >> ok, commissioners, thank you. that would conclude the informational presentation for item 13. you are now on item 14, case

2012.0901t, threshold for application of inclusion area affordable housing. >> i would note that to the extent that it relates to the ballot measure, the same precautionary advice i gave before the prior item would apply. you may discuss and make recommendation on this particular item, but the extent that it relates to the ballot measure, may not take a position on the ballot measure. thank you. >> good afternoon, commissioners. the item before you today is an ordinance amended the planning code to move the unit numbers threshold for application of inclusion their affordable housing program. it is important to note that this ordinance would only become effective if the housing trust fund gets approval from the

voters in the november election. if the voters approve the housing trust fund and the ordinance is adopted, it would move the threshold for considering the affordable housing inclusion their requirement from residential units with five units or more to those with 10 units or more. in my presentation, i will first get a background on the inclusion reprogram in the city and then discuss the impact of this ordinance. first, the background. in 1992, the planning commission adopted the city's first inclusion very affordable housing policy. since then, the program has been modified and incrementally expanded. most recently, in 2006, the requirements were changed in several aspects. some of these aspects include increasing the inclusion requirements, additions to the

area of median income calculations, and expanding the requirement by lowering the threshold from projects with 10 or more units to projects with five or more units. the current proposal that is before you today would move the threshold back to the higher threshold of 10 or more units. this change would affect any pipeline projects that have not secured the first construction permits. as of january 1, 2013. this proposal fits in the larger context of the housing trust fund, which would provide secure funding dedicated to housing for 30 years. the housing trust fund response to the critical need for affordable housing at a time when federal assistance for housing has been severely cut and the redevelopment agency, as the major sponsor for funding

housing in the city, has been dissolved. let's now look at the five to nine unit project. when the smaller projects became subject to the inclusion reprogram in 2006, since then, there have only been seven project entitled, of which, only one has been completed. these projects, should they move forward under their requirement, would bring $1.4 million and provide three onside affordable units. the implications -- now, i will talk about the implications of the proposed ordinance. the proposed ordinance is being reported into the housing trust fund after a collaborative process through which more than 50 stakeholders of housing came to contact us. these stakeholders include

developers, affordable housing advocates, bankers, lenders, city agencies, and elected officials, all of which are not in support of the housing trust fund. staff finds that the impact of the proposed ordinance are insignificant for the following reason -- first, the residential units provided as a part of the project constitutes a small portion of the overall housing production in the city. in the past 10 years, the project constituted only 3% of residential units in the city. the second reason is that the monetary amount that the city would gain from these units remains insignificant compared to funding we would receive from the drowsing -- the housing trust fund. assuming all the five to nine projects that are under review and have not received a timely

yet would move forward to production, the city would receive about $5.4 million. this amount remains minuscule compared to what the city would gain from the housing trust fund, which would be about $68 million. in sum, this ordinance would bolster the consensus reached through the housing trust fund. the potential loss in revenue is absorbed by the housing trust fund, and the potential gain is significant. for these reasons, the department recommends that you recommend approval to the board of supervisors. i also wanted to add that since the public has heard our report, it has come to our attention that two amendments should be made. two sections mention that the threshold for exclusionary requirement is five or more

units. therefore, we would recommend modifying these two sections to be consistent with this proposed ordinance. i would like also to mention that there was a typo in the resolution that mentioned that the ordinance would be effective as of january 1, 2012. that should be as of january 1, 2013. lastly, i would like to introduce down from the mayor's office and board of supervisors who are here and have some comments about this ordinance. first, the director of the mayor's office of housing, and the housing adviser for the mayor's office of housing, and an aide from supervisor kim's office. >> good afternoon. i would like to start my remarks

by just thanking the staff of the planning department for all their assistance through many meetings of the housing trust fund working group as a city family. overall, work to try to develop an overall program. the housing trust fund was initiated -- it was something that was mentioned in the mayor's inauguration speech about the desire to build housing for the 100%. parts of the housing trust fund that clearly focused on replacing the source of funding for affordable housing due to the dissolution of the redevelopment agency, but other parts of the larger housing trust program are related to h