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 housing, and this is one of those parts where the restoration of the prior limits in terms of what is subject to the inflationary ordinance -- inclusionary ordinance is something we feel would stimulate the creation of additional units where residential units have been

stalled. as your staff has stated, there have been seven projects entitled but only one completed. over a very, very long period of time. that, we hope, would change with the restoration of the prior limits. these units are clearly spread throughout the city. i know we are all focused on the large major developments downtown and the major approved project areas, but these particular developments are spread throughout the city and are part of meeting the city's overall goals of creating housing throughout the city. we clearly feel that that is a part of the overall housing production that we want to encourage in the city, not just the downtown development, but throughout the neighborhoods. we urge your support of this particular item. thank you very much.

commissioner fong: thank you. >> the mayor transmitted to you before your meeting a letter asking for your support to restore the exemption of buildings with less than 10 units from the city's inclusionary housing program. the council and community housing organization also transmitted a letter of support. i have copies for you that i would like to provide. the council of community housing organizations was an integral part of the housing trust fund working group. i want to be very -- you know, i want to reserve time for other folks here, but i just wanted to reiterate a few things, one of which is the overall goal of the mayor's initiative was to be able to create housing, both affordable, market-rate and

below-market-rate. the context for which the working group members came in was to be able to increase production. i think was integral to that is just understanding, i think, the context in which that focus was provided. as the director has commented on, i think we are at that point because we have been planning for over the last decade, particularly on the eastern part of the city, to grow the city, to grow it in an equitable manner. what we have before you, i think, is a measure that would help to stimulate balanced growth. in addition to some of the larger developments we have, i think an integral component of that balance is giving small developers the opportunity to bring their products to market.

the housing trust fund working group that was in many ways painstakingly put together -- it took many hours of effort and getting people from different points of view to get a -- together, and this component is as essential as the other elements of the housing trust fund. with that, we ask for your support of the measure. thank you. commissioner fong: thank you. >> good afternoon, commissioners. i am a legislative aide for supervisor kim, who was unable to be here today and requested i represent her thoughts. we understand that the current exemption legislation before you was part of the process of building consensus for the housing trust fund that was a

result of the negotiations and hard work of the mayor's staff and key stakeholders. during the drafting of the housing trust fund charter amendment and in particular, this companion legislation, the super -- supervisor expressed her desire to explore reduced inclusion their requirements -- inclusionary requirements. we intend to co-sponsor this legislation and work closely with small developers and the mayor's staff to explore inclusion their requirements for residential buildings with five to nine units that could address any direct or indirect impact the market rate housing type has on a portable unit housing rates in san francisco and to address any unintended consequences that this exemption -- of this exemption that may result in inclusionary

housing requirements appear this requirement could be less than what is required to stimulate production of five to nine units and develop a stream of funds that could facilitate the preservation, rehabilitation, and/or construction of smaller affordable use buildings. she wants to work with staff to produce a sample pro forma that would generate the intended stimulant effects as described previously and also if it scales up to the inclusion very housing requirements of 10 units. as discussed in the staff report, there has been no such sample for this residential building tight. as the legislation moves forward to the board, we intend to continue again to work closely with small developers, key community stakeholders, planning, and the mayor's office of housing staff to better understand the challenges of small developers and to explore

an idea of reduced inclusion their requirements for these smaller residential buildings. we hope you will consider this idea in your discussion today. thank you. commissioner fong: thank you. i think that is it. is there any public comment on this item? >> commissioners, i am with the residential builders association. several of my colleagues and i will endeavor to summarize city housing trust history. mayor ed lee recognizes the need to replace steeply declining affordable financing for housing

production with a reliable and continuous revenue stream, but he also recognized the need to create a stimulus for a crippled and acutely depressed local housing industry. to that end, the mayor convened the big tent working group of all housing trust stakeholders. large-scale developers, non- profits, local, indigenous, medium to small builders -- in short, it covers and a representative group of stakeholders from across the industry spectrum -- they joined together to make common cause, and the impetus for that was a common calamity. a prolonged and severe economic depression in san francisco put the construction industry. this economic disaster was exacerbated by the burdensome public policies, including the legislation that was wholly unsuited in the aftermath of an

economic downturn. emblematic of that was the legislation been crafted for five to nine unit projects and inclusion very -- inclusionary requirements. i ask that you ta the testimonyt characterizes this as a concession to achieve consensus. it would mean a part of the housing trust fund working groups unanimous an unending commitment to a shared objective to be more fully realized in this fall's election. commissioner fong: i have a number of speaker cards. for the safety of the room, i will call them in batches. if you want to line up on the side of the room and try not to block the televisions, that would be great. and the commissioners, residential builders association. i will give you a brief history of the five to nine units. commissioner fong: did you not

quite understand? it seems like you would all have an order in which you would like to present, it seems you could line yourself in order that you have already preset. i need you all over there. >> thank you. inclusionary policy was first adopted in 1992, amended in 2002 and again in 2006. in 2006, a technical advisor committee was formed. its members were the council of community house organizations, receive housing, asian neighborhood design, south of market community action network , hash jr. foundation. it is important to state that the city did not include any

member or a representative from the small business community. as a result, the following recommendations are move forward. to increase on-site requirements from 10% up to 15%, and offset from 15% to 20%. to lower the threshold for inclusionary requirements from 10 to five units or more. a provision was also included to be constructed within a one-mile radius of the principal project, and afterwards, there was legislation introduced and approved to lower the inclusion error percentage on buildings of 120 feet and taller down to 12%. while much of the financial analysis was substantiated by feasibility studies, the smallest project studies -- that it was 100 units-plus project,

as represented on page 22 of the final analysis. it is incomprehensible how the planning department can make policy recommendations for inclusion very housing requirement on five to nine-year project when, in fact, the five to nine-year project were never studied. i want to reiterate this, commissioners -- you have a model you are about to put inclusion requirements, but you never studied that model. in fact, the closest that you have, is a 100-unit building. there is no comparison between a 100-unit building and a five to nine unit building in economies of scale. it is not even the same hemisphere. i really want to reiterate that point. when you do study, study the model. if i get the overhead projector for just a second. thank you. not sure if you can see that totally, but