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 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 od