public comment? next item, please. >> commissioners under your regular calendar you also considered items 9a and b and places you on 10, adoption of procedures manual update. >> good afternoon, commissioners and again planning director staff. this item brand new. there are two related items the first is the adoption of the procedures manual for inclusionary affordable housing and you will remember you had an extensive presentation from the mayor's office of housing november 1st, just an informational hearing. since that hearing date, the mayor has introduced an ordinance that would make the conforming amendments that are needed, if you would choose to adopt this procedures manual today. so we have three staff from the mayor's office of housing who will give the presentation today. dan adams.

brian chu. and i'm sorry -- will be making the presentations today. if you do choose to adopt the procedures manual, we'll go into the associated ordinances as the next item. >> good afternoon, commissioners we have divide up our presentation into two segments. i am here just to give a brief overview of some of the demographics of the program that was requested last time and dan adams will come up and walk you through some of the small changes and additions that have been made in the procedures manual between the time of the last informational meeting and today's meeting. and i do have some handouts i can leave with you for some of

the information that i'm going to talk to you today. you had asked for general information about the number of units in our program and who is in our units? so briefly, we have approximately 1280 completed units in our bmr program. of those approximately 860 are ownership units and 420 are rental units. again i have all of this on a handout that i will give for you for a total of 1280. we have an additional 1200 units in the pipeline that are ready to go. of those the percentage of rental and ownership still shift as we go through the development process. in the past as miss egan mentioned, ownership units used to be the majority to be

produced. you had also asked a little bit about the demographics especially in terms of race and ethnicity as to who is in our units. so we took a snapshot and looking at who is our rental and ownership households of december, 2012 and compared that to the relevant citywide distribution of race and ethnicity. so let me start on the rental side. it turns out that the number of households of color in our bmr program overall is actually overrepresented. there is a larger percentage of asian african-american latino and more specifically for

people who might be interested, for example, the percentage of asian pacific islander households in the 0-50 ami is 52% city. african-american households, in the 0-50% ami and rental units it's about 12%. latino hispanic families, 14% citywide, about 20% in our rental units. the one ethnicity that is somewhat underrepresented is white. so that is about 39% citywide and 0-50 ami, and just about 14%. n our in our rental units. we don't have race and ethnicity for every single units. we have tried to collect it

over the past five, six years. alt least it's a snapshot of our units. the number of households of color are overrepresented in the ownership, but the distribution is different than the rental side. on the ownership the number of asian families is a significant increase over the number of ami households would be in the 50-95% ami range. for that population, although asian-pacific islanders households comprise 28% of the 50-80 ami, they compose 60% of people that are in the ownership pool. african-americans are underrepresented, as are latino and hispanic families. african-americans are about 7%

citywide in that demographic, just about 1%, very low number in our ownership units. latinos 13% citywide and 5% in our bmr units. in terms of the outreach and the marketing for those units, because i think those demographics automatically lead to those questions. through the time i have been there with the department, so i started there about 2005, we have had grants to a number of strategic community-based organizations in order to increase our outreach, specifically on the homeownership side. so we have worked specifically the asian, inc., with san francisco

housing development corp., san francisco's lgbt center, et cetera. specifically to try to target outreach to the api lgbt latino and african-american communities, as well as working with homeownership sf, which was a elaborative of all the different homeownership organizations, as well as consumer credit outreach. there are additional barriers to access those units. whenever anyone contact ours offices and said can you contact about bmr us about opportunities, everybody gets an email blast about an opening in the program.

we approved the marketing plans of each of the development s where developers post on craigslist and other publications. we have also been attempting to assess what more we can do? clearly the numbers on the rental side, i think, we're rear view mirrorly relatively happy with. on the ownership side we have been working with our homeownership counseling groups to determine what is it that proves to be the stumbling block?

one is the timing to actually successfully apply. we have attempted to do, i think, a better job with the outreach opportunities to make sure there are families that are able to apply. we can always do better with that. but what we have been noticing more is that for many of the families the credit readiness. so even if we can get people in and of course for the unit as miss egan described you have to go through a lottery process. so even if someone is picked no. 1 or no. 2 in the lottery, it's often the credit readiness of the credit scores and it's something that you can usually fix within two, three weeks. it takes months and sometimes longer to clean up that credit. what we have now shifted

towards is expanding what was more traditionally thought of as homeownership counseling. they themselvess have recently shifted their model and so homeownership is one tool towards the larger picture of financial literacy and asset-building. because if you don't have that credit score you are not only to be able to fulfill your credit requirements for homeownership and even rental. the tricky thing we found for any financial literacy program, for it to be effective, people usually only attend those courses when it's linked to an imminent financial event such as i want to buy a house. it's difficult to bring someone in

to say a year from now you might be ready to buy and house and let's work on your credit score now. but that is the challenge that we need to work on. so that is why we're going to be working with our community-based organizations moving forward to do so. one exciting opportunity as you know with the passage of prop c, we do have a pot of money for housing stabilization. so what we're going to be doing in january through june is working with our neighborhood organizations, including all the homeownership sf organizations, to try to figure out how we can restyle and retune our homeownership programs in order to make them more successful in the long run. a couple of the questions you had requested was how many owners also benefit from having a down payment assistance linked to our bmr units? so we have about 83 owners out of the total of 860 that have been received assistance. we usually are able to provide down payment assistance for

about 20bmr owners a year. we have a combined source of state dollars and a little bit of federal dollars, so we can afford to give out about $750,000 a year with our down payment assistance, specifically to bmr owners. i think those are the major points that you had asked about that are program-wide, if there are any questions i would be happy to answer those before i bring up mr. adams. thank you, mr. chue. looks like no questions, but the commissioners may have questions after the presentation. >> thank you, commissioner. >> good afternoon, dan adams with the mayor's office of housing. very happy to be here to submit your approval for the procedures manual for

inclusion. we were here before you for an informational update and during that hearing my colleague sandra egan did a good job. i have a more narrow task, which is good because i have a much more narrow skillset in that area. so i will read through the minor modifications that have happened since the last hearing. we have done additional outreach. we have gotten some input from other stakeholders, internal that have generated a few reviews to the manual. again the housing trust fund -- the passage of the housing trust fund will generate some modifications to the manual and we plan on come back to you next year for that update. this update doesn't contemplate

or contradict any of the housing trust fund work. i'm going to refer to a memo included in your packet, which outlines the few changes that have happened since the last hearing. the first there was a clarification had a we made that bmr on-site ownership will be priced at 90% ami. we wanted to make that explicit and we added the phrase for those units not able to save, "the owner must make good-faith efforts to ensure that before any modification to the sale price is made, that the owner during a six -month period is making a good-faith effort to sell the unit under the current program." similar to the first point, we're clarifying that the bmr rental pricing is at 65% ami, also having included a range in the earlier version. we're provide something flexibility in terms of the

annual certificate if he annual certificate if he annual certificate if he xinc c: program filesxinc c: stenoprogram filesxinc c: stenoprogram filesxinc c: stenoprogram filesxinc c: ificate.trn /r/t}{( recertification of income. the fourth point compliance is referenced to the land dedication to give additional instruction to the planners to identify in the review process whether the land dedication applies to a single site or multiple sites in cases where there are multiple parcels being dedicated under the land dedication model. also under the land dedication model, we make clear that the approval letter that moe issues can change, but only under

situations based on new information. but approval by the mayor and the board of supervisors is of course final. and finally, important insertion under our bmr rental to ownership conversion rule. where the right of first refusal for the existing resident includes pricing at the original bmr rental rate. or the actual income level of the renter, in cases where the existing occupant or tenant, their income has increased above the rental level. the pricing of the unit under that first right of first refusal scenario would be priced per their actual income level. so those are the highlight modifications that i wanted to bring forth. and i too will be here for any questions. >> thank you. >> thank you.

>> why don't we take a few clarifying questions first or public comment? >> public comment. >> let's take public comment on this item. seeing none, public comment is closed commissioner antonini. >> thank you, i had a couple of questions on the memo. and i am led to believe when i first saw this, i thought it was the entire program. but this is only a memo dealing with the resale of existing ownership units and then dealing with the other entities here. for example, as i recall unless it's changed, your for-sale ownership units are 100 ami and it can be up to 120 in some instances, but i believe it's always been at 100 ami has been the price for-sale units. and then the rental units at 60 ami? >> that is correct, but there

has been adjustment. there are two ami tables that we use in san francisco. there is a tri-county, or three county ami table. at one point the board of supervisors directed us to use a san francisco-specific table and given the relative wealth of our adjacent counties to the south and north, san francisco's ami is about 10% lower than the tri-county ami.

so san francisco -- 100% ami is equivalent to 90% in san francisco and that is called out here. similarly on the rental side, it coordinates to 55%. >> i understand what you are doing, but i don't really understand why an off-sale unit would be at 70 and not 90? what is the difference between that being on-site and off-site? >> i think my understanding that this policy is a consistent policy that we have had. unfortunately i can't speak to the distinction between those ami levels. how to i believe it's not a new policy. it's consistent with what we have seen previously. >> it's significant for me and any time we approve these projects for

sale that was at the tri-county and i understand your adjustment. the other problem is the downward adjustment raises the subsidy, because as you know, when you do an ami unit, it costs more at the lower income level because the price you charge has to become compensatorily lower and therefore, the subsidy from the rest of the project to make that is higher. so what you are doing is making it more difficult for middle-income people to buy market-rate units by making them more expensive. although i know your program doesn't influence the cost of housing in the whole city. but the worst part of it is t probably doesn't address that income group from the 90 to the

120, or 130th percentile. so those are some arguments i would make for rethinking the percentages that you put on there. >> if i could just in really quick on that? >> go ahead. >> one thing to keep in mind is the on-site and off-site are options that can be chosen by the developer. so there is no requirement that the developer choose an off-site option unless it becomes economically prohibitive, the off-site is an option that is offered to the developer. and i do think it provides some of the an incentive to choose an on-site option, because the ami levels would be higher for the on-site option and thus as you point out the difference between the sales price and the cost of production would be less. so the developer contribution would be minimized. that is consistent with a future policy under the housing trust fund, which will further provide incentive for

developers to provide their units on-site by reducing the on-site inclusionary requirements. i want to point out there is no requirement for a developer to choose the off-site option if they see it as more expensive. >> they would have to have a lower income to qualify? >> it extends to a different population that. is correct. >> that is the only thing. there are good arguments to be made both on-site and off-site and we have heard horror stories about the on-site units where people can't pay the homeowner's association fees and there is sometimes resentment in some buildings and sometimes off-site has advantages particularly if it's in the same vicinity. but that is not what we're talking about today. then the land dedication

option, i have seen one project coming in future that will use that. it is a little bit disturbing because if you have an ownership project, and you are trying to do something that is similar to that land dedication doesn't have requirements. you could take the dedicated land and the mayor's office of housing could put as many units as it wants on there at any income level they want to do, as opposed to something that mirrors the project for which the land dedication is being done. i think that is really not consistent, if we're trying to get a cross-section of incomes, a cross-section of opportunities, it would seem that the project should have similar income levels and if it's for-sale, on the project, it should be for-sale on land dedication. i know you can get more, smaller units on the land dedication, but that might not always be the best thing for the city, where we don't have

enough larger units. so just some of my reflections on this. finally the pricing of bmr units to ownership. i know it's a tricky subject. what you are trying to do is allow the existing renter to buy the unit. and it would be based upon his or her present income as opposed to the income that they had when they first got into the unit, when they were low enough. >> should that income have risen above the ami level. >> if it's significantly lower than what is normally the percentage for ownership, you are sort of giving them more of a bonus, you know? allowing them to get into it. whereas it might be normally, you would have other people's bidding on it who might have incomes that are a bit higher. so i like to see right of refusal a good thing, but that

has to be carefully crafted. >> those are some of my thoughts. >> commissioner hillis? >> do you know how many units that were completed were offsite/on-site, the break down or a general estimate? >> shandra touched on this in our presentation briefly. do we have that data with us today? in terms of projects about 70 plus per cent of the projects have chosen on-site. in terms of units, it's 60 plus percent of the units. i dent have the off-site. it's the least chosen option. >> >> those tend to be 100%

affordable? >> or to be mixed in with a portion of another development. and anecdotally they seem to be 100% affordable, but i don't have the data. >> if you are off-site, are you able to take advantage of tax credits or some other sorces of funding? >> no, it wouldn't align with a kind of 60% ami tax credit and, in fact, the program prevents you from meeting your inclusionary obligation through the taking advantage of other subsidies. so we wouldn't see that alignment. >> so they are generally done not with other subsidies? >> that is my understanding. the 70% threshold is in the code. these are great questions and policy questions to come back and address, but our procedures

manual update doesn't contemplate a change to that. >> i wasn't familiar with the offsite ami was encouraged. there is some reason if the ami is lower off-site, that is some rationale to have them offsite? >> i can come back and report on that. i think it's a very fair question. certainly on the face of it it means to get deeper affordable, . >> i'm sorry, deputy city attorney susan cleveland knowles, just to correct one thing mr. adams just said, the current code does not provides that if you are doing a tax-exempt project you are not subject to the inclusionary housing program at all. the ordinance that you will hear in your next item puts the tax exemption projects back

within the rubric and provides an exemption to what mr. adams stated. gemly you are not allowed to use subsidized units for your inclusionary units unless you are a california debt limit allocation project using 4% credits. so that will be in your next all right, but it's also reflected in this new procedures manual. so it's a small technicality, but for some projects, you will be able to have a slight subsidy, but you have to provide more units at deeper affordable. >> commissioner borden? >> i wanted to thank you -- i was one of the commissioners who asked for a lot of this data and i do hope that you work more around the issue that you talk you ed about. it seems like that fica score issue would be a problem and i

understand it could be a problem with public housing as well and that is something that we need to be more proactive in working with tenants. and so i don't know to the extent that the housing trust fund legislation, i don't think it ever really dealt with that issue, but it might be something to look at from a larger policy standpoint. >> certainly. >> so i appreciate that. in terms of the pipeline of the 1200 bmr units, do you know where most of those are in the pipeline? are those projects approved and not just constructed? >> maybe i will call up our data folks here. >> my understanding is that when we pulled that -- i will have to get back to you on that -- that they are all projects that are is gone through the