>> good afternoon. welcome to the san francisco board of supervisors land use and economic development committee. my name is scott wiener. i am the chairman of the committee. to my right is supervisor jane kim, the committee vice-chair, and supervisor david chiu, a

member of the committee will be joining us shortly. i want to thank sfgtv and specifically nona melkonian and caroline luber for broadcasting today's committee hearing. madam clerk, are there any announcements? >> yes. please make sure to silence all cell phones and electronic devices. completed speaker cards and copies of any documents to be included as part of the file should be submitted to the clerk. items acted upon today will appear on the april 2nd board of supervisors agenda unless otherwise stated. >> okay, thank you. and we're going to pass over items 1 and 2 for the moment and start with item number 3. >> item number 3 is a resolution adopting a freeway agreement with the california department of transportation (caltrans) for a portion of state highway route 101 from south van ness avenue to golden gate avenue; and authorizing official acts related thereto. >> ms. devine from the department of public works. ~ 101 >> good afternoon.

this resolution would authorize the department of public works to enter into a freeway agreement with caltrans. there we go. in yellow is shown how we get on route 101 now and in pink is shown how we get off of 101. prior to the earthquake, the central freeway was designated 101 and as part of the central freeway replacement project this is to adopt the route designation between the caltrans right-of-way and the city streets. so, it's pretty straightforward. maintenance has already been taken care of in a separate agreement and i'd be pleased to answer any questions that you have. >> thank you, ms. devine.

colleagues, any questions? supervisor kim. >> [inaudible], i just had a hard time. ~ seeing the street names. >> okay. >> so, where is the route exactly, the the black line? it looks like it's going through a parcel. that's why. >> it doesn't actually go through a parcel. if you're coming northbound on 101, you get off on mission street shown in pink here. and then you continue up south franness [speaker not understood]. if you're going southbound you're on van ness. it routes you to mission street and then there's an entrance along division. also you can get onto 101 coming from octavia on the elevated ramp and on 101, you can also come southbound on van ness and go around this loop. so, none of these are actually

on parcels. they're either caltrans right-of-way or city right-of-way right now and it's just to redesignate it from going over here. >> got it. thank you so much. now, it's just hard to look at the maps. it looked like van ness was going through a parcel but that's actually just van ness avenue. >> it is. >> thank you. >> thank you, colleagues. any additional comments or questions? okay. we will open it up for public comment. is there any member of the public who would like to speak regarding item number 3? if so, please come forward. okay. it looks like there is no public comment. so, public comment is closed. [gavel] >> colleagues, can we have a motion to forward item 3 to the full board with recommendation? >> so moved. >> okay. and can we take that without objection? that will be the order. [gavel] >> thank you. madam clerk, can you please call item number 1? >> item number 1 is an ordinance amending the san francisco planning code, section 401, and provisions of the inclusionary affordable housing ordinance, sections 415 et seq., to update and clarify provisions of the inclusionary affordable housing program by providing a cap on rent increases, clarifying the timing of off-site

developments; requiring rental units that convert to ownership to sell at less than the price for ownership units under certain circumstance; establishing pricing for affordable single room occupancy units; changing the status of projects using california debt limit allocation committee tax exempt bonds so that such projects are subject to the program, but that units may qualify as on or off-site units under certain circumstances; allowing income levels of qualifying households to exceed those specified in certain situations; authorizing the mayor's office of housing to change a monitoring fee to verify occupancy of affordable units; making technical clarifications and corrections, and making environmental findings and findings of consistency with the general plan. ~ ordinance >> thank you. and item number 1 is sponsored by the mayor. and i do have amendments that have been requested by the mayor's office of housing and, so, i will distribute those. the amendment is to add an uncodified section to the ordinance providing that the exemption from the inclusionary housing program for california debt limit allocation projects continues to apply to any project that as of today has already received approval from the planning commission or the planning department. dan adams from the mayor's office of housing is here to speak to the legislation and to the proposed amendment. mr. adams. >> thank you, supervisor wiener. thank you, supervisors, for the opportunity to present to you a series of updates and clarifications to our inclusionary program. and i think it is an apt title to the ordinance. what is before you is a set of refinements to our program. it does not represent any kind of major policy changes, but i do want to take a brief moment

to walk through what those modifications are. to start out, however, i'd like to bring up ann marie rogers from the planning department to summarize recent recommendations from the planning commission. >> thank you. ms. rogers. >> good afternoon, supervisors. ann marie rogers, planning department staff. i just wanted to [speaker not understood] reiterate the planning commission's commitment to inclusionary housing program and they feel these updates are crucial to the success and clarity of the program. they originally recommended approval in december of last year and there are some recent additions that are before you and they just last week, they recommended approval of those. so, here are their recommendations from last week. and i reviewed the proposed amendment and everything is in line and thank you very much for having us here today. >> thank you, ms. rogers. mr. adams? >> so, as ann marie mentioned, the planning commission last december approved an update to our procedures manual and that update really codified a series of best practices and lessons

learned over the last five years of managing the program. we're very pleased to, to have inclusionary program which is really considered one of the best around the country. and i want to recognize shondra eagan who is here with us to answer questions to really bring in the program to a level where it attends to a lot of need in the city. so, the planning commission approved the update to the procedures manual. it included a number of modifications that require adjustment to the planning code through legislation and that's what we're here today to review with you. in addition, we're taking advantage of the legislation to do just a couple of clarifications that result from the recent passage of prop c. so, what i wanted to do is first kind of walk through the modifications and clarifications related to our inclusionary program update. and then i'll talk about the couple of amendments that we introduced just last week addressing prop c. and i'm going to just go through the [speaker not

understood] digest, it does a good job of summarizing the modifications. and on the second page of that are a series of bullet points that reference the clarifications we're making through legislation to the planning code. the first is that in this legislation we're providing an explicit cap on rent increases. landlords who own rental units under the inclusionary program cannot bank the increases in rent level. so, the rent levels increase as the area median income increases and landlords need to be judicious about updating those changes be they an increase or a decrease annually. if they fail to update those increases, they won't be able to then bank and charge in a lump sum to existing tenants. we're also clarifying this is consistent with our current policy, but clarifying for those developers and owners who choose to meet their requirement through an off-site option, the off-site units need to come online. at the same time or in advance

of the principal project as demonstrated by a certificate of occupancy. so, we're just making that clarification. this is an important -- the following is an important clarification given the number of rental units we're seeing in the program for years predominantly the program produced ownership units but given changes in the market we're seeing a number of new rental unit projects. and our ordinance clarifies the requirements by which a rental project converts to ownership. specifically, it calls out that the rights of a tenant has currently and will continue to have right of first refusal. but it also makes explicit that the sales price of that unit as it converts excuse me, from rental to ownership shall be priced at the rental level. which in most cases is currently 55%. so, to take today's rent levels as an example, rental units are priced at 55% ami. ownership units are priced at

90% ami. in order that the current tenant have an ability to purchase the unit, they get a right of first refusal and the pricing of that unit shall be at the rental level. or at the tenant's current income level. so, if the tenant's income has increased it will be priced according to the ami that corresponds to their current income. if that tenant does not take advantage of the opportunity or is unable to, they'll get six months to leave their unit, a relocation allowance and then the unit can be priced at the ownership rate. we also establish a pricing category for s-r-o units where none existed previously, at 75% of our studio pricing. so, that's a new category. we also are collecting up or including in the inclusionary program projects that take advantage of tax exempt bond financing as issued by the california debt limit allocation committee.

project sponsors can take advantage of this financing mechanism as a way to meet their inclusionary requirement, though they have to provide more units at a deeper affordability. we would like to -- currently those projects are exempt from the inclusionary program monitoring and oversight requirements. this legislation would mean that they would be included in those requirements. the amendments we'd like to make today and that supervisor wiener referenced earlier is that we want to make clear that for projects that have already received their planning approvals as of today will be exempt from this provision. so, this will be a new, a new inclusion in our inclusionary program for projects moving forward. the projects that have already exceeded their planning approvals will be exempt from that and that's the language that was referenced earlier. finally, we have in the ordinance language that allows us to under certain circumstances increase the number of eligible buyers that we have available for

inclusionary units by increasing the ami level of eligibility. so, the pricing won't change. the pricing of unit levels will stay consistent. but in certain circumstances, for instance, where new units come online, developers and owners will be able to price the units, pharmaceutical, at 90% ami, but include eligible buyers who makeup to 100% ami and we found that our pricing mechanism was so tight that we were ending up with a very limited pool of eligible buyers. so, we've allowed for some flexibility in increasing the eligible income level. upon -- and further flexibility for those projects that are unable to find a buyer after good faith efforts for a period of six months, our department has discretion to increase the eligible ami level up to 20%. so, in my example previously up to 110% ami. those would be on a case-by-case basis after a

developer and owner or a homeowner had shown good faith effort in order to try and sell the units. we're interested in, especially in down market street not having units that are sitting empty. so, that concludes sort of the key components of the procedures manual -- excuse me, of the inclusionary update. as i mentioned, we did want to take advantage of this legislation to do a couple of prop c clean up components. and i'll just call those out currently. the first is, as you know, prop c did among other things reduce the on-site inclusionary requirement by 20% for those project areas that have a 15% requirement, those are reduced to 12%. but there are a number of areas throughout the city with inclusionary requirement is higher and what -- at the request of the planning department we'd like to through

legislation update the planning code. ~ this in no way changes the current law of the land as described and articulated in the charter. it merely is a mechanism to include those adjustments in the planning code to avoid confusion on the part of the planners who are overseeing projects as they come in for entitlements. so, that's the first component of the substitute legislation that we introduce. the second is to correct an error or an oversight in previous legislation that the board of supervisors approved last year. this was a companion measure to prop c that moved the threshold for inclusion in the inclusionary program from 5 units to 10 units. and that it was intended to cover the entirety of the city. there was an oversight in the drafting of that legislation. it failed to pick up a special use district within south of market area, the children youth and family zone. so, this legislation currently would just make explicit that

adjustment from the children youth and family zone from five units to 10 units to be consistent with the policy throughout the city. it also makes a slight adjustment. there is additional trigger or threshold within the children youth and family zone for inclusion in the inclusionary program of a 40 foot height limit. in order not to provide incentives for developers to sort of squish or reduce the height of a ground floor and to be consistent with the city's policy around height bonuses throughout the city, we have recommended increasing that height limit from 40 feet to 45 feet. so, those two -- those corrective measures for the children youth and family zone and the 20% reduction for the on-site requirement are the two components that are additional since the introduction of the legislation. ~ following planning commission approval. that concludes my presentation. as i mentioned, i'm here along

with shondra eagan to answer any questions. thank you. >> supervisor kim. >> i do have a question. actually before that, if it's okay through the chair, i think it is important for members of the public to respect one another and as far as my understanding of the rules are, you're allowed to hold a fine as long as you're not obstructing the view of audience members behind you. ~ sign so, there is no need for -- [speaker not understood]. >> ma'am, thank you. supervisor kim. >> so, i just want to make that really clear. my question is actually for you, mr. sider. on the first piece you talked about, when a developer building owner decides to change from a bmr rental unit to a bmr ownership. and when -- the tenant. what is currently the case actually before i ask the second question, before i ask my question? >> currently i think there is a

bit of ambiguity in the current -- in general, the requirements are what are recorded in title in nsr. shondra might speak to best practice, shondra eagan with our office. >> good afternoon, i'm shondra eagan from the mayor's office of housing. mr. adams is correct. the restrictions are those recorded in the notice of special restrictions. currently the program allows the procedures manual to set out the rules for conversion or the details of t. we have set forth a program that says that the current tenant has a right of first refusal and certain amount of time to leave if they decide not to buy it. we've also -- we had in our office interpreted the conversions that it would sell at the rental level so the lower level. and there's been some debate about that between the developer community and the

mayor's office of housing. ~ and after reviewing the actual language of the law, we feel that there is enough ambiguity that it wasn't clear, that they should sell at the rental level. so, this is in essence a compromise. so, what we're saying now is the units will sell ten rental level only if that current tenant decides to buy the unit. if the current tenant doesn't buy the unit, the unit can be sold at the higher ami level. so, the 90%. >> um-hm. and you said that currently the tenant is allowed to stay for a certain period of time or is allowed -- this will clarify that it's six months? >> currently it does say six months. >> okay. >> and it's going to further clarify that, they have the right of first refusal, they have six months. >> and what are the relocation costs that are allocated to them in these circumstances? >> we don't have any currently, but we're adding in relocation and we're just mirroring what the receiptction board does. >> how much is that? >> something around 5,000. >> so