Inclusionary housing programs require new housing projects to “include” affordable units or pay a fee.
The price of new housing is based on what people are willing to pay. But market rates are usually not affordable to people with lower incomes. This program requires new housing to “include” affordable units. This helps create new affordable housing at the same rate as market housing.
The San Francisco inclusionary housing program was created in 1992 and is now captured under Section 415 of the San Francisco Planning Code. Section 415 is the primary source of inclusionary units.
Inclusionary rules require that new private housing developments with 10 or more units must either pay a fee or include in the project a subset of units that are affordable (for rent or ownership). Developers also have the option of building affordable units off-site. Collectively, these units are called “Below Market Rate” (BMR) units.
|Alternatives||Name||What is it|
|Default||Affordable Housing Fee||A fee assessed based on the number of units in the project and the estimated difference in cost between what people can afford and cost of construction|
|Alternative 1||On-site units||Requirement that 12% of the total units on-site must be affordable (e.g. a 100 unit building will include 12 affordable units)|
|Alternative 2||Off-site units||Requirement to build off-site units at a rate of 20% of the total principal project (e.g. a 100 unit building will build an off-site project that equals 20% of the principal project)|
|Alternative 3||Combination||Any combination of the above options|
The BMR units are allocated through a lottery process. All individuals and households can enter the lottery. However, applicants must meet income requirements and certain conditions determine preferences in the lottery ranking process.
Income levels served
Inclusionary housing programs serve individuals and families ranging from 55% of Area Median Income to 120% of Area Median Income. The table shows income levels based on persons per household for 2016.
Use of the Affordable Housing Fee
The Affordable Housing Fees are used to:
- Increase the supply of affordable housing, including minimum amounts allocated to acquiring or rehabilitating “Small Sites,” which are properties with up to 25 units
- Provide assistance to low and moderate income homebuyers
- Pay for studies to determine the affordable housing fee
Mayor’s Office of Housing and Community Development (MOHCD) | MOHCD implements and monitors the inclusionary housing program, including tracking properties, determining fee levels, and monitoring the marketing and sale or lease of affordable units. MOHCD also oversees almost 2,000 inclusionary units that were part of projects initiated under the City’s Redevelopment Agency, which was dissolved in 2012. Office of Community Investment and Infrastructure (OCII) | OCII is the successor agency that oversees the competition of projects begun by the Redevelopment Agency. Once developed, these units will be transferred to MOHCD for monitoring. City Planning | City Planning implements inclusionary housing procedures related to the permitting and approval of units that fall under the policy. Planning is also responsible for enforcing the Inclusionary Housing Ordinance.
- Inclusionary Housing Program Overview
- Inclusionary Affordable Housing Program Monitoring and Procedures Manual
- Documents and reports regarding the Inclusionary Housing Program
- Report on San Francisco’s Affordable Housing: Affordability Gap
- Briefing Book: State of the Housing Market Study, April 2012