May 12, 2014 8 Comments in Inclusionary Housing, Policy by
1600 Market resized
1600 Market Street is the off-site project to Brian Spiers Development's LINEA project, located half a mile away. The 23-unit, for-sale development was the only off-site project delivered in 2013.
Of the three options - on-site, off-site or in lieu - that a developer can use under the Inclusionary Housing Ordinance, the off-site option is by far the least used. In fact, there have only been seven off-site projects completed since 2003. The large majority of new housing projects provide their below-market-rate (BMR) units on-site. Most of the rest pay an in-lieu fee to the Mayor’s Office of Housing and Community Development (MOHCD) that is used to subsidize affordable housing around the City. The rigidity of the current rules make the off-site option almost infeasible, unless the “stars align.” The SFHAC recently put together a working group to examine ways to make this option more flexible, with the goal of quicker production of affordable housing. Remember that the off-site option results in BMR production of 20 percent compared with 12 percent for on-site, a significant boost.
We’ve identified a few ways the off-site option could be reformed:
Fix the timing issue. Current off-site rules require completion of both the market-rate and BMR housing projects at the same time. We support changing the rule to encourage productive joint ventures between market-rate developers and the BMR developers. The challenge is to address both the City’s concern that the BMRs won’t get built and the developer’s concern that the costs of the BMR project could spiral out of control or the project could be significantly delayed. We believe that with certain assurances, allowing up to three years for the delivery of the affordable project would make the off-site option much more feasible. We support binding performance commitments from the market-rate developer to assure the City the BMR units will be built.
Change the 1-mile radius rule. Current rules only allow off-site projects within a 1-mile radius of the principal project. This distance seems arbitrary and has actually prevented the construction of off-site housing in the past. The distance should be increased - we’ve suggested 2.5 miles. An alternative approach would be to allow BMR projects within the same supervisorial district or within “similar” neighborhoods. Finally, the Director of MOHCD should have discretion to recognize special circumstances that would allow a BMR project outside the agreed distance. 
Adjust the unit size and unit mix.  Current rules require strong equivalence between the unit mix and unit sizes of the off-site BMR units and the principal project.  We believe that off-site BMRs should achieve equivalence in total area, but which allow the BMR developer to determine the unit mix according to their specific project needs.
The SFHAC is currently working with MOHCD and other stakeholders to find consensus on this topic. Leave your thoughts and ideas on this piece in the comment section below.

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Housing Action Coalition

The Housing Action Coalition is a member-supported nonprofit that advocates for building more housing at all levels of affordability to help alleviate the Bay Area's housing shortage, displacement, and affordability crises.

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