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DB_06_Implementing_State_Density (San Francisco) desk itemPLANNING DIRECTORBULLETIN NO. 6 Implementing the State Density Bonus Program This Bulletin is an overview of the State Density Bonus Law and describes the implementation procedures for projects seeking to use the program in San Francisco. References: Government Code Section 65915 Planning Code Section 206.6 First Issued: DECEMBER 2018 Revised: JULY 2019 BACKGROUND: The California State Density Bonus Law (“State Law”) offers development incentives to projects that provide on-site affordable housing. The State Law offers three categories of benefits to incentivize on-site affordable housing: 1. A project may seek up to 35% additional residential density; 2. A project may receive up to three incentives or concessions (generally, defined as a reduction of development standards, modifications of zoning code requirements, or approval of mixed-use zoning) to offset the costs of providing affordable housing on- site; and 3. The City must waive any local development standard required to construct the on-site affordable housing and the incentives or concessions. The amount of the density bonus and the number of incentives or concessions depends on the amount and level of affordability of the affordable units in the project. The City adopted the Individually Requested State Density Bonus Program (Planning Code Section 206.6) in 2017 to implement the State Law. HOW DOES SAN FRANCISCO IMPLEMENT THE STATE DENSITY BONUS PROGRAM? Calculating a Density Bonus Base Density State Law allows projects to receive up to 35% additional residential density. To determine the amount of additional density, Planning Department staff must calculate the principally permitted density under current controls (“base density”). This calculation is referred to as a base density study. The “base density” is the maximum allowable gross residential density principally permitted under the current zoning. Residential density regulations in San Francisco vary by zoning district. In some districts, residential density is regulated by a ratio of units to lot area, such as one unit per 600 square feet. In these districts, base density is the maximum number of units allowed by the zoning district. Other districts use form-based density, where residential density is regulated by the permitted building volume – either the maximum floor area ratio (FAR) or a maximum building volume controlled by height, bulk, and setback controls (“form-based zoning”). In areas with form-based zoning, the base density is interpreted to be the maximum residential gross floor area principally permitted on the site under the current zoning. In some cases, the Planning Code allows for increased density through a discretionary entitlement process (i.e. Conditional Use Authorization). For example, projects in the Residential Transit Oriented (RTO) District have a principally permitted dwelling unit DIRECTOR’S BULLETIN NO. 6 2 SAN FRANCISCO PLANNING DEPARTMENT density of one unit per 600 square feet of lot area and require a Conditional Use Authorization to exceed one unit per 600 feet of lot area. Because the base density is determined only by the principally permitted density, additional density achieved through required discretionary entitlements, such as the RTO example above, shall not be included in the calculation of base density. Other provisions of the Planning Code require a discretionary entitlement due to the size of the lot and are not directly related to the size and/or density of a proposed development. For example, Neighborhood Commercial Districts (NC) often require a Conditional Use Authorization for projects on lots greater than 10,000 square feet. In these cases, a project may still assume the maximum allowable density permitted on the site as the base density, provided that the base density study is otherwise Code-compliant. The Planning Department applies the following provisions when calculating the base density: • Base Density is calculated using “Residential Gross Floor Area,” which means any floor area that would be counted as Gross Floor Area as defined in Planning Code Section 102 that is dedicated to the residential uses in the property. (December 2018) • The base density does not need to account for compliance with wind or shadow requirements. (December 2018) • Sub-grade residential floor area1 will not be counted as residential floor area in the base density study or bonus project for the purposes of calculating the maximum residential floor area. This interpretation is narrowly applied to the calculation of maximum residential density for the purpose of implementing the State Law and does not apply to the calculation of Gross Floor Area for other purposes, including FAR and Impact Fee assessments. (July 2019) • Certain zoning districts do not have a rear yard setback requirement under Section 134. Instead, these districts are controlled by lot coverage provisions. Projects in Central SOMA (Section 249.78(d)(6)) and the Downtown Residential District (DTR – Section 825(b)(2)) must calculate base density assuming 80% coverage on all residential levels. The base density study may not assume full lot coverage. (July 2019) Bonus Project The amount of density bonus that a project may seek is set forth in the State Law. The maximum density bonus is an additional 35% above the base density. The table below summarizes the amount of density bonus allowed based on the level of affordability. In areas where density is controlled as a ratio of units to lot area, the maximum density bonus will be calculated as 135% of the base density represented as number of units allowed on the site. Any resulting remainder is rounded up to the next whole number. In areas with form-based density, the maximum density bonus will be calculated as 135% of the residential gross floor area permitted in the base density study. Restricted Affordable Units Category Minimum Percentage of Restricted Units Percent of Density Bonus Granted Additional Bonus for Each 1% Increase in Restricted Units Percentage of Restricted Units Required for Max. Bonus Very Low Income (up to 50% AMI)5%20%2.5%11% Low Income (up to 80% AMI)10%20%1.5%20% Moderate Income (up to 120% AMI)10%5%1%40% Senior Housing 100%50%-- Transitional Aged Youth 10%20%-- 1 Sub-Grade residential floor area is defined as any floor area that is located below the First Story, as defined in Section 102. DIRECTOR’S BULLETIN NO. 6 3 SAN FRANCISCO PLANNING DEPARTMENT Requests for Waivers, Incentives, and Concessions Incentives or Concessions The State Law offers project the right to receive one, two, or three incentives or concessions “that are required to provide for affordable housing costs.”2 An incentive or concession can be a reduction in site development standards, a modification of zoning code requirements, approval of mixed-use zoning, or other regulatory incentives or concessions that “result in identifiable and actual cost reductions.”3 The terms “incentives” and ““concessions” are interchangeable; for the purposes of this document they will be referred to simply as “incentives.” The number of incentives the project may receive depends on the number of affordable units provided and the level of affordability, as described in the table below. Target Group Restricted Affordable Units Very Low Income 5%10%15% Low Income 10%20%30% Moderate Income 10%20%30% Maximum Number of Incentives 1 2 3 The applicant must provide a written statement describing the requested incentives and may request a meeting with Planning staff to discuss the request. The City must approve the requested incentives unless it finds that they 1) will not result in identifiable and actual cost reductions; 2) will have specific adverse impacts on public health or safety of the physical environment, or 3) will have specific adverse impacts on property that is listed on the California Register of Historic Resources. The Project Sponsor must include the requested incentive(s) in the Individually Requested State Density Bonus Supplemental Application, along with the base density study and density bonus project. The Department may request additional documentation and verification regarding cost reductions and/or impacts on public health, safety, or historic property. Required verification may include a site-specific analysis (i.e. a pro forma) of the costs reductions to a project that will be provided by the requested incentive. The Department may require an evaluation of the financial analysis by a qualified third-party consultant. The Planning Department applies the following additional requirements related to incentives:: • All projects, including Density Bonus Projects, must comply with any required entitlement process and pay all required development impact fees. • Incentives shall be granted only from Planning Code provisions, not standards in other City regulations. • All projects, including Density Bonus Projects, shall comply with Dwelling Unit Mix requirements included in Planning Code Sections 207.6 and 207.7. Waivers The Planning Code currently regulates the physical dimensions of residential development through requirements limiting height and bulk, or requiring open space, rear yards, dwelling unit exposure, and other requirements that can preclude the ability to construct the project with the bonus density and the requested incentives. In accordance with the State Density Bonus Law, the City must grant a waiver of any development standards that will preclude the construction of the project with the bonus density and incentives within the permitted building envelope, unless the City finds that the requested waiver 1) would have a specific, adverse impact upon health, safety, or the physical environment, or 2) would have an adverse impact on any property listed in the California Register of Historical Resources. 2 CA Govt. Code Section 65915(k) 3 CA Govt. Code Section 65915(k) DIRECTOR’S BULLETIN NO. 6 4 SAN FRANCISCO PLANNING DEPARTMENT Additionally, the following provisions apply to requests for waivers: • Waivers shall be granted only from Planning Code provisions, not standards in other City regulations. • Waivers shall not be granted from Dwelling Unit Mix requirements included in Planning Code Sections 207.6 and 207.7. To determine whether waivers are necessary to construct the density bonus project, applicants must submit a base density study and a bonus project. The applicant must include the requested waivers in the Individually Requested State Density Bonus Supplemental Application. The Department may request additional documentation to demonstrate that the development standard would preclude construction of the project with the additional density and the incentives. Review Process Eligibility A project must provide at least five net new units in the base portion of the project to qualify for the State Density Bonus Program. Please see Section 206.6(b) for other eligibility requirements. Submittal Requirements Applicants must complete the Individually Request State Density Bonus Supplemental Application. Applicants will be required to provide a calculation of the base density consistent with the current Planning Code, and a calculation of the allowable density bonus. In zoning districts where density is regulated by volume (“form-based” zoning), applicants must demonstrate that the base density can be achieved as a Code-conforming project that requires no waivers, modifications, exceptions, or variances from zoning requirements. This evidence must be presented in the form of a “base density study” submittal, which is a set of schematic plans that comply with Planning Department’s Plan Submittal Guidelines. Architectural details, including floor plans for each floor, will not be required for a base density study. The applicant must submit a Code-compliant building massing, building section, and floor plans for the ground floor. Performance-based standards, such as wind controls, will not be evaluated as part of the base density study. In addition to the base density study, the applicant must submit plans for the density bonus project. The plans for the bonus project must comply with the Department’s Plan Submittal Guidelines before the application will be accepted for review. The bonus project submittal must include a description of the requested incentives and any necessary waivers, and all relevant supporting documentation. Graphic representations to support the requests for waivers are required, and must include a step-by-step illustration of how the massing of the proposed project shifts as the density bonus and incentives are incorporated into the project. The first step should illustrate a Code-compliant base project massing and should include the total residential gross floor area included in the massing.4 Each subsequent step should demonstrate how the proposed massing is changing and should include the corresponding increase in residential gross square feet, as well as any incentives, concessions, and waivers that are required to achieve that massing. The last step should illustrate the final massing, describe the final requested waivers, and the final residential gross floor area. Each step in the diagram should clearly delineate between requested incentives and requested waivers by using a different color or hatch for each. A sample massing diagram is included as Exhibit A of this document. 4 Residential Gross Floor Area means any floor area that would be counted as Gross Floor Area, as defined in Planning Code Section 102 that is dedicated to the residential uses on the property. For the purpose of calculating the base density, sub-grade residen- tial floor area will not be counted. Additional information on calculating a base project may be found on page 2 in the “Base Density” Section. DIRECTOR’S BULLETIN NO. 6 5 SAN FRANCISCO PLANNING DEPARTMENT Process Projects that are subject to specific entitlements without the density bonus must still secure that specific entitlement with the density bonus. For example, a project in Eastern Neighborhoods that requires a Large Project Authorization approval by the Planning Commission because the base project is over 25,000 square feet will continue to require approval by the Planning Commission. For projects that do not require a Planning Commission entitlement, the Planning Commission must adopt findings that the requested incentives will result in actual cost reductions for the project, and the requested waivers and incentives will not negatively impact public health, safety, or historic property. An applicant may not seek an incentive or waiver from a required entitlement process or any required development impact fees. Below market rate units provided as part of a density bonus project are administrated by MOHCD. Planning Code Section 206.6 requires that the applicant enter into a regulatory agreement with the City that will be recorded on the deed of the property. The agreement will include details on the number, location, and affordability of the restricted units, a description of incentives and waivers approved by the City, and other provisions to ensure compliance with Section 206.6. The regulatory agreement must be finalized and recorded prior to the issuance of the first construction document. Please contact the staff planner prior to the issuance of the site permit for the project to request a draft regulatory agreement. Applicants must submit an Individually Requested State Density Bonus Supplemental Application along with the Preliminary Project Assessment (PPA) Application or Project Application. Note that projects that do not submit a complete base density study and bonus project will be considered incomplete and will not be accepted for review. Inclusionary Affordable Housing requirements in State Density Bonus projects San Francisco’s Inclusionary Affordable Housing Program (Planning Code section 415 et seq.) applies to the entirety of any development project with 10 or more units, regardless of whether the project includes additional density through a state or local program. Section 415 requires a project to pay the Affordable Housing Fee. In lieu of the Affordable Housing Fee, projects may elect to provide a percentage of units as “below market rate” (BMR) units at a price that is affordable to a specified mix of low, moderate, and middle-income households either on-site or off-site, referred to as the On-Site Alternative or Off-Site Alternative, respectively. Projects that opt to include on-site units in order to qualify for a density bonus under the State Law may also be able to satisfy all or part of the Affordable Housing Fee requirement, by receiving a “credit” for the on-site units provided. This “credit” is calculated in accordance with Planning Code Section 415.5(g)(1)(D), referred to as the Combination Alternative. The Combination Alternative allows projects to satisfy the Inclusionary Housing requirement through a combination of payment of the fee and provision of on-site units. An example of how to apply the Combination Alternative to a Density Bonus project is provided below. Under State Law and the Individually Requested State Density Bonus Program, projects may only receive a density bonus for below market rate units provided at a single income level; projects cannot combine different below market rate income levels to receive a greater density bonus. The Inclusionary Affordable Housing Program requires projects with 25 or more units that elect the On-Site Alternative to provide BMR units at three different income levels, or “tiers.” These tiers are set at different levels depending on the tenure of the proposed projects. Rental projects must provide units at 55% AMI, 80% AMI, and 110% AMI. Ownership projects must provide units at 80% AMI, 105% AMI, and 130% AMI. When using the required On-Site units to qualify for a density bonus, the tiers may not be lowered or combined in any way, except that the 55% AMI tier may be lowered to 50% AMI. DIRECTOR’S BULLETIN NO. 6 6 SAN FRANCISCO PLANNING DEPARTMENT Calculating the Inclusionary Housing Fee for Density Bonus Projects To calculate the applicable Inclusionary Housing Fee for projects seeking a “credit” for on-site units provided to qualify for a density bonus, applicants must submit the following information: • the number and type of on-site units to be provided, and the percentage of the total number of units in the proposed project these represent; • documentation that all on-site units comply with the affordability levels, unit size, unit mix, unit distribution and equivalency, and other requirements of Section 415.6 (as further specified in Zoning Administrator Bulletin No. 10), depending on the location, tenure, and number of total units in the project, and the date that the Project Application was accepted; and • necessary AMI information to verify if/how the project qualifies for a State Density Bonus. The remaining portion of the Fee requirement not satisfied by the credit for on-site units shall then be provided by payment of a pro-rated amount of the Affordable Housing Fee. The following examples illustrate how the Inclusionary requirement may be satisfied in 1) areas where density is regulated by a ratio of units to lot area, and 2) in areas where density is regulated by the permitted volume on the site (form-based density). Example 1: Zoning District establishes density as ratio of units to lot area Project Location: Polk NCD Zoning District Project Tenure: Rental On-Site/Fee Rate: 19% / 30% Maximum Allowable Residential Density (Base Density): 93 units Bonus Project Total Area: 96,292 gross square feet Bonus Project Total Number of Units: 115 Step 1: Determine the total Fee and total on-site units due as if applied to the entire project. • Total Fee: Residential Gross Floor Area x Fee rate x Affordable Housing Fee amount: 96,292 gsf x 30% x $199.50 = $5,763,076.20 • Total On-Site: 115 units x 19% = 21.9 = 22 units Step 2: Determine the number of on-site units required for the project as proposed. • 93 units (base density) x 19% = 17.7 = 18 units required Step 3: Determine the proportion of the Inclusionary requirement satisfied by on-site units • 18 units provided/22 units to satisfy the On-Site Alternative = 81.8% = 82% Step 4: Determine the Fee amount required to satisfy the remainder of the Inclusionary requirement • 82% of Inclusionary requirement met by providing on-site units • 100% - 82% = 18% of Inclusionary requirement remains • Total Fee amount x remainder: $5,763,076.20 x 18% = $1,037,353.72 DIRECTOR’S BULLETIN NO. 6 7 SAN FRANCISCO PLANNING DEPARTMENT Example 2: Zoning District with form-based zoning The Combination Alternative works similarly to the example above, with one additional step (step 2) to convert the maximum allowable residential density from floor area into units, and to determine that the applicant will provide the on-site units required to qualify for the requested density bonus. Project Location: C-3-G Zoning District Project Tenure: Rental On-Site/Fee Rate: 20%/30% Base Density Study: 100,000 gross square feet Bonus Project Size: 135,000 gross square feet Number of Units: 200 Step 1: Determine the total Fee and total on-site units due as if applied to the entire project. • Total Fee: Residential Gross Floor Area x Fee rate x Affordable Housing Fee amount: 135,000 gsf x 30% x $199.50 = $8,079,750 • Total On-Site: 200 units x 20% = 40 units Step 2: Convert maximum allowable floor area into units, and apply the on-site rate • Determine the ratio of the project represented by the maximum allowable residential density (base density): 100,000 gross square feet/135,000 gross square feet = 74% • Apply that ratio to the total number of units in the project to determine the maximum allowable residential density in units (base density): 200 total units x 74% = 148 units (base density) • Apply the on-site rate to the maximum allowable residential base density in units: 20% x 148 units = 29.6 = 30 units Step 3: Determine the proportion of the Inclusionary requirement satisfied by on-site units • 30 units provided/40 units required to satisfy the On-Site Alternative: 30/40 = 75% Step 4: Determine the Fee amount required to satisfy the remainder of the Inclusionary requirement • 75% of Inclusionary requirement met by providing on-site units • 25% of Inclusionary requirement • Total Fee amount x remainder: $8,079,750 x 25% = $2,019,937.50 Director’s Bulletin No. 6 will be updated periodically as the Department continues to issue interpretations related to the implementation of the State Density Bonus Program in San Francisco, and to clarify existing policies as needed. The Department will apply any updates to the Bulletin to projects currently under review. Please check the Planning Department website at sfplanning.org for the most recent version of this Bulletin. CONTACTS Carly Grob 415.575.9138 carly.grob@sfgov.org Kate Conner 415.575.6914 kate.conner@sfgov.org Jacob Bintliff 415.575.9170 jacob.bintliff@sfgov.org Paolo Ikezoe 415.575.9137 paolo.ikezoe@sfgov.org DIRECTOR’S BULLETIN NO. 6 8 SAN FRANCISCO PLANNING DEPARTMENT RESOURCES Individually Requested State Density Bonus Informational and Supplemental Application Packet Planning Code Section 206.6 Planning Code Section 415 Planning Department Plan Submittal Guidelines EXHIBIT A Diagram provided by Mithun San Francisco BASELINE: Full ground floor with 5 stories of housing above; resid. gross sq. ft. = approx. 87,500 STEP ONE: Size of code-compliant rear yard = 25% of lot depth located along one of the street frontages STEP TWO: Relocate rear yard to center of massing as courtyard STEP THREE: Reduce rear yard and unit exposure to allow room for double-loaded corridors + approximately 10,750 residential SF STEP FOUR: ADD one full story of units and one partial story of units with additional roof-top open space + approximately 19,800 residential SF FINAL MASSING: full ground floor with 8-9 stories of housing above resid. gross sq. ft. = approx. 118,050 FLO R I D A S T BRY A N T S T RESI D E N T I A L RESI D E N T I A L PDROPEN SPACEOPEN SPACEFOR MORE INFORMATION: Call or visit the San Francisco Planning Department Central Reception 1650 Mission Street, Suite 400 San Francisco CA 94103-2479 TEL: 415.558.6378 FAX: 415 558-6409 WEB: http://www.sfplanning.org Planning Information Center (PIC) 1660 Mission Street, First Floor San Francisco CA 94103-2479 TEL: 415.558.6377 Planning staff are available by phone and at the PIC counter. No appointment is necessary.