Housing developers in San Francisco are required by law to provide affordable housing in new buildings, either by offering a certain percentage of below-market-rate apartments–or by paying a fee.

On Wednesday night, KRON4’s Philippe Djegal takes a look at the city’s inclusionary housing program.

The hammering sounds of new construction are unavoidable in San Francisco.

Some scoff at the sight of new luxury apartment buildings going up, bothered by the fact that most San Franciscans are priced-out of living in one of these new developments–unaware of the city’s inclusionary housing ordinance.

“The inclusionary housing program definitely makes a big difference,” San Francisco Mayor’s Office of Housing and Community Development Director Kate Hartley said.

Based on the law, developers of all new housing projects with 10 units or more are required to either one, make 19 percent of the development affordable housing; two, build an equal amount of affordable units at an off-site location; or three, pay an in lieu fee.

It is a fee that the San Francisco Mayor’s Office of Housing and Community Development collects and then invests in affordable housing.

“We have had an inclusionary program since 2002,” Hartley said.

And in the past decade, Hartley says San Francisco has collected about $198 million in inclusionary housing fees.

That comes out to about $20 million a year.

When leveraged with low-income housing federal tax credits, state and other local funding, Hartley says the inclusionary fees make a big difference.

“It is actually being spent,” Hartley said. “We have built over the last 10 years, using inclusionary fees, about 2,000 units. And we have many more…units, hundreds of units, in the pipeline right now.”

KRON4 caught up with Hartley at the Openhouse Community at 55 Laguna St.

It is San Francisco’s first 100-percent affordable housing complex for LGBT seniors.

It was built in part with inclusionary housing fees.

“Typically, the city provides about, between 40 and 60 of the cost to build housing,” Hartley said.

Developers have a choice of either making a portion of new buildings affordable, pay a fee, or build affordable units off-site–meaning on a piece of land somewhere else.

This is an option, Hartley says, developers rarely use.

But there are examples of off-site construction, like one building at 1400 Mission St.

It’s made up of 167 below-market-rate condos and 24 middle-income rental units.

All built here, rather than at the main development–Lumina at 201 Folsom St.

It is a 655-unit luxury high rise built in 2015.

“And it doesn’t happen too often because as you can imagine, that’s a somewhat difficult process to find a piece of land, entitle it and build,” Hartley said. “But we have had about four or so off-site developments.”

Several cities across the nation and in the Bay Area have inclusionary housing programs.

San Jose is also one of them and expects to collect $20 million to $25 million in fees annually. That money will be invested into 100-percent affordable housing.

“San Francisco is not the…most strict program in the country, but we definitely…have been out in front on this issue,” Hartley said.

Annually, Hartley says the city’s goal is to create 5,000 housing units.

Fifteen-hundred of them are affordable, creating mixed-communities in new developments–blending low, medium, and high-income households together.

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