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Describing and setting forth a proposal to the voters at an election to be held on November 5, 2024, to amend the Charter of the City and County of San Francisco to establish the Affordable Housing Opportunity Fund for Seniors, Families, and People with Disabilities to fund project-based rental subsidies for extremely low-income households consisting of seniors, families, and persons with disabilities, and to require the City to appropriate at least $8.25 million to the Fund annually starting in Fiscal Year 2026-2027. 

Section 1. Findings.

(a)  California law requires the City to adopt a Housing Element that commits to approving an annual number of 1,748 units of housing, or 13,981 units total, over eight years, affordable to Extremely Low-Income (“ELI”) households with income up to 30% of the region’s Area Median Income (“AMI”).  The rents affordable to households making 30% of AMI do not cover the costs of affordable housing projects, and as a result, project sponsors serving ELI households in affordable housing projects face a financial operating deficit.  In addition, there are an insufficient number of higher-paying renters within affordable housing projects to cover the financial operating deficit  that results from affordable rents for ELI households.  Thus, project sponsors of affordable housing projects cannot subsidize a sufficient number of units for ELI renters to meet the City’s Housing Element goals and feasibly operate their affordable housing projects.

(b)  Due to the high cost of developing and operating housing in San Francisco, most affordable housing rents are set at income limits that are out of reach for ELI households.  The largest funding source for affordable housing development – the Low-Income Housing Tax Credit (“LIHTC”) – is designed to make units affordable to households with incomes at 50%-60% of AMI, with rents up to twice that which would be affordable to ELI households. Additionally, the City’s Below Market Rate (“BMR”) units under the Inclusionary Housing Program (Planning Code Section 415 et seq.) are also out of reach for ELI (as well as very low-income) households, as the Inclusionary Housing Program only requires developers to set rents for low-income (55% of AMI), moderate-income (80% of AMI), and middle-income households (110% of AMI).  Given these barriers to the production of affordable housing for ELI households, it is not surprising that the majority of affordable housing produced in San Francisco since 2005 has only targeted very low-income (30%-50% of AMI) and low-income (50%-80% of AMI) households. 

(c)  Seniors on fixed incomes and adults with disabilities are particularly rent-burdened. According to the Department of Disability and Aging Services (“DAAS”), there are approximately 52,600 households in San Francisco with a senior aged 62 years or older, and 20,000 households with a disabled adult aged 18-61 years. Of those households with a senior member, 33,900 income-qualify as ELI, and of those households with a disabled adult, 8,900 income-qualify as ELI.

(d)  There are approximately 66,000 ELI households in San Francisco, and 80% of them are rent-burdened or paying more than 30% of their income on rent. 

(e)  While funding for the development and construction of affordable senior housing has historically been generated through affordable housing bond issuances, LIHTC, and MOHCD loans, the 15-year underwriting standards of private lenders and the Mayor’s Office of Housing and Community Development (“MOHCD”) require rents affordable to low income households that are well out of reach for ELI households.  Many affordable senior housing projects lack the rent subsidies that would be necessary to maintain rents required under such underwriting guidelines while charging affordable rents to ELI seniors, meaning that the seniors most in need of safe, stable, and affordable senior housing end up in our city’s Single Room Occupancy (“SRO”) hotels or shelter system – or worse, on the streets.

(f)  Approximately 12% (or 8,000) of ELI households are families with children. A full-time minimum wage worker in San Francisco makes approximately $37,600 per year.  A single parent working full-time at a minimum wage job does not earn enough to pay or qualify for two- or three-bedroom units at the majority of the City's affordable housing developments as their income falls just under 30% of AMI. 

(g)  The DAAS estimates that there are 41,900 ELI households with a senior or disabled member and that over 56% of those households are rent-burdened. The median monthly income of a single-senior household is $1,511, and that of a household consisting of a single adult with a disability is $1,493 – or approximately 15% of AMI in both cases. The rent for a studio apartment at a majority of the City’s affordable housing developments is only affordable to households with incomes at or above 50% of AMI. 

(h)  More than 75% of all ELI residents in the City are people of color. Forty-eight percent of African American, 31% of American Indian, 23% of Latino, and 22% of Asian households are ELI. In response to the COVID-19 pandemic, the City funded the Emergency Rental Assistance Program (“ERAP”). Of ERAP’s 23,462 applicants, more than half had incomes below 19% of AMI and over 85% had incomes below 30% of AMI. Twenty-seven percent of applicants identified as Black or African American and almost 21% identified as Latino.

(i)  The San Francisco Reparations Plan 2023, prepared by the San Francisco Human Rights Commission, identified the establishment and enforcement of a City policy to prioritize the creation of low-income and acutely low-income housing based on 30% of AMI as a key policy recommendation (Policy Recommendation 1.5). 

(j)  The lack of stable and continuous operating subsidies leads to rents that disqualify the City’s neediest and most vulnerable populations, including rents for affordable housing acquired or preserved through bond funds. Affordable housing non-profits are struggling to acquire and preserve “small-sites,” funded through MOHCD, given the high cost of deferred maintenance and lack of operating subsidies to make the rents affordable to ELI households.

(k)  Despite hundreds of millions raised from revenue measures, and unanimous Board of Supervisors support, the City’s budget has failed to fund crucial affordable housing strategies each year for ELI households, including seniors, families with children, and persons with disabilities. To ensure ELI households can afford to reside in the City’s affordable housing, the City must provide annual funding specifically to the City’s affordable housing serving ELI households.

(l)  There have been dramatic cuts to United States Department of Housing and Urban Development (“HUD”) rental subsidy programs (including Section 8 low-income rent subsidies, HUD Section 202 housing program for seniors, and HUD Section 811 housing program for people with disabilities). The State of California does not fund any operating or rental subsidy programs. 

(m)  The Bay Area Housing Finance Agency (“BAHFA”) is expected to place a $20 billion regional affordable housing bond on the November 2024 ballot. While BAHFA’s Business Plan prioritizes the production of units for ELI households, the operating or rental subsidies needed to create ELI-affordable units are not an eligible use of bond revenue. The BAHFA Business Plan acknowledges that, “this housing type requires reliable, ongoing operating subsidies to successfully stabilize households’ tenancies” and that BAHFA expects to work closely with local jurisdictions to create the financing programs necessary to make ELI housing successful.

(n)  This Charter Amendment addresses a chronic budgetary problem by setting aside a portion of the City’s existing revenue each year to fund project-based rent subsidies for existing and newly constructed or acquired permanent affordable housing for ELI households.

(o)  The intent of this measure is to establish a minimum annual commitment of no less than $8.25 million, starting in Fiscal Year 2026-2027, to ensure access for ELI households to the City’s affordable housing. If there is a significant budget deficit, the funding for the first fiscal year may be reduced to $4 million and then will be $8.25 million in Fiscal Year 2027-2028 and thereafter. 

(p)  The City may fulfill its commitment to fund the expenditures this measure requires by appropriating funds from any number of sources, including but not limited to taxes collected under the Empty Homes Tax Ordinance (Business and Tax Regulations Code, Article 29A) and the Homelessness Gross Receipts Tax Ordinance (Business and Tax Regulations Code Article 28), or other similar special taxes, to the extent that the permissible expenditures in those special tax measures coincide with the expenditures this measure requires.  Furthermore, any money in the Affordable Housing Opportunity Fund for Seniors, Families, and People with Disabilities at the end of each fiscal year will be held in reserve for future use.  Nothing in this measure requires that revenues from any special tax measure be appropriated for the uses in this measure.

(q)  It is the further intent of this measure that the City maximize the number of ELI affordable housing units created by the Fund by entering into long term rent subsidy agreements with the City making annual contributions. The duration of such agreements should reflect the requirements of competitive regional, state and federal funding sources.

(r) It is the further intent of this measure to support the future growth and expansion of the Fund, subject to the future approval of voters, by developing sound, transparent, and effective policies with regular public reporting of program performance.

Section 2.  The Board of Supervisors hereby submits to the qualified voters of the City and County, at an election to be held on November 5, 2024, a proposal to amend the Charter of the City and County by adding Section 16.132, to read as follows:

NOTE:                  Unchanged Charter text and uncodified text are in plain font.

                                    Additions are single-underline italics Times New Roman font.

                                    Deletions are strike-through italics Times New Roman font.

                                    Asterisks (*   *  *   *) indicate the omission of unchanged Charter subsections.

SEC. 16.132.  AFFORDABLE HOUSING OPPORTUNITY FUND FOR SENIORS, FAMILIES, AND PEOPLE WITH DISABILITIES.

(a)  Establishment of Fund.  There is hereby established the Affordable Housing Opportunity Fund for Seniors, Families, and People with Disabilities (“Fund”) to be administered by the Mayor’s Office of Housing and Community Development (“MOHCD”), or any successor agency. Monies therein shall be expended or used solely by MOHCD, subject to the budgetary and fiscal provisions of the Charter. Monies in the Fund shall accumulate interest which shall be credited to the Fund, provided that the balance in the Fund exceeds $50,000.  Any unexpended and unencumbered balance remaining in the Fund at the close of any fiscal year shall be accumulated to the Fund.

(b) Purpose of Fund.  The purpose of the Fund is to increase and fund project-based rent subsidies for permanently affordable housing to make rents affordable for Extremely Low-Income Households.

(c)  Definitions.

“Acutely Low-Income Disabled Persons” shall mean households consisting of persons eligible for accessible units for disabled households and earning up to 15% of Median Income.

“Acutely Low-Income Seniors” shall mean households consisting of seniors and earning up to 15% of Median Income.

 “Extremely Low-Income Disabled Persons” shall mean households consisting of persons eligible for accessible units for disabled households and earning up to 25% of Median Income, and including Acutely Low-Income Disabled Persons.

“Extremely Low-Income Families” shall mean single adults or families earning up to 35% of Median Income.

“Extremely Low-Income Households” shall mean, collectively, Extremely Low-Income Disabled Persons, Extremely Low-Income Families, and Extremely Low-Income Seniors.

“Extremely Low-Income Seniors” shall mean households consisting of seniors and earning up to 25% of Median Income, and including Acutely Low-Income Seniors.

“Fund” shall mean the Affordable Housing Opportunity Fund for Seniors,  Families, and People With Disabilities, established in this Section 16.132.

“Housing Preservation Program” shall mean a program administered by MOHCD to preserve multifamily residential buildings or buildings with SRO Units as Permanent Affordable Housing that are at risk of loss of affordability or at risk of loss of the opportunity to create permanent housing affordability, due to vacancy decontrol or market speculation, and/or at risk due to their physical condition and need for life safety improvements.

“LOSP” shall mean  the City’s Local Operating Subsidy Program that provides operating subsidies to residential buildings providing supportive housing for homeless individuals and families.

“Median Income” means the median income published annually by MOHCD for the City and County of San Francisco, adjusted solely for household size, and derived in part from the income limits and area median income determined by the United States Department of Housing and Urban Development for the San Francisco area, but not adjusted for a high housing cost area.

“MOHCD” shall mean the Mayor’s Office of Housing and Community Development, or any successor agency.

“Permanent Affordable Housing” shall mean a multifamily housing building or a building with SRO Units that is: (1) regulated and monitored by the City under a recorded deed restriction, recorded regulatory agreement, and/or ground lease ensuring permanent affordability for the useful life of the property but for no less than 75 years; (2) 100% of the residential units are restricted to income qualified households (except any manager units) with a maximum average of not more than 80% of Median Income across all units in a project, but not to exceed 120% of Median Income for any unit; and (3) with a rent for all units in a project affordable to such households, at initial residence and at re-rental at no more than 30% of the maximum household income. Permanent Affordable Housing may include principally permitted non-residential uses on the ground floor, and non-residential uses that are accessory to and supportive of the affordable housing.

“Senior Housing” shall  mean a multifamily residential building that is specifically designed for and occupied by senior households and complies with all applicable federal and state fair housing laws.

“Senior Operating Subsidies (SOS) Program Fund” shall refer to the program established  to receive any monies appropriated or donated for the purpose of providing project-based subsidies to new senior affordable housing developments funded by the City to maintain rents that are affordable to extremely low-income senior residents with incomes at or below 30% of Median Income, or any successor program.

“SRO Unit” shall mean a Single Room Occupancy Unit and shall  mean a dwelling unit or group housing room consisting of the following: (1) no more than one occupied room with a maximum gross floor area of 350 square feet and meeting the Housing Code’s minimum floor area standards; (2) which may have a bathroom in addition to the occupied room; and (3) as a dwelling unit, has a cooking facility and bathroom or, as a group housing room, it shares a kitchen with one or more other single room occupancy unit(s) in the same building and may also share a bathroom. 

 (d)  Annual Appropriations to the Fund. 

(1) In Fiscal Year 2026-2027, except as provided in subsection (d)(3), the City shall appropriate $8.25 million to the Fund.     

(2) In each year after Fiscal Year 2026-2027, and through Fiscal Year 2045-2046, the City shall appropriate to the Fund an amount not less than the prior year’s appropriation, adjusted by the percentage increase or decrease in aggregate discretionary revenues, as determined by the Controller, based on calculations consistent from year to year, provided that the City may not increase appropriations to the Fund under this subsection (d)(2) by more than 3% in any fiscal year.  In determining aggregate City discretionary revenues, the Controller shall only include revenues received by the City that are unrestricted and may be used at the option of the Mayor and the Board of Supervisors for any lawful City purpose.

(3)  Notwithstanding subsections (d)(1) and (d)(2), the City may reduce the amount appropriated to the Fund in any fiscal year when the City’s projected budget deficit for the upcoming fiscal year at the time of the March Joint Report or March Update to the Five Year Financial Plan as prepared jointly by the Controller, the Mayor’s Budget Director, and the Board of Supervisors’ Budget Analyst exceeds $250 million, adjusted annually beginning with Fiscal Year 2026-2027 by the percentage increase or decrease in aggregate City discretionary revenues, as determined by the Controller, based on calculations consistent from year to year; provided, however, that the amount appropriated to the Fund in Fiscal Year 2026-2027 shall be no less than $4 million and, thereafter, must be no less than $8.25 million in each fiscal year.

(4)  The Controller shall set aside and maintain appropriations, together with any interest earned thereon, in the Fund.

(5)  Commencing with a report filed no later than March 1, 2025, the Controller shall file annually with the Board of Supervisors, by March 1 of each year, a report containing the amount of monies from each non-general fund source projected to be available that may be appropriated to the Fund under this subsection (d).     

(e)  Uses of the Fund.  The City, acting through MOHCD, shall disburse monies from the Fund through grants or other types of payments, on terms determined by MOHCD in its sole discretion.  Any repayment of a grant or other payment from the Fund that the City receives will be returned to the Fund.  Monies in the Fund shall be used to provide project-based rent subsidies only for new and existing Permanent Affordable Housing, provided that no more than 20% of annual funding from the Fund shall be used for the purpose of subsidizing existing Permanent Affordable Housing.  Monies in the Fund shall be used to allow: 

(1) Extremely Low-Income Seniors to afford a unit with rent restricted at 30% of 60% of Median Income in new or existing Permanent Affordable Housing that is Senior Housing and such households to pay a maximum rent not to exceed 30% of 15% of Median Income or 30% of 25% of Median Income, as applicable to the household’s income, with priority for Senior Housing that provides housing to persons at or over the age of 62; or 

(2) Extremely Low-Income Families, prioritizing families with children, to afford a unit with rent restricted at 30% of 60% of Median Income in new or existing Permanent Affordable Housing, including a building with SRO Units, and such households to pay a maximum rent not to exceed 30% of 35% of Median Income; or

(3) Extremely Low-Income Disabled Persons to afford new or existing accessible units designated and designed for disabled households in Permanent Affordable Housing with rent restricted at 30% of 60% of Median Income and such households to pay a maximum rent not to exceed 30% of 15% of Median Income or 30% of 25% of Median Income, as applicable to the household’s income; or

(4) Extremely Low-Income Households to afford a unit with rent restricted at 30% of 60% of Median Income in an existing multifamily residential building,  including an existing building with SRO Units, that will be acquired and preserved as Permanently Affordable Housing through funding under a Housing Preservation Program and such households to pay a maximum rent not to exceed 30% of 15% of Median Income, 30% of 25% of Median Income, or 30% of 35% of Median Income, as applicable to the household’s income.

Monies in the Fund shall not be used to provide rent subsidies directly to tenants to lease residential units, to provide subsidies for the sole purpose of an operating deficit, or to provide any other form of housing assistance that is not supporting Extremely Low-Income Households to afford a Permanent Affordable Housing unit. Except for expanding the availability of existing Senior Operating Subsidies (SOS) Program Fund programs, monies in the Fund shall not be used to replace or supplant funding for other rent subsidy programs existing as of the date this Section 16.132 was added to the Charter, including, but not limited to, LOSP housing or its successor programs. 

(f)  Implementation Policies and Annual Report. 

            (1)  No later than June 1, 2025, MOHCD shall publish a report describing and analyzing implementation policy options that would maximize the number of ELI affordable senior, family, and accessible units through the provision of project-based rent subsidies in both new affordable housing and preservation projects.

            (2) Beginning with the end of Fiscal Year 2026-2027, within 150 days of the end of each fiscal year, MOHCD shall file with the Board of Supervisors a report describing the status of any project authorized to be funded under this Section 16.132.  MOHCD may combine such report with any other annual reporting obligations to the Board of Supervisors.

(g)  Legislation.  The City may enact ordinances establishing additional requirements for use of the Fund consistent with the purposes of this Section 16.132. 

(h) Expiration.  This Section 16.132 shall expire by operation of law on December 31, 2046, following which the City Attorney may cause it to be removed from the Charter unless the Section is extended by voters.