Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Inclusionary Housing topic
No spam. Unsubscribe anytime.
Planning Commission approves 42 Otis sponsor’s switch from on-site units to in-lieu fee
Summary
The Planning Commission voted to allow the sponsor of a mixed-use project at 42 Otis Street to satisfy its inclusionary housing obligation by paying the in-lieu affordable housing fee rather than providing three on-site BMR units, citing pandemic-related cost pressures and staff recommendation. Commissioners requested more data on fee-outs citywide.
The San Francisco Planning Commission on March 25 approved a request from the sponsor of the 42 Otis Street project to change its inclusionary compliance method from three on-site below-market-rate units to the affordable housing fee required by Planning Code Section 4.15.
Esmeralda Martinez, planning department staff, said the 5-story, 55-foot mixed-use project under construction contains 24 single-room-occupancy units and commercial space. The project sponsor previously pledged three on-site BMR units but submitted a revised affidavit electing to pay the in-lieu fee. Martinez said the fee revenue will fund other permanently affordable projects identified by the mayor’s office of housing and community development (MOHCD).
Steve Vettel, speaking for the project sponsor, told commissioners construction delays and a roughly 50% increase in costs since the sponsor underwrote the project made on-site for-sale BMR condos financially infeasible. Vettel said lenders required flexibility to ensure the building could be completed and that the in-lieu fee (approximately $480,000, plus interest) would allow construction to continue.
Public commenters and housing advocates were split. Some neighborhood callers and affordable housing advocates urged the commission to require on-site units, arguing the city needs physically integrated BMR units to preserve mixed-income communities. Others, including a representative of a local housing coalition, said they understood the financial constraints and urged approval to avoid leaving the site unfinished.
Several commissioners, while voting to approve the sponsor’s request, asked staff to compile a tally of how often projects have moved from on-site units to in-lieu fees, disaggregated by project size, location and ownership type, so the commission can better weigh policy trade-offs in future cases.
The commission approved the change to the affordable housing fee method by a 7-0 vote. The decision allows the sponsor to pay the in-lieu fee and requires the fee be recorded as a condition of project approval.
