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Planning commission backs code change to allow inclusionary rental units after state law shift
Summary
The commission recommended approval of a Planning Code amendment to implement AB 1505 (the "Palmer fix"), allowing on‑site and off‑site inclusionary units to be rental units rather than ownership. Staff said the change reduces processing time and enables more code‑compliant projects to provide on‑site affordable rentals.
The Planning Commission voted Jan. 11 to recommend a Planning Code text amendment that will let the city require on‑site or off‑site inclusionary units to be rental units, aligning the code with state law AB 1505 (the so‑called "Palmer fix").
Planning Department policy staff explained that prior to AB 1505, local inclusionary requirements effectively forced many code‑compliant projects to deliver ownership units or negotiate a time‑consuming Costa Hawkins exemption agreement with the city, a process that required substantial staff and City Attorney involvement (SEG 2748–2776). Carly Grove, Planning Department, said AB 1505, signed in September 2017 and effective Jan. 1, 2018, restores local authority to require rental inclusionary units for inclusionary compliance without needing Costa Hawkins waivers (SEG 2787–2796, SEG 2799–2803).
Staff recommended amending Planning Code Section 415 to remove the on‑site ownership requirement and to add technical edits (including updating an agency reference to OCII and adding the Department of Homelessness and Supportive Housing as an eligible subsidy provider). Lee Hepner from Supervisor Peskin—s office outlined a technical amendment planned for the Land Use Committee to conform cross‑references (SEG 2848–2860; SEG 2886–2896).
Commission discussion noted the administrative relief the change affords: it should reduce the number of Costa Hawkins agreements processed and allow code‑complying projects to deliver on‑site rental inclusionary units more readily. Commissioner Johnson urged staff to later evaluate how AB 1505 changes inclusionary unit production, particularly for HOME SF/code‑compliant projects (SEG 2928–2936; SEG 2948–2956).
On a motion to approve with staff amendments, the commission voted unanimously (7–0) to forward the code amendment for adoption (vote recorded on the hearing record).
