Planning Commission allows 2338 19th Avenue developer to satisfy inclusionary obligation with in‑lieu fee

The San Francisco Planning Commission voted 4–2 on Dec. 18 to let the applicant for 2338 19th Avenue modify how it satisfies its inclusionary housing obligation, allowing payment of an in‑lieu fee instead of delivering the originally required on‑site below‑market‑rate (BMR) unit.

Planning staff said the building originally was required to provide one on‑site below‑market‑rate unit; the sponsor seeks to switch the elected method of compliance to an in‑lieu fee because the designated BMR unit is unusually large (the sponsor described it in the record as nearly 2,000 square feet and functionally three bedrooms) and difficult to market as an affordable unit. Staff noted the approval is required under Planning Code section 415.5.

Project architect Jeremy Schaub told commissioners the unit was completed during the COVID‑era and never sold through the City’s BMR marketing program. Chaska Berger of the Mayor’s Office of Housing confirmed MOHCD did not perform a site visit and has not marketed the unit.

Builder Cyril Hackett said he met the city‑recommended realtor and was advised the unit’s size made it hard to place through the BMR program; Hackett described construction delays and financial strain during the pandemic that affected marketing and timing. Housing staff said the housing team calculated an approximate in‑lieu payment using a legacy per‑unit methodology plus accrued interest and treasurer interest rates; staff estimated the in‑lieu fee (with interest) at approximately $1,000,000 for this obligation.

Commission debate focused on preserving the integrity of the inclusionary program for small developments and on whether the practical circumstances and lengthy delays justified the switch to a fee. Commissioner concerns included whether the unit had been adequately marketed through the City program and the effect of permitting more in‑lieu payments on the program’s goals. Several commissioners said the fee payment could leverage additional outside funding to build deeper affordability elsewhere.

The motion to take discretionary review and approve the change passed 4–2. The record shows Commissioners McGarry, Braun and Moore voted in favor; Commissioners Williams and Imperial voted against; the commission president recorded an Aye vote. Planning staff and MOHCD will implement the fee payment process and the department said no immediate opposition had been lodged in person at the hearing.

Next steps include finalizing the fee calculation and processing payment consistent with the code; staff said they will monitor compliance with code requirements related to inclusionary obligations.