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ARTICLE · 23 MARCH 2010

Changes To San Francisco’s Inclusionary Housing Program For Rental Projects

Farella Braun & Martel
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On November 26, 2009, the California Supreme Court decided to leave intact the appellate court decision in Palmer/Sixth Street Properties v. City of Los Angeles (2009) 175 Cal.App.4th 1396.

United StatesReal Estate and Construction
Ilene Dick
Ilene Dick
Steven Vettel
Steven Vettel

The Planning Commission scheduled to hear proposed amendments on March 25, 2010.

On November 26, 2009, the California Supreme Court decided to leave intact the appellate court decision in Palmer/Sixth Street Properties v. City of Los Angeles (2009) 175 Cal.App.4th 1396. This decision limits the enforceability of inclusionary housing ordinances, such as San Francisco Planning Code Section 315, that require residential developers of rental housing to set aside a portion of their rental units as low-income units with restricted rents. For-sale projects are not affected by Palmer.

Generally, San Francisco's inclusionary ordinance requires developers of both for-sale and rental housing projects either to provide on-site or off-site a certain percentage of the project's units as affordable units or to pay a very hefty in lieu fee to be used by the Mayor's Office of Housing. Whether a unit is "affordable" is based on its restricted rent or sales price. For example,

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