San Francisco ditches fees for affordable housing and in-laws to speed up housing

San Francisco plans to give up nearly $2 million in projected fees on affordable housing projects and in-law construction over the next year, in hopes that cutting costs will encourage new housing development.

On Tuesday, the Board of Supervisors unanimously passed a plan, created by Supervisors Vallie Brown and Gordon Mar and Mayor London Breed, which will suspend certain fees for certain new types of housing.

The proposal is a pilot program that will last for one year, during which time the city hopes that 225 building projects will benefit from it, most of them new in-law units (“accessory dwelling units,” or ADUs in City Hall talk).

According to the text of the bill, the fee breaks apply to 100 percent affordable housing protects and accessory dwelling unit projects “where the subject accessory dwelling unit property is: (1) within a building or on a property containing four or fewer dwelling units or (2) located on a nonprofit charitable organization’s residential project.”

The bill further defines affordable housing in this case as “a multi-family residential building, including any ancillary commercial space, where I00 percent of the residential units (not including a manager’s unit) will be subject to a recorded regulatory restriction to ensure affordability based on income, or where 100 percent of the residential units (not including a manager’s unit) are funded by a nonprofit charitable organization and will provide permanent housing for homeless or formerly homeless persons.”

Qualified projects get to skip inspection fees, plan review fees, records retention fees, and site surcharge fees, which the Mayor’s Office says can run up to $150,000 per project, or about 7.8 percent of the total cost of a new ADU.

The city’s Budget and Legislative Analyst’s Office predicts that the cost over the one-year period will come to approximately $1.96 million.

After the vote, Supervisor Brown said of ADUs, “We know that many of the property owners building this housing are doing so to house their senior parents, college-age children, or other family members, or else to rent out to single person households at lower rents.”

Breed noted, “With building costs already so high, we shouldn’t be adding fees that get in the way of new homes.” The mayor introduced the legislation in February, arguing “we can absorb the loss of these fees, but we cannot absorb the loss of new housing.”

San Francisco legalized in-law homes in 2016. However, as of 2018, the city had issued only 109 permits for new ADUs, and only 23 were actually built, although it’s mostly the approval process rather than the fees that holds up the new ones.