Sec. 85.3. HOUSING INNOVATION PROGRAM.

(a) Establishment. There is hereby created a Housing Innovation Program for the City to be administered by MOHCD.

(b) Purpose. The purpose of the Program is to develop additional housing opportunities that complement the existing housing opportunities and resources offered through programs administered by MOHCD, including, but not limited to (1) promoting homeownership and housing preservation, especially for communities that are at high risk of displacement and have been historically denied equal access to capital; (2) financing the construction of additional housing units that support Low-Income and Moderate-Income homeowners with multi-generational living and/or the ability to age in place; and (3) exploring creative prototypes for housing and financing options for Low-Income and Moderate-Income residents.

(c) Duties. To administer the Program, MOHCD shall:

(1) Provide grants to organizations, including a Partner Organization, of up to 10% of each disbursement of Program funds for the following

purposes:

(A) to establish marketing and educational materials about wealth-building and homeownership, with the goal of promoting racial equity and increasing participation in the Program by current and displaced San Francisco residents who have been historically disadvantaged by government and private actions; and

(B) to provide professional development, capacity building, and training for staff to implement the purposes of the Program;

(C) to develop creative construction design prototypes that could be pre-approved for simplified permitting and financing options for LowIncome and Moderate-Income residents, especially to add additional dwelling units to single family homes;

(2) Provide loans and technical assistance for Low-Income and Moderate-Income Property Owners to construct the New Unit(s), with the goal of supporting multi-generational living and/or aging in place, provided that the following conditions shall apply to these loans:

(A) the value of the Residence shall not be considered when assessing the Property Owner’s eligibility for a loan;

(B) as long as the borrower is not in default and as long as the borrower continues to occupy the Residence or one of the New Unit(s) as their primary residence (except in extenuating circumstances as determined by MOHCD): (i) repayment shall be deferred until the earlier of: five years after the first certificate of occupancy is issued for the New Unit(s), or seven years after the deed of trust for the loan is recorded on the Residence or New Unit(s), except as described in subsection (c)(2)(C) below, (ii) the loan shall not accrue interest prior to the maturity date, and (iii) the loan shall be repaid in full on the maturity date;

ll be deferred until the earlier of: five years after the first certificate of occupancy is issued for the New Unit(s), or seven years after the deed of trust for the loan is recorded on the Residence or New Unit(s), except as described in subsection (c)(2)(C) below, (ii) the loan shall not accrue interest prior to the maturity date, and (iii) the loan shall be repaid in full on the maturity date;

(C) if the borrower enters into an agreement, effective upon commencement of the loan, to receive referrals of households with rental subsidies from the San Francisco Housing Authority and/or the Department of Homelessness and Supportive Housing or any successor agency to fill any and all vacancies in the New Unit(s) or the Residence during the loan term, repayment shall be deferred until the earlier of: 10 years after the first certificate of occupancy is issued for the New Unit(s), or 12 years after the deed of trust for the loan is recorded on the Residence or New Unit(s);

(D) if the New Unit(s) is sold, separately or in conjunction with the sale of the Residence, prior to the maturity date, the loan shall either be (i) assumed by the new owner of the New Unit(s), if the new owner meets all other loan eligibility requirements, for the remainder of the loan term, or (ii) repaid in full with interest immediately upon the sale of the New Unit(s);

(E) the Property Owner enters into one or more agreements with the City (i) subjecting the New Unit(s) to Administrative Code Chapter 37, as it may be amended from time to time, including but not limited to the rent increase limitations of Chapter 37, and (ii) waiving the Property Owner’s ability to displace one or more tenants in the New Unit(s) in accordance with the Ellis Act, California Government Code Sections 7060, et seq., as it may be amended from time to time;

(F) within the 10 years prior to the Property Owner’s application for the loan, and continuing until the commencement of the loan, the Property Owner has not at the Residence: (i) displaced one or more tenants in accordance with the Ellis Act, California Government Code Sections 7060, et seq., as it may be amended from time to time; (ii) recovered possession of a unit pursuant to Administrative Code Section 37.9(a)(8), as it may be amended from time to time; (iii) recovered possession of a unit pursuant to a Buyout Agreement as defined in Administrative Code Section 37.9E, as it may be amended from time to time; or (iv) otherwise withdrawn any rental unit from rental housing use;

(G) the Property Owner has not received a notice of violation of Administrative Code Chapter 37 within the 10 years prior to the Property Owner’s application for the loan, and continuing until the commencement of the loan; and

(H) MOHCD shall require any other loan terms it deems necessary, except that MOHCD may not impose any conditions or restrictions that prohibit the inheritance of the New Unit(s) or Residence by the heir(s) of the Low-Income and Moderate-Income Property Owners; and

(3) Provide down payment assistance loans for:

(A) the acquisition of units by Low-Income and Moderate-Income tenants who: (i) are at risk of displacement from their rental unit due to the anticipated sale of their tenancy-in-common building, and (ii) desire to purchase their rental unit;

(B) the acquisition of single-family homes, condominiums, and residential units by Low-Income and Moderate-Income tenants who: (i) are at risk of displacement due to sale or conversion of the single-family home, condominium, or residential unit that they are currently renting, and (ii) desire to purchase that single-family home, condominium, or residential unit; and

(C) Family Child Care Providers who desire to purchase a residence to operate a Family Child Care Program.

(Added by Ord. 172-22, File No. 211232, App. 8/4/2022, Eff. 9/4/2022)

(Former Sec. 85.3 added by Ord. 258-99, File No. 990624, App. 10/15/99; repealed by Ord. 171-03, File No. 030422, App. 7/3/2003)