San Francisco Redevelopment Agency

Western Addition Redevelopment Project Area A2

Implementation Plan (2004-2009)

• INTRODUCTION

This Implementation Plan (“Plan”) is prepared and adopted in accordance with Section 33490 of California Community Redevelopment Law (California Health and Safety Code §§ 330000 et seq.) (“CRL”).  This Implementation Plan identifies project area activities scheduled over the five years beginning July 2004, and ending January 1, 2009, the date the Western Addition A-2 Redevelopment Plan (“Redevelopment Plan”) will expire.

The Redevelopment Plan for the 277-acre Western Addition Project Area A-2 (“Project Area”) was adopted on October 15, 1964, by Ordinance No. 273-64 and was funded originally under a Loan and Grant Contract with the federal government through the Department of Housing and Urban Development (HUD), which was closed out on September 17, 1982.  Since 1989, the Western Addition A-2 Redevelopment Project (“Project”) has been funded primarily by tax increment financing.  The Redevelopment Plan has been amended seven times, most recently on April 19, 2005, to revise parking, height and bulk restrictions on five sites in the Project Area to permit affordable senior housing at a greater density than currently allowed on three of the sites (Central Freeway Parcels A, C, and Rosa Parks); reduce the amount of parking required for senior housing (Central Freeway Parcels A, C, and Rosa Parks); increase the height limit on two of the sites formerly occupied by the Central Freeway (Parcels A and C); permit market rate housing at a greater density than currently allowed as part of a mixed-use development that will include a jazz club and a public garage (Parcel 732-A); and provide for a non-residential density bonus for mixed use development involving the rehabilitation of an historic Muni Substation building at Turk and Fillmore streets. 

The purpose and actions of the Redevelopment Plan are:

1. Provide the framework within which restoration of the economic and social health of the Project Area and its environs will be accomplished by private actions;
2. Guide and stimulate the development of sound and attractive residences available to persons of varied incomes and ages, with the emphasis on the provision of moderate-priced private housing for families of moderate income and for the elderly;
3. Guide development toward the production of a satisfying and urban living and working environment, preserving and enhancing the unique social, cultural and esthetic qualities of the City;  and
4. Stimulate and attract private investment to improve the City's economic health and expand the tax base.

Community participation from the early 1970s through the elected Western Addition Project Area Committee (“WAPAC”) was the model for project area committees nationally.  CRL requires that an elected PAC be convened to advise a redevelopment agency whenever a substantial number of low- or moderate-income residents live in the proposed project area or the proposed plan would authorize the use of eminent domain to acquire such residential properties or otherwise displace a substantial number of low- or moderate-income persons through redevelopment activities.  Under the CRL, a PAC advises a redevelopment agency on policy matters leading up to and for up to three years following plan adoption. 

In the Project Area, with the Agency’s relocation program and eminent domain activities having been substantially completed by 1984, the Agency ceased funding an office and the operations of WAPAC in 1989, looking to local neighborhood groups to provide input on the Agency’s continuing community redevelopment activities in their neighborhoods.  In November 2003, the Mayor appointed the 15-member Western Addition Citizen’s Advisory Committee (“WACAC”) to advise the Agency through completion of its work program in the Project Area.

• PROJECT BLIGHTING CONDITIONS 

Since adoption of the Redevelopment Plan, conditions of blight have been significantly addressed by the development of new housing units, the retention and rehabilitation of residential units, development of the four-block Nihonmachi area, new streetscape improvements, public art and other revitalization efforts in the Fillmore Jazz Preservation District, the installation of public improvements, development of cultural, institutional facilities, public buildings, office and commercial buildings and a new state office building.  The Redevelopment Plan also provided for new development andrehabilitation ofadditional residential units under owner participation agreements (“OPAs”).

Although the Project is significantly completed, certain blighting conditions remain.  The 1989 Loma Prieta earthquake caused portions of the Central Freeway system to be demolished, and a 1995 fire destroyed the landmark property, St. Paulus Lutheran Church.

1. SPECIFIC GOALS AND OBJECTIVES OF THE AGENCY FOR THE PROJECT AREA

The redevelopment of the Project Area predominantly for residential uses of medium and high densities in accordance with the Master Plan of the City and County of San Francisco (“City”) is substantially complete.  Certain areas within the Project Area will continue to be used for commercial, residential with commercial, institutional and public purposes.

• SPECIFIC PROJECTS AND EXPENDITURES PROPOSED THROUGH JANUARY 1, 2009

The Project Area will close out effective January 1, 2009.  The remaining project development activities to be accomplished through January 1, 2009 are described in Chart 1A. Project Descriptions: Development Activities (2004-2009), and housing production in the Project Area since 1964 is summarized in Chart 1B. Project Descriptions: Housing Completed Through 2004.

Chart 2. Estimated Project Expenditures 2004-2009, represents the cost of each development activity during each of the fiscal years covered by this Plan and indicates the estimated tax increment and other funds required to complete the Project Area.  Chart 2 also indicates the major tasks to be performed to successfully implement development.  Funding for redevelopment activities is primarily from tax increment funds.  Because of the high seismic retrofit costs associated with the Muni Substation that the Agency acquired in 2003 after the Arts Commission’s inability to develop it, the Agency expects to need additional sources of funds to complete the scheduled, non-housing, development activities.  Agency affordable housing development activities will be funded by the Affordable Housing fund.

Several properties under the ownership of the Agency are programmed for development, including: Parcels 729-A and B, located at 1210 Scott Street, a proposed affordable homeownership development; Parcel 732-A, currently under development, a mixed use development comprising a thirteen-story building containing a restaurant/jazz club, a restaurant, and other entertainment related retail uses,  80 condominium units (68 market-rate and 12 below market-rate units), and a public parking lot to support the commercial uses; the City landmark Old Municipal Railway Substation building, which will be offered for cultural uses; Central Freeway Parcels A, C, G and the vacant property located immediately adjacent on the east side of the Substation building (1345 Turk Street).

The Redevelopment Plan contains provisions for owner participation activities.  Through January 1, 2009 owner participation activity is expected to yield:

• Additional new and rehabilitated housing units
• Additional new and rehabilitated commercial/retail space
• New institutional facilities

Central Freeway Parcel B, which is owned by the State, Central Freeway Parcel D, which is privately owned, and Central Freeway Parcels E and F, which the City owns, are likely to be privately developed or rehabilitated within the implementation period.  Additional projects in predevelopment stages include: California Pacific Medical Center’s proposed new women’s and children’s hospital on the site of the Cathedral Hill Hotel, and Kaiser Foundation Hospital’s proposal to demolish the existing mixed-use building located at1401-1417 Divisadero for future medical office and outpatient clinic and construct a 21 unit residential development for low-and very low-income households at 2139 O’Farrell Street, as a condition precedent to the demolition.  

In addition, the Agency plans to undertake or continue activities intended to assist in the transition to City jurisdiction after the Redevelopment Plan terminates in 2009.  Establishment of one or more property based improvement districts (“PBID”), which is a means of financing local services and improvements that supplement existing city and agency-funded services, is also critical to ensure continued maintenance of the streetscape improvements and annual cultural events within these areas.  After the Redevelopment Plan terminates on January 1, 2009, the funds generated by the PBID can be used for purchasing supplemental services such as maintenance and sanitation, promotional events, and/or for capital improvements such as street furniture, trees, signage and special lighting.  The formation of a PBID requires a lengthy community driven process that also includes the San Francisco Board of Supervisors’ issuance of a Resolution of Intent, and ultimately culminates in a majority vote of property owners.  Only an affirmative vote of the property owners can result in the formation of a PBID.

An Eighth Amendment to the Redevelopment Plan is planned during the implementation period.  The amendment will provide general conformity of the Redevelopment Plan’s land use controls to the City’s proposed rezoning under its Market-Octavia Neighborhood Plan, for Central Freeway Parcels B, D, E, F, and respond to the requests of the Western Addition community, the Mayor’s Office and the Board of Supervisors to address off-site liquor sales and formula retail.  The Agency plans to adopt land use policies in anticipation of the plan amendment to protect and maintain the small scale character of area commercial districts by limiting off-sale liquor sales and formula retail uses.

Upon substantial completion of the Agency’s non-housing redevelopment activities, it will request that the Board of Supervisors adopt a plan amendment by ordinance pursuant to Senate Bill 2133, codified in CRL Section 33333.7 (an “SB 2113 Ordinance”).  An SB 2113 Ordinance will enable the continued receipt of tax increment allocated from the Project Area solely for Affordable Housing activities until no later than January 1, 2014, so that the Agency can mitigate the loss of the 6,709 Affordable Housing units eliminated from all project areas before 1976, which have not been replaced to date.  An SB 2113 Ordinance does not extend the termination date of January 1, 2009.  Chart 3. Current and Future Construction and Project Schedules, indicates the Agency’s projected schedule for completion of its redevelopment activities in the Project Area.

• EXPLANATION OF HOW THE GOALS AND

         OBJECTIVES, PROJECTS AND EXPENDITURES WILL ELIMINATE PROJECT BLIGHTING CONDITIONS

The Project Area’s goals, objectives, and expenditures will eliminate blighting conditions by: stimulating economic development of the Fillmore Street commercial corridor with establishment of a PBID; maintaining public improvements along the lower Fillmore Street corridor; providing for business loans to existing and new businesses; providing for use of a City landmark property (the Muni Substation) that is consistent with the jazz district theme and legal requirements under the purchase agreement with the City; and developing additional affordable housing.

VI.    EXPLANATION OF HOW THE GOALS AND OBJECTIVES, PROJECTS AND EXPENDITURES WILL IMPLEMENT WESTERN ADDITION PROJECT AREA A-2 AFFORDABLE HOUSING REQUIREMENTS

A.     Affordable Housing Fund Set-Aside Requirements. 

CRL Section 33334.2, as amended in 1976 and 1984, requires deposit into the Agency’s Affordable Housing Fund (“Housing Fund”) of at least 20% of all tax increment generated from a redevelopment project area.  Furthermore, the Housing Fund must be used to improve or increase the supply of housing affordable by persons and families of  the following incomecategories:  (i) households whose annual income is less than 50% of the area median income in San Francisco (“AMI”) (“very-low income households”), (ii) households whose annual income is between 50% to 80% of the AMI (“low-income households”), and (iii) households whose income is between 80% to 120% of AMI (“moderate- income households”).  Housing Fund assistance must be used to rehabilitate or create housing that is affordable by such income groups (collectively “Affordable Housing”).

The Agency has met or exceeded the minimum 20% tax increment set-aside requirements since 1989, the year that the Board of Supervisors first authorized the use of tax increment financing and the year that the Agency adopted the policy goal of using 50% of the total tax increment allocated to the Agency for Affordable Housing activities.  On August 16, 2005, the Agency reaffirmed this policy by adoption of Resolution No. 134-2005, which states the Agency’s intent to continue to use 50% of  tax increment allocated to the Agency to increase, improve and preserve the supply of Affordable Housing.  On the average, during the period between the fiscal year ending on June 30, 2000 and the fiscal year ending on June 30, 2005, the Agency hasbudgetedover 39% of all tax increment receipts for low and moderate income housing Affordable Housing. (Chart 4. Amount of Funds Used to Finance Affordable Housing Program – All Project Areas). 

The amount of tax increment deposits in the Housing Fund for the prior implementation period as of January 1, 2004, including the portions generated from the Project Area, for fiscal years 2004-2005 through the end of this Implementation Plan’s term are described in Chart 4.  The Agency expects to continue to utilize all tax increment allocated by the Board of Supervisors for the rehabilitation, replacement and construction of Affordable Housing, as indicated in Chart 4.

B.     the CRL’s Housing Fund Expenditure Requirements.

1.      housing Fund Expenditures During the Ten Year Period from January 1, 2000 through January 1, 2009.

CRL Section 33334.4(a) requires the Agency to expend Housing Fund moneys over each ten year period covered by the Agency’s Implementation Plans to benefit low-income and very low-income households in the ratio of the housing needed by income categories to the total citywide need for all Affordable Housing. Utilizing the Association of Bay Area Governments’ (“ABAG”) determination of San Francisco’s share of regional housing needs, the Housing Element adopted on May 13, 2004, by the City (“Housing Element”) indicates that the citywide Affordable Housing need from January 1999 to June 2006 is as follows:

Income Category             # of Units Needed

  Very low- income                            5,244

   Low- Income                                 2,126

   Moderate- Income                         5,630

   Total:                                            13,009

(Housing Element, page 121.) Thus, the citywide need for housing affordable by all low-income and very low-income households during such 1999 - 2006 period is 7,370 units or 56.7% of the total Affordable Housing need.  Therefore, at least 56.7% of all Housing Fund expenditures must be used to rehabilitate or create housing affordable by very low-income and low-income households. 

Substantially all of the Agency’s Housing Fund expenditures have been used since 1989 to rehabilitate, replace or create housing affordable by low-income and very low-income persons.  The Agency will continue to exceed the minimum 56.7% expenditures required by CRL Section 33334.4 for housing affordable by low-income and very low-income households over the ten year period between 2000-2009.  In the prior implementation period, 1999-2004, 94.8% of Agency funded Affordable Housing was affordable by very low-and low-income households. The Housing Fund expenditures for the prior Implementation Plan and projected for the current implementation period are included as Chart 5. Citywide Housing Production by Income Category.

The Agency’s prior Affordable Housing production during the 1999-2004 implementation period averaged 601 very low-income and low-income housing units/beds per year. In order to meet the ABAG targets, 917 units affordable by very low-income households and 373 units affordable by low-income households must be produced each year in San Francisco in 2005, 2006 and 2007 Housing Element page 121 ABAG will be updating its housing need projections in 2008.  Until new projections become available ABAG staff has indicated that 2,716 units (the annual average citywide need for all Affordable Housing in the 1999-2006 time period) should be used as the annual Affordable Housing need goals for 2007 and 2008.  The Mayor’s Office of Housing also produces affordable housing used to meet the ABAG goals.

The Affordable Housing funded through Housing Fund expenditures will also be consistent with the stated goals and objectives of the City’s General Plan and Housing Element.

2.      Housing Fund Expenditures during the Implementation Plan Term.

CRL Section 33334.4(b) also requires the Agency to make Housing Fund expenditures before January 1, 2006 “to assist housing that is available to all persons regardless of age in at least the same proportion as the population under age 65 years bears to the total population” in San Francisco, as reported in the most recent census (the “Age Proportionality Requirement”).  The Housing Element indicates that the population under age 65 as of the 2000 census is approximately 84.6% of the total population in San Francisco and projects that the population under age 65 as of 2010 will increase slightly to 84.9% by 2010.  (Housing Element, page 24.)   Therefore, Housing Fund expenditures for Affordable Housing restricted to persons 65 years of age or older (“age restricted”) should be limited to approximately 15% of all Housing Fund expenditures.  

(The state legislature amended the Age Proportionality Requirement in 2005 to require Housing Fund expenditures in at least the same proportion as the number of low-income households with a member under age 65 years bears to the total number of low-income households in San Francisco and such revised Age Proportionality Requirement will apply to that portion of the Implementation Plan term commencing with fiscal year 2006-2007.)

Over the Implementation Plan term, the Agency anticipates that it will be able to meet the Age Proportionality Requirement for Housing Fund expenditures.  For the prior Implementation Plan term, 82.2% of Housing Fund expenditures were for affordable housing in the City that is not age restricted.  For this Implementation Plan term, the Agency currently projects 79.5% of Housing Fund expenditures will be utilized for affordable housing in the City that is not age restricted.  (Chart 6. Comparison Charts for Citywide and Senior Housing Production).  The percentages for the Implementation Plan period are based upon known projects and will be adjusted as new projects are added that are not age restricted such that by the end of the next ten year implementation period, the Agency will be in compliance with the Age Proportionality Requirement.

C.   Replacement Housing. 

1. Replacement of Affordable Housing Removed or

         Destroyed before 1976.

CRL Section 33413(a) requires the Agency to provide replacement housing when it funds or enters into an agreement providing for the removal of Affordable Housing located in a redevelopment project area created or added on or after January 1, 1976 (a “Post-1976 Redevelopment Project Area”).   The Project Area is a pre-1976 area that is exempt from most of Section 33413(a)’s replacement housing obligation (unless it destroys or removes housing on or after January 1, 1996). 

Nevertheless, pursuant to the Agency’s request, the California Department of Housing and Community Development (“HCD”) has certified that 3,216 Affordable Housing units formerly in the Project Area were removed or destroyed as a result of Agency activities before January 1, 1976, the effective date of CRL Section 33413. HCD has also certified Agency data indicating that 3,320 units of such Affordable Housing were replaced between 1964 (the year the Redevelopment Plan was adopted) through the end of 1976. 

Upon substantial completion of its non-housing redevelopment activities, the Agency plans to ask the Board of Supervisors to adopt an SB 2113 Ordinance amending the Redevelopment Plan.  The amendment will enable the continued receipt of tax increment allocated from the Project Area solely for Affordable Housing activities until no later than January 1, 2014, so that the Agency can mitigate the loss of the 6,709 Affordable Housing units eliminated from all project areas before 1976, which have not been replaced to date. 

2.      Replacement of Affordable Housing Removed After January 1, 1996.

CRL Section 33413(d) requires the Agency to provide replacement housing for displaced residents within four years whenever it destroys or removes Affordable Housing.  This requirement applies to all redevelopment project areas.  Affordable Housing removed on or after January 1, 1996 from a pre-1976 area must be replaced in the following minimum ratios:  (a) at least 75% of the Affordable Housing removed before January 1, 2002 must be replaced, and (b) 100% of the Affordable Housing removed after January 1, 2002 must be replaced.  The Agency has met these requirements to date and expects to continue to meet the replacement housing requirement if it causes the removal of Affordable Housing in the future.

The Agency’s policies also require priority for newly rehabilitated and constructed Affordable Housing to be provided to residents who have been displaced by redevelopment activities in accordance with Agency rules and regulations. 

3.      Replacement Housing to be provided before the redevelopment plan expires. 

Section 33490(a)(4) of the CRL requires an implementation plan for a redevelopment project area that will end within six years to indicate whether it will be able to comply with the replacement housing requirements of  Section 33413(a), which apply only to Affordable Housing removed from the Project Area on and after January 1, 1996.  The Agency has complied with the requirement and expects that it will continue to comply with the four year replacement deadline if any additional Affordable Housing is removed before the January 1, 2009 expiration of the Redevelopment Plan.   

Any Housing Fund deposits attributable to the Project Area remaining after the January 1, 2009 expiration date will be utilized to fund Affordable Housing in the Project Area or other parts of San Francisco.

D.     Affordable Housing Production

1.      CRL Required Housing Production

CRL Section 33413(b) establishes the following affordable housing production requirements for any Post-1976 Redevelopment Project Area:  (i) at least 15% of all new and substantially rehabilitated dwelling units developed within the redevelopment project area by public or private entities or persons other than a redevelopment agency must be available at affordable housing cost to, and be occupied by, persons and families of low- or moderate-income, and at least 40% of such units must be available at affordable housing cost to, and be occupied by, persons and families of very low- income; and (ii) at least 30% of Agency sponsored or built housing units be available at affordable housing to, and be occupied by, persons and families of low- or moderate- income, and at least 50% of such units must be available at affordable housing cost to, and be occupied by, persons and families of very low- income.    These requirements do not apply because the Project Area was adopted before 1976.

However, the Agency sponsored housing to be built in the Project Area will be 100% Affordable Housing.  In addition, as next discussed, the Agency has adopted an inclusionary housing requirement in 1990, which applies to all of its redevelopment project areas and will promote compliance with the 15% production goal.

During the prior implementation period, 3,167 housing units have been completed in the Project Area, of which 1,559 are affordable. Chart 7. Western Addition Affordable Housing Production lists the number of new and rehabilitated dwelling units completed and to be developed in the Project Area, and the number of units for very low- and moderate-income households completed and to be developed, since 1989.  Since Project inception in 1964, 8,446 housing units have been developed in the Project Area, of which 4,416 are affordable, as shown in Chart 1B. Completed Housing through 2004.

1. The Agency’s Inclusionary Housing and Housing

bond Requirements

In 2002, the Agency amended its inclusionary housing requirement (originally adopted in 1990 and, as amended in 2002, the “Housing Participation Policy”), which requires that either 10% or 20% of dwelling units constructed on privately owned land in any redevelopment project area must be Affordable Units (defined as housing affordable by households whose annual income is no more than 60% of the AMI for rental units and no more than 100% of the AMI for ownership units).  

In addition, whenever the Agency issues revenue bonds to finance housing developments by private developers, including nonprofit organizations, the Agency’s practice is to require such development to provide the maximum feasible number of housing affordable by very-low income and low-income housing for at least the initial term of the revenue bonds.

1. Affordable Housing Produced During Prior

Implementation Plan Term

Effective January 1, 2003, CRL Section 33490(a)(1)(C)(iv) was amended to require a description of the Housing Fund moneys utilized each year in the previous Implementation Plan term for each of the following income groups:  extremely low-income, very low-income and low-income households, indicating for each income category (i) the number of units constructed with other locally controlled governmental assistance (but without Agency assistance), and (ii) the number constructed with Housing Fund assistance.  As previously stated, substantially all Housing Fund expenditures have been used to create or rehabilitate housing affordable by very low-income and low-income households. 

In recent years, the Agency has targeted a substantial amount of its Affordable Housing Program to provide housing for extremely low-income households; however such housing production is not separately reported and is therefore included in housing production data reported for very low-income households.  The Agency recently refined its data collection standards and now maintains specific data on the extent to which its Affordable Housing Program benefits extremely low-income households.   

The data available for Housing Fund expenditure benefiting very low-income and low-income persons for the Project Area and citywide is contained in Chart 8A. Net Expenditures from Housing Fund.  Chart 8B. Estimated Expenditures from Housing Fund FY 2005-2009 provides the Agency’s projections of Housing Fund expenditures over this Implementation Plan period.  The expenditures in Western Addition Project Area during the prior implementation period from July 1, 1999 through June 30, 2004 resulted in 4,416 units of affordable housing units constructed or rehabilitated in the Project Area.

4.      Projected Affordable Housing Production by Expiration of the redevelopment plan

Whenever the Agency issues bonds or provides Housing Fund loans or grants for a housing development, the Agency’s practice is and will continue to be to require the provision of the maximum number of housing affordable by very low-income and low-income persons.

Agency assisted Affordable Housing for the Project Area planned from July 1, 2004 includes Central Freeway Parcels A, C, and G, 1210 Scott Street, Banneker Homes, 1345 Turk Street, and the Fillmore Heritage Center.

E.      Compliance with  Minimum Affordability Standards

CRL Section 33334.2 requires affordable dwelling units to remain available at affordable housing cost to, and be occupied by, persons and families of very low-income, low-income or moderate income for the longest feasible time, but not less than 55 years for rental units, and not less than 45 years for owner-occupied units.  The Agency requires all housing developments receiving Housing Fund assistance, and Agency issued bond financing to comply with these requirements, and the Agency will continue to comply with the minimum requirements.  The Agency has also negotiated and will continue to negotiate required affordability terms beyond the CRL’s minimum requirements, whenever feasible.

ATTACHED CHARTS

1A.      Project Descriptions:  Development Activities

(2004-2009)

1B.    Project Descriptions:  Housing Completed through 2004

2.      Estimated Project Expenditures

3.      Current and Future Construction and Project Schedules

4.      Amount of Funds Used to Finance Affordable Housing Program – All Project Areas

5.      Citywide Housing Production by Income Category

6.      Comparison Charts for Citywide and Senior Housing Production

7.      Western Addition Affordable Housing Production in Development or Completed since 1989

8A.   Net Expenditures from Housing Fund

8B.    Estimated Expenditures from Housing Fund FY 2005-2009

8C.   Projected Debt Capacity – All Project Areas