San Francisco is reducing costs and requirements for developers and recommending increased city funding to expand affordable housing projects.
An ordinance signed Thursday by Mayor Daniel Lurie will lower both San Francisco’s inclusionary housing requirements for developers and project impact fees — the charges developers pay to help cover costs of new infrastructure and services.
The Board of Supervisors approved the changes July 14 on the recommendations of the city controller and the city’s Inclusionary Housing Technical Advisory Committee, which analyzed the economic feasibility of the city’s housing requirements.
“This is how the inclusionary housing program was designed to work,” said Eric Tao, a member of the advisory committee. “A fluid mechanism to maximize the production of affordable housing with market-rate projects, but not at a level that would make such production unfeasible.”
The Supervisors also voted to add a companion measure, intended to increase the city’s funding for affordable housing through 2058, for addition to November’s general election ballot.
$3 billion housing fund expansion
Under the initiative, the city would grow its Housing Trust Fund, the source of city-led housing projects, by allocating a portion of future property tax growth every year until the budget expands from its current $52 million per year to $125 million per year.
At $125 million, the fund would grow at the same rate as General Fund discretionary revenue, at a maximum increase of 3% per year.
The measure, which would also extend the Housing Trust Fund’s end date from 2043 to 2058, is projected by the city to increase the city’s baseline affordable housing funding by over $3 billion over the next 30 years. The initiative was recommended by the Technical Advisory Committee in April.
“When we build new homes, rents go up and families bear the costs,” Lurie said. “We’ve said no to new housing as a city for too long — under my administration, we’re saying yes.”
The measure is part of Lurie’s broader Family Opportunity Agenda, which has a goal of reducing the cost of living for San Francisco families through childcare, education and housing initiatives.
Housing shortage remains major challenge
The approved legislation addresses what District 7 Supervisor Myrna Melgar, who cosponsored the ordinance signed by Lurie, has called the city’s “greatest challenge”: San Francisco’s housing shortage.
In 2024, Census data showed that 36% of San Francisco households spent 30% or more of their income on housing, according to the Metropolitan Transportation Commission and the Association of Bay Area Governments.
As a result of these affordability issues, San Francisco is one of the fastest-aging cities with the fewest children per capita in the country, according to Census data.
“It’s no secret why,” District 2 Supervisor Stephen Sherrill said in a statement. “The cost of living is too high.”
“It’s no secret why — the cost of living is too high.”
— Stephen Sherrill, San Francisco District 2 supervisor
To meet projected population growth, San Francisco is under a state mandate to add 82,069 new residential units, roughly 57% of which must be affordable housing, during the 2023-2031 planning cycle.
However, the city only produced 12% of this requirement through 2025, while 37.5% of the requirement’s time span passed, according to a city analysis.
