Mayor Lurie Signs Legislation to Boost Housing Production, Transformative Investment in Affordable Housing Heading to November Ballot

SAN FRANCISCO – Mayor Daniel Lurie today signed legislation to unlock the construction of new homes across San Francisco as a major expansion of the city’s investment in affordable housing will be on the ballot in November. Cosponsored by District 7 Supervisor Myrna Melgar, District 6 Supervisor Matt Dorsey, District 2 Supervisor Stephen Sherrill, District 3 Supervisor Danny Sauter, and Board of Supervisors President Rafael Mandelman, and passed by the board 9-2, the ordinance represents the most significant update to the city’s inclusionary housing and development impact fee requirements in a decade, in line with the recommendation of housing experts and with the support of affordable housing providers and labor leaders. Alongside that ordinance, the Board of Supervisors voted unanimously to place a companion measure sponsored by Supervisor Melgar on the November ballot to expand and renew the city’s Housing Trust Fund—more than doubling annual local funding to support affordable housing production and preservation citywide.

The legislative package builds on Mayor Lurie’s work, in partnership with Supervisor Melgar and the Board of Supervisors, to build housing and bring down the cost of living for families in San Francisco. Last year, Mayor Lurie signed his Family Zoning plan, modernizing the city’s half-century-old zoning map to help ensure that the next generation of San Franciscans can afford to raise their kids in the city. Under his Family Opportunity Agenda, San Francisco will be the first major city in the U.S. where every family with children under five years old has access to childcare—minimizing or altogether eliminating a major expense for many families.

“When we don’t build new homes, rents go up and families bear the costs. And we've said no to new housing as a city for too long—under my administration, we're saying yes,” said Mayor Lurie. “We are tackling the cost of living head-on, and this plan meets the moment. I am proud to partner with a champion for affordable housing in Supervisor Melgar and this Board of Supervisors, which understands the urgency of this work for families across the city and is taking action.”

"The shortage of housing is our greatest challenge as a city, and we need to respond accordingly,” said Supervisor Melgar. “Our housing production is in a slump, and adjusting the inclusionary requirements is the appropriate response to incentivize new home construction while we also expand our investment in affordable housing production through the Housing Trust Fund. This is our opportunity to keep long-time residents stably housed and welcome new families to our dynamic city where anything is possible.”

The expansion of the Housing Trust Fund and the updates to the inclusionary housing and development impact fee requirements follow the unanimous recommendations of the city controller and the Inclusionary Housing Technical Advisory Committee. The technical advisory committee is a panel of affordable housing providers and local housing developers appointed by the mayor and Board of Supervisors to advise the controller every three years on a report analyzing the economic feasibility of the city’s inclusionary housing requirements. The report, published on April 30, recommended lowering the city’s inclusionary housing requirements while increasing stable, recurring public funding for affordable housing development through growth in the city’s property tax base over time. The technical advisory committee unanimously recommended this approach.

The companion ballot measure would increase the city’s annual contribution to the Housing Trust Fund, currently $52 million per year, by allocating a portion of future property tax growth every year until the annual funding reaches $125 million. After that, the fund would grow at the same rate as General Fund discretionary revenue up to 3% per year through 2058—an extension from the current sunset date of 2043. The measure is projected to increase the city’s baseline local funding for affordable housing by over $3 billion over the next 30 years.

To ensure funding availability in the near term, the Housing Trust Fund may be used to support the issuance of revenue bonds and other forms of municipal financing to fund affordable housing production and preservation. The measure also includes important fiscal guardrails, including the ability to freeze or reduce the annual appropriation in budget years with large budget deficits or during a recession.

The inclusionary measure passed with support from District 4 Supervisor Alan Wong, District 5 Supervisor Bilal Mahmood, District 11 Supervisor Chyanne Chan, and District 9 Supervisor Jackie Fielder, in addition to the legislation’s cosponsors.

“This is a great step forward for San Francisco's housing future,” said Rebecca Foster, CEO of the Housing Accelerator Fund and Inclusionary Housing Technical Advisory Committee Member. “The TAC came together around a clear consensus. We need to restore feasibility for market-rate housing production, and we need a stronger, more durable funding source for affordable housing. An expanded Housing Trust Fund delivers exactly that. This measure strikes the right balance, and it's a big win for San Francisco and for every family who calls this city home.”

“We see every day that affordable housing changes lives, but delivering and preserving those homes requires certainty and partnership,” said Tiffany Bohee, President of Mercy Housing California and Inclusionary Housing Technical Advisory Committee Member. “This comprehensive housing package supports new housing production alongside sustained investment in affordable homes, strengthening the city’s commitment to ensuring our most vulnerable residents have access to safe, stable housing.”

“Working people are getting squeezed from every direction, and San Francisco will not solve its affordability crisis if nothing gets built. Updating the city’s inclusionary requirements while expanding the Housing Trust Fund keeps housing production moving,” said Larry Mazzola Jr., San Francisco Building Trades Council President. “This is a balanced approach that creates more housing at all income levels, protects good middle-class careers, and makes sure the workers who build this city can still afford to live in it.”

“I believe that we will see an increase in new housing production in San Francsico as a result of this ordinance reducing the inclusionary housing requirement to be more aligned with market metrics. This is how the inclusionary program was designed to work, 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,” said Eric Tao, Interim CEO of TODCO Group, Principal of L37 Development, and Inclusionary Housing Technical Advisory Committee Member. “Moreover, this is being implemented with the near tripling of the Housing Trust Fund dedicated to 100% affordable housing, which funding will draw directly from the new housing production stimulated by the ordinance signed today. The combination continues San Francisco’s deep commitment to affordable housing and production of housing for all.”

“These legislative proposals from the mayor and Supervisor Melgar are precisely what this moment calls for. Housing is too expensive to build, and implementing the TAC’s recommendations to lower fees and inclusionary requirements will help to address that challenge,” said Jesse Blout, Principal at Strada Investment Group and Inclusionary Housing Technical Advisory Committee Member. “When paired with the plan to increase funding for the Housing Trust Fund, our partners in City Hall are bringing us closer to the goal of delivering thousands of new housing units a year to residents at all income levels.”

“I’m grateful to Mayor Lurie and my colleagues on the board for our shared commitment to getting San Francisco building again,” said Supervisor Dorsey. “This legislation is a real step in the right direction towards meeting our city’s housing needs, and it reflects our commitment to a thriving and affordable future.”

“San Francisco is the fastest-aging city with the fewest children per capita in the country. It’s no secret why: The cost of living is too high,” said Supervisor Sherrill. “This legislative package recognizes that we are in a housing crisis by tripling our investment in affordable housing and lowering the cost of construction. Together, this reform helps us finally get shovels in the ground and deliver the homes San Franciscans need.”

“Today's housing affordability crisis demands urgent action, and City Hall is listening,” said Supervisor Sauter. “This package of legislative changes and expanded affordable housing funding will result in more new homes, stronger communities, and a more welcoming San Francisco.”

“Too often, affordable and market rate housing are treated as conflicting priorities,” said Board President Mandelman. “The reality is we need much more of both, and this package advances both by easing the burdens on market-rate production at the same time it ensures a reliable and increasing source of funds to support affordable housing development.”

“Over the past several years, construction costs have climbed, interest rates have increased, financing has become more difficult, and housing production has slowed dramatically. We must take a pragmatic and responsible approach to housing,” said Supervisor Wong. “We cannot collect affordable-housing fees from projects that are never built because the fees are too high. We cannot require below-market-rate units in buildings that never leave the drawing board because the economic conditions are not favorable.”