SF Eyes 5% Inclusionary Rate and 67% Fee Cut to Restart Housing Production

San Francisco is preparing the most sweeping overhaul of its affordable housing funding model in a decade — slashing developer fees and inclusionary requirements that a new city analysis says have become economically meaningless, while betting on a ballot measure to triple annual affordable housing investment. The Planning Commission on May 28 received a detailed informational briefing on the proposal, drawing extensive public comment and pointed questions from commissioners about whether the plan goes far enough, and whether it goes too far.

• City controller finds all 80 residential development scenarios infeasible — even hypothetical 100% market-rate projects with zero affordable housing requirements can't pencil out
• Proposed legislation would cut the on-site inclusionary rate from 15% to 5% and slash development impact fees by 67%, with a 25-unit minimum threshold exempting small projects entirely
• Companion ballot measure would expand the Affordable Housing Trust Fund from $50M to $125M per year, using 20% of annual property tax growth and projecting $3 billion for affordable housing over 30 years
• Market-rate housing production has collapsed 70% since 2020, from over 3,000 units to just 924 in 2025, and inclusionary fee revenue has dropped 94% — from a pre-pandemic average of $31M to $2.1M per year
• Public comment was overwhelmingly supportive, with SPUR, the Housing Action Coalition, Abundant San Francisco, and multiple residents urging swift action
• Commissioners raised concerns about gentrification in sensitive neighborhoods, the security of the ballot measure strategy, and whether even these reductions are sufficient