San Francisco wants to cut affordable housing rule

While the gold rush air of the artificial intelligence boom has sprouted the next wave of start-ups and brought thousands of new residents to San Francisco, developers have struggled to build new housing.

A new proposal out of city hall this week aims to change that, albeit at the expense of its affordable housing goals.

City leaders want to slash the percentage of affordable housing units required in new development from 15 percent to 5 percent, according to a plan unveiled Tuesday by Mayor Daniel Lurie and Supervisor Myrna Melgar. If the proposal, which already has the support of at least three other supervisors, passes, San Francisco would have one of the country’s lowest on-site affordable housing requirements in the country.

New projects with 25 or fewer units would be exempt from providing on-site affordable housing altogether.

The rate of affordable housing required on new development has long been a flashpoint in San Francisco politics. The argument from, often from the left, has been that as the city grows, the market won’t provide low-income units on its own, thus speeding up gentrification. Yet, developers often argue that high inclusionary rates drive up costs and can stifle new projects, leading to no new housing and higher rents.

This dynamic has played out across the city over the last half-decade. Between 2020 and 2025, developers built fewer than 800 affordable housing units as part of its inclusionary zoning program. The state mandates San Francisco permit at least 45,000 new subsidized housing units by 2031.

However, the city is not just ditching affordable housing in pursuit of new construction. In tandem with a proposed slash to inclusionary rates, the same city leaders introduced a ballot initiative for November that would more than double San Francisco’s annual contribution to its Housing Trust Fund, used to finance and preserve affordable units. If approved by voters, the city would set aside $125 million per year in its budget, up from $52 million.

Surprising endorsements

With the June 2 primary weeks away, Californians will soon have a firmer idea of who will likely fill the shoes of two of its most prominent politicians: Gov. Gavin Newsom and Rep. Nancy Pelosi.

Across party lines, the five leading gubernatorial candidates have put housing at the top of their platforms. In the race to succeed Pelosi, state Sen. Scott Wiener — California’s pre-eminent pro-housing legislator over the last decade — has remained the front runner over two candidates further to his left.

However, a new round of endorsements have scrambled expectations.

Two prominent organizations under the state’s pro-housing movement have diverged on their support in the governor’s race. YIMBY Action, the organizing arm of the “yes, in my backyard” movement threw its support behind progressive billionaire Tom Steyer. California YIMBY, the leading pro-housing lobby in the state capitol, declined to endorse a single candidate. Instead, it urged its supporters to back either Steyer, San Jose Mayor Matt Mahan, former Orange County congresswomen Katie Porter or former state attorney general Xavier Becerra, each of whom carried “solid YIMBY bonafides.”

Then, earlier this week, Pelosi came out in support of Wiener’s opponent, San Francisco Supervisor Connie Chan, a longtime critic of the legislature’s pro-housing overhaul led by Wiener. Pelosi might carry the single most influential endorsement in San Francisco, but many are skeptical it will be enough to lift Chan, who has been polling in third, over Wiener.