The San Francisco Board of Supervisors voted 9-2 on Tuesday to cut to 5 percent the percentage of units that developers of market-rate housing must set aside for affordable units in their projects.<\/p>\n
Up until today, the rate \u2014 called the \u201cinclusionary housing\u201d rate \u2014 was 15 percent citywide with an exception for the Mission District, which stood at 17 percent.\u00a0<\/p>\n
The dissenting votes were from Supervisors Shamann Walton and Chyanne Chen.<\/p>\n
District 9 Supervisor Jackie Fielder sought to again carve out the Mission, and succeeded: Her amendment calling for an 8 percent requirement for the Mission District narrowly passed in a 6-5 vote. Supervisors Matt Dorsey, Alan Wong, Stephen Sherrill, Danny Sauter, and Rafael Mandelman all voted against Fielder\u2019s amendment.<\/p>\n
The board also voted to exempt developers of properties with fewer than 24 units from the requirement entirely. Previously, any development of 10 units or more had to include a certain percentage of affordable housing, or to pay a fee that went into an affordable housing fund. \u00a0<\/p>\n
The ordinance<\/a> was co-sponsored by Supervisors Myrna Melgar, Dorsey, Sherrill, Sauter, and Mayor Daniel Lurie.\u00a0<\/p>\n The ordinance was part of a deal<\/a> Melgar struck with the mayor and affordable housing groups earlier this year. In return for the groups dropping opposition to reducing the inclusionary rate, Melgar introduced a fund for building and renovating affordable housing that could grow to nearly $4 billion.<\/p>\n That charter amendment<\/a> also passed today in a 11-0 vote. The fund will allocate a percentage of future increases in the city\u2019s property tax revenue, and would grow to $125 million a year. It will be on the November ballot.<\/p>\n The Inclusionary Housing Ordinance was first passed in 2002 and requires market-rate housing developers to provide some amount of affordable housing, either within a market-rate development, off-site, or through paying an in-lieu fee to fund other affordable housing projects.\u00a0<\/p>\n Every three years, the city controller\u2019s office releases a report on the city\u2019s inclusionary housing requirements. The most recent, a memorandum<\/a> released by Controller Greg Wagner in April 2026, concluded that market-rate housing development in San Francisco has slowed due to several factors\u00a0\u2014 among them higher interest rates and increased cost of construction.<\/p>\n The memo concluded that, given these challenges, even a 5 percent\u00a0requirement might be too high. \u201cRequirements significantly above 0% would further threaten feasibility,\u201d the memo reads,\u201d and would not create additional affordable housing.\u201d\u00a0<\/p>\n In advance of the vote, Susana Rojas, the executive director for Calle 24, told Mission Local about the impact that the lowered rate would have on the Mission.\u00a0<\/p>\n \u201cOur compromise of having it be at 8 percent in the Mission is really not ideal, but it\u2019s better than not having inclusionary housing at all,\u201d Rojas said.\u00a0<\/p>\n Dorsey said that he understood \u201cthe desire and the importance of having a number that\u2019s greater than zero,\u201d but added: \u201cI don\u2019t believe we should single out neighborhoods and freeze them out for new housing \u2014 market-rate or affordable.\u201d<\/p>\n Supervisor Melgar, who co-sponsored Fielder\u2019s amendment, disagreed with Dorsey\u2019s take. \u201cI just want to point out that 5 percent of 100 is five, and it\u2019s more than zero,\u201d Melgar said.\u00a0<\/p>\n \u201cThis is a temporary moment,\u201d Melgar continued, pointing out that the new percentages voted in today are, like the previous ones, set to expire in three years.\u00a0<\/p>\n \u201cIn three years when our economy recovers, when we no longer have a Republican president making everything more expensive in our country, the rate will go back up,\u201d she said. I have every expectation that the inclusionary rate will be reset higher by a future body of the Board of Supervisors.\u201d\u00a0<\/p>\n Supervisor Connie Chan also voiced support for Fielder\u2019s amendment, saying she would not vote to pass the primary legislation unless Fielder\u2019s amendment was passed as well.\u00a0<\/p>\n Changes like these to citywide housing mandates are nothing new \u2014 the required percentages of inclusionary housing tend to rise when new construction is booming, and fall when housing development stalls<\/a>.\u00a0<\/p>\n