San Francisco Cuts Its Affordable Housing Requirement From 15 Percent to 5 Percent
The San Francisco Board of Supervisors voted 9 to 2 on Tuesday, July 14, 2026, to cut the share of units that market-rate housing developers must set aside as affordable from 15 percent citywide to 5 percent. Supervisors Shamann Walton and Chyanne Chen cast the dissenting votes.
The requirement, known as the inclusionary housing rate, had been 15 percent across most of the city and 17 percent in the Mission District. District 9 Supervisor Jackie Fielder won a separate amendment setting the Mission at 8 percent rather than 5. That amendment passed 6 to 5, with Supervisors Matt Dorsey, Alan Wong, Stephen Sherrill, Danny Sauter, and Rafael Mandelman voting against it.
The board also exempted buildings with fewer than 24 units from the requirement entirely. The previous threshold was 10 units.
Why the rate came down
The city controller’s office reviews the inclusionary requirement every three years. Its April 2026 memorandum, released by Controller Greg Wagner, found that market-rate construction in San Francisco has slowed under higher interest rates and rising construction costs, and concluded that even 5 percent may be above what projects can carry. “Requirements significantly above 0% would further threaten feasibility,” the memo reads, “and would not create additional affordable housing.”
The ordinance was co-sponsored by Supervisors Myrna Melgar, Dorsey, Sherrill, Sauter, and Mayor Daniel Lurie. Melgar defended keeping a number above zero during the debate: “5 percent of 100 is five, and it’s more than zero.” She also noted that the new rates expire in three years, as the previous ones did.
Susana Rojas, executive director of Calle 24, told Mission Local before the vote that the Mission figure was a compromise: “Our compromise of having it be at 8 percent in the Mission is really not ideal, but it’s better than not having inclusionary housing at all.”
The trade: a new affordable housing fund
The rate cut came packaged with a charter amendment Melgar negotiated with the mayor and affordable-housing groups, which passed the same day 11 to 0. It creates a fund for building and rehabilitating affordable housing, financed by a share of future growth in city property tax revenue. The fund would reach roughly $125 million a year and could total close to $4 billion over its life. It goes to voters in November.
What changes on the ground
Nothing is built or unbuilt today. The change alters the math developers run before proposing a project, so its effects show up in permit filings and groundbreakings over the next few years rather than in current construction.
San Francisco has adjusted this requirement repeatedly since the Inclusionary Housing Ordinance first passed in 2002, raising it when construction is strong and lowering it when it stalls. The last revision, in 2023 under then-Mayor London Breed and then-Board President Aaron Peskin, took on-site requirements from 22 percent to between 12 and 15 percent, and off-site requirements from 33 percent to between 16 and 21 percent.
The vote lands alongside other recent changes to what can be built where, including SB 79, which took effect July 1 and allows taller housing near major transit stops, and project-level requests such as Brookfield’s bid to add 600 homes at Pier 70.
Reporting from Mission Local and SFist, with feasibility findings from the city controller’s April 2026 memorandum and the text of the ordinance.
Photo: Sanfranman59, CC BY-SA 3.0, via Wikimedia Commons.
