Lower fees, less affordable units: San Francisco's new housing plan to expedite development

SAN FRANCISCO, CALIFORNIA - JUNE 09: In an aerial view, rows of homes are seen on June 09, 2023 in San Francisco, California. According to a report by real estate company Redfin, owning a home in the San Francisco Bay Area is more expensive than rent

Two of San Francisco’s top leaders have unveiled a housing plan aimed at expediting new housing developments in the city by cutting fees and lowering the number of affordable units developers must include.

The plan, dubbed the Housing Fee Reform Plan, consists of two pieces of legislation that will be presented on Tuesday during the Board of Supervisors meeting. 

One piece of legislation seeks to reduce inclusionary housing requirements – commonly referred to as affordable units – on new and already approved projects. 

The second aims to reform development impact fees to stimulate construction projects. 

The two new proposals, spearheaded by Mayor London Breed and Board President Aaron Peskin, comes at a time when housing development has seemingly stalled in San Francisco. The city’s current housing plans has San Francisco on path to build less than 3,000 new homes this year, an analysis by the Chronicle found. 


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"San Francisco’s fees are preventing new projects from being proposed and stalling thousands of already approved homes in the pipeline from moving forward due to escalating costs," city officials said in a press release.

If enacted, the new legislation could unlock nearly 8,000 approved but unbuilt housing units across San Francisco, with over 2,500 units in the downtown area alone, city officials claim. 

It will also provide a pathway for over 10,000 proposed projects to quickly move from approval to construction.

"We are fundamentally changing how we approve and build housing in San Francisco," Mayor Breed said in a press release. "When fees are set so high that everything freezes, it halts housing and hurts our entire city."

The new legislation also proposes a 33% reduction in other development impact fees for the next three years.

"Our Inclusionary Housing laws have always been about maximizing the highest amount of affordable units that the private market will bear," Board President Peskin said in a press release. "This temporary reduction in affordable housing obligations is intended to kickstart housing development at this critical time in San Francisco’s economic recovery."

The Housing Fee Reform Plan is a key component of Mayor Breed's Housing For All initiative, an eight-year plan to meet the state-mandated goal of building 82,000 new homes in San Francisco.

Dan Safier, President and CEO of the Prado Group – a real estate investment and development company based in San Francisco – said the new legislation is a "very important step" in building new housing and bringing construction jobs back to the city.

"While there is still much work to do, this legislation provides meaningful changes to begin reducing the costs that are constraining new housing development citywide," Safier added. "This is one critical step and I am encouraged by the spirit of cooperation that we are seeing from our city’s leaders for the benefit of all San Franciscans." 

However, not everyone is enthused about the new legislation. John Avalos, executive director of the Council of Community Housing Organizations, called the reductions in affordable housing units a "tough pill to swallow."

"We know that San Francisco will continue to underproduce affordable housing unless or until the state invests in a permanent funding source, making the adoption of next year’s housing bonds critical to our success," Avalos said.