San Francisco Mayoral Candidates Agree Bold Action Is Needed on Housing. What Are Their Proposals?

Housing will be top of mind for many San Francisco voters this November, and mayoral candidates hoping to lead the city out of its affordability crunch are rolling out competing plans to tackle the problem.

While their strategies differ, one thing the leading candidates agree on is the city desperately needs to take bold action on housing. San Francisco is on the hook to add 82,000 housing units by 2031 — and is still far from reaching its goal. That’s because the city has long struggled to produce more housing, due to a combination of zoning limits and high production costs, exacerbated by lengthy approval processes in City Hall.

“There is not enough housing built and the geography where it is being built doesn’t match with where the highest resources are,” said Sujata Srivastava, chief policy officer at the San Francisco Bay Area Planning and Urban Research Association (SPUR), a nonprofit public policy organization. “We have met all of our housing production in the last few decades almost entirely in the eastern neighborhoods and there is very little happening in the northern and west side neighborhoods.”

The majority of San Francisco residents, about 65%, are renters. And at least 27% of those renters spend more than a third of their income on housing, and closer to 40% for families with low income, who on average earn $70,237 annually, according to a 2023 Moody’s report.

But building more affordable housing for lower- and middle-income residents has been a particularly difficult equation to solve — one that each candidate said they’re determined to fix.

Take Mayor London Breed, who has vowed to veto “any piece of anti-housing legislation” that comes across her desk. She recently received a significant endorsement from YIMBY Action, a political advocacy group that advocates for housing development at all income levels.

In her six years as mayor, Breed has overseen the creation of thousands of new units, despite falling woefully short of state requirements. In the first six months of 2023, for example, the city permitted 179 new units, or less than one home on average per day, according to a 2023 review (PDF) from the California Department of Housing and Community Development.

Her plan, dubbed Housing for All, launched in February 2023 and moved to cut inclusionary fees by nearly a third after a city committee suggested they were too high to make many projects feasible. Inclusionary fees require housing developers of projects with 10 or more units to either pay a fee into the city’s affordable housing fund, or include a portion of below-market units.

To encourage more development, Breed said she is open to further reducing those fees to trigger new housing construction in San Francisco. She also introduced a $300 million affordable housing bond, which voters passed in March, that will fund building, acquiring or rehabilitating affordable units in the city.

“As much as I want the inclusionary funds for affordable housing, I want housing, period,” Breed told KQED.

Breed’s competitors Mark Farrell, a former supervisor and interim mayor, and Daniel Lurie, an anti-poverty nonprofit founder and Levi Strauss heir, agree on further reducing fees used to fund affordable housing. Lurie’s plan includes an economic impact analysis to recommend fee reductions, while Farrell, who recently secured support from the San Francisco Building and Construction Trades Council, proposes decreasing the current 12% rate to 10%.

“Right now developers are voting with their pocket books, investing (housing) in other cities and not San Francisco because we have made it too onerous,” Farrell told KQED, stressing that the current administration has “failed” to move fast enough on the city’s housing shortage. “There are affordable housing measures on the ballot that I will always support, but we can’t shy away from the argument or the reality that building more housing increases affordability.”

Supervisors and fellow mayoral candidates Ahsha Safaí and Aaron Peskin told KQED that proactively lowering affordable housing fees is not an immediate priority since the city in 2023 created a process to review and adjust inclusionary fees already. Under that change, the city reviews fee rates every three years.

“If there is a need to lower it more we can have that conversation, but we did that,” Safaí said.

The Excelsior Supervisor added that he thinks further reducing the transfer tax from 6% to 3% on union-backed projects, meaning fees tacked on when property is exchanged from one owner to another, could also spur development. But with tens of thousands of units in various phases of the housing development process already, Safaí is also proposing a full audit of the Department of Building Inspection to find inefficiencies.

Breed, Farrell and Lurie all agree on upzoning and building housing around major transit and commercial corridors on streets such as Van Ness, Geary and Lombard. Lurie says he wants to allow approving more six-to-eight-story buildings and create a new role in city hall to shepherd housing projects with community input.

Peskin, a longtime supervisor for the city’s densest neighborhoods including North Beach and Chinatown, has been criticized by his opponents for blocking some housing projects in particular around the North Beach and waterfront areas.

But he’s not the only candidate who has a history of blocking some housing projects. As supervisor, Farrell opposed an affordable housing project at Booker T. Washington, for example.

Unlike his competitors who are eager to build housing for all income levels, Peskin wants to prioritize building more housing that’s affordable to lower- and middle-income households. He’s currently working to pass legislation that would utilize tax-exempt government-issued revenue bonds to build housing affordable to the middle class including teachers, health care workers and first responders.

The idea is to build affordable housing specifically for people earning 80%–120% of the area median income (AMI), like teachers, firefighters, service workers who might make too much to qualify for low-income housing but not enough to pay market-rate rent prices. It would cap rents at 15% below market rate or limit rents to caps set by the Mayor’s Office of Housing and Community Development for people with those income ranges.

“All of the moderate conservative candidates in the race are singularly focused on turning Ocean Beach into Miami Beach, and they are all focused on the problem which is zoning and not financing,” Peskin told KQED. “How we build workforce housing and affordable middle-income housing is where the work needs to be done.”

But at least one affordable housing developer has already criticized the plan, arguing the savings for renters immediately don’t add up.

Housing affordability experts like SPUR’s Srivastava say increasing the city’s housing inventory is necessary to keep rents affordable, but development should be done thoughtfully to avoid displacing more vulnerable communities and neighborhoods that could get priced out with additional market-rate development.

“People on the westside and northern neighborhoods are watching this issue carefully,” she said.

In addition to lowering fees and exempting transfer taxes on multifamily projects, Lurie’s plan includes speeding up housing approvals by cutting certain design guidelines and creating a “shot clock” that sets maximum review times and standards for project approvals.

The city has close to 73,000 units in the pipeline, 24% of which are considered affordable, but a lack of financing for those affordable and middle-income projects is a major impediment.

“The city’s role can no longer be just about rezoning,” former San Francisco Planning Director John Rahaim said in a prepared statement. Rahaim also gave Lurie’s plan his seal of approval. “The city must help to create the local market conditions that enable approved units to actually get built.”

Lurie touts that his nonprofit, Tipping Point, built 145 units of affordable housing at 833 Bryant Street in three years — about half the typical time for such projects — at around $383,000 per unit compared to the city’s average of $700,000 per unit.

The project utilized state legislation passed in 2017 that expedited the approval process for some multifamily projects in cities that are not on track to meet housing production goals. It also received a $50 million boost directly from Tipping Point, donated from Charles and Helen Schwab, to get things moving quickly.

Not all projects will have such a generous boost of capital at the start, Srivastava said. But she added it’s necessary that city leaders embrace creative solutions to get around the “slow and unwieldy” affordable housing financing model.

“The next person in City Hall will need to adopt a plan that does not undermine state housing laws,” she said. “There isn’t a lot of room for the city to keep playing games.”