The San Francisco City Council convened on July 4, 2025, to discuss significant changes to the city's inclusionary housing requirements, aiming to address the pressing need for affordable housing. The proposed legislation seeks to reduce the inclusionary housing rates for larger projects, which have been a barrier to development in the current economic climate.

During the meeting, city officials highlighted the urgent need for affordable housing, referencing a forthcoming bond measure aimed at funding the construction of 46,000 mandated units. The proposed changes are designed to make housing development more feasible, particularly for projects with 25 or more units that have received final approval prior to November 1, 2023. These projects would see a reduction in inclusionary housing requirements from the current rates, which many developers argue are financially unviable.

Key findings from a recent economic feasibility analysis indicated that many apartment projects are currently not financially feasible, even without inclusionary requirements. The analysis revealed that under existing conditions, developers struggle to meet land costs, making it difficult to proceed with new housing projects. In contrast, some condominium projects showed marginal feasibility at lower inclusionary rates, suggesting that adjustments could stimulate development.

The proposed ordinance includes a tiered approach to inclusionary rates, with reductions for both pipeline projects (those approved before November 2023) and interim projects (approved between November 2023 and November 2026). The city aims to simplify the process by allowing administrative adjustments to inclusionary rates, rather than requiring each project to return to the planning commission for approval.

Public comments during the meeting reflected a mix of support and caution. Advocates for affordable housing emphasized the importance of reducing barriers to development while also calling for a balanced approach that ensures adequate resources for below-market-rate housing. Some speakers urged the city to consider the broader implications of lowering inclusionary rates, advocating for a comprehensive strategy that includes increasing funding for affordable housing initiatives.

As the city moves forward with these proposed changes, officials are committed to revisiting the inclusionary housing requirements in three years, ensuring that the policies remain responsive to market conditions and community needs. The council's actions signal a proactive approach to tackling San Francisco's housing crisis, aiming to create a more sustainable and inclusive housing landscape for all residents.