Board approves limited fee waivers to speed office‑to‑housing conversions downtown with a 7‑million‑square‑foot cap

The San Francisco Board of Supervisors on Feb. 25 passed on first reading an ordinance designed to encourage conversion of underused downtown office space into housing. The measure waives certain development impact fees, including inclusionary housing fees, for a narrowly targeted subset of downtown office‑to‑residential projects and requires reporting and a square‑foot cap on exemptions.

Why it matters: Downtown vacancy in San Francisco has climbed in recent years, and proponents say conversions to housing would both add homes and reduce office vacancy. The ordinance seeks to lower costs that have deterred conversions. Supporters contend the measure will accelerate downtown housing production; critics warned it could reduce long‑term funding for affordable housing and other community needs.

Key provisions: The ordinance creates a narrow waiver for projects in core downtown districts (C2 and C3) that convert nonresidential space to housing. Supervisors amended the measure to include a 7,000,000 square‑foot cap on the total amount of space eligible for fee waivers; Land Use Committee language also requires periodic reporting to the inclusionary housing technical advisory committee.

Board debate and votes: Supervisor Matt Dorsey said the ordinance seeks to unlock housing by reducing fee barriers. Supervisor Shamus Sauter (chairing the land‑use conversation) introduced the amendment that set the 7 million square‑foot cap, saying it translated to roughly 7,000 converted units and limited the program’s fiscal reach. Supervisor Chan acknowledged the need to spur conversions but said waivers without sunsets or caps could create long‑term fiscal tradeoffs, and urged committee review. The ordinance passed first reading as amended, 9–2, with Supervisors Walton and Fielder voting no.

Public and technical context: Supporters pointed to examples in other cities — New York had thousands of conversions underway — and argued a measured waiver would help stabilize the downtown real‑estate market and yield housing without immediate on‑site affordable units. Opponents and community organizations asked for protections for priority equity geographies, cultural districts and assurances that impact fee revenue to support childcare, transit and open space would not dry up.

Implementation and next steps: The ordinance requires reporting and includes technical amendments to allow monitoring of outcomes. It passed first reading; further hearings and any additional amendments may occur before final passage.