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Supervisors advance downtown office‑to‑residential waiver with 7,000,000 sq. ft. cap amid fiscal concerns
Summary
The board passed the office‑to‑residential conversion waiver on first reading with a 7,000,000 square‑foot cap after debate over lost inclusionary housing fees and fiscal tradeoffs; supporters said the change will help downtown recovery, while opponents warned of long‑term revenue loss and urged committee review.
The San Francisco Board of Supervisors on Feb. 25 voted to advance an ordinance on first reading that would exempt a narrow class of downtown office‑to‑residential conversion projects from certain impact fees and inclusionary housing requirements, adopting an amendment that caps the waiver at 7,000,000 square feet (approximately 7,000 converted units).
Supervisor Matt Dorsey, who co‑authored the legislation, said the exemptions are aimed at unlocking conversions amid a reported 35% downtown office vacancy and would accelerate housing production downtown without requiring an arbitrary sunset date. “This is a forward‑thinking policy that will help us revitalize downtown while ensuring our city meets its long‑term housing needs,” Dorsey said.
Supporters argued conversions would create market‑rate units and stabilize the property and business tax base; Supervisor Shamon Sauter said a square‑foot cap ensures the program is bounded and can be revisited if successful. “By setting a cap on square footage, we ensure that we do not prematurely short circuit these conversions at an arbitrary date,” Sauter said.
Opponents—including Supervisor Chan (Budget Committee Chair) and Supervisor Walton—warned the waiver would forgo inclusionary housing fees and other community impact funds at a time the city faces significant shortfalls. Chair Chan said she would vote against an amendment to increase contract funding elsewhere and urged caution about waiving fees without sunset dates or conditions, citing competing needs for dentals, youth services and behavioral health funding.
The board adopted the amended item on a recorded vote with nine ayes and two no votes; Supervisors Melgar and Fielder voted no on the final tally. The ordinance was passed on first reading; additional committee review and potential amendments were discussed as next steps, and supervisors urged staff reports and public comment in committee to help refine the program’s boundaries and reporting requirements.
The ordinance includes reporting requirements for the mayor's office of housing and community development and an affirmation of CEQA determinations; details on the exact eligibility criteria for projects, and the timeline for any permanent fee changes, will be finalized in subsequent committee hearings.
Supporters said the measure could yield up to half of downtown's estimated conversion potential if successful; critics asked for clearer guardrails to protect priority equity geographies and cultural districts.
Next steps: the item will continue through the legislative process, with supervisors and staff signaling further committee review and public comment opportunities before final passage.
