Committee advances ordinance to cut inclusionary on-site rate to 5% and reduce impact fees, forwarding it to full Board

The Government Audit and Oversight Committee on July 2, 2026 advanced an ordinance to recalibrate San Francisco's inclusionary affordable housing requirements and reduce development impact fees, forwarding the amended measure to the full Board of Supervisors with a positive recommendation.

Staff from the Office of Economic and Workforce Development (OEWD) and the Planning Department described the proposed legislation (Board File 260538) as the implementation of the controller's technical advisory committee (TAC) recommendations after its April 30 economic feasibility report. Jacob Bintliff, OEWD (representing the mayor's office), said TAC modeling found current inclusionary rates are not economically feasible under today's construction and financing costs and recommended cutting the on-site requirement to 5% citywide and proportionally reducing impact fees. Ada Tan of the Planning Department gave detailed ordinance provisions: raising the applicability threshold from projects of 10 units to 25 units; setting the on-site requirement at 5% (4% lower-income, 1% moderate-income) and fee/off-site rates to 10% citywide (15% in certain higher-rate areas); expanding a land-dedication option with minimum site capacity rules and permitting fee deferrals up to 85% to first certificate of occupancy.

The Budget and Legislative Analyst (BLA) report summarized fiscal implications: in fiscal year 2023–24 the city collected roughly $1.5 million in affordable housing fees and $2.6 million in development impact fees; the ordinance would reduce those streams by roughly half in current collection levels (BLA estimate ~ $3 million annual difference), though staff argued some revenue loss could be offset if the reductions unlock additional market-rate development that pays fees and increases the property tax base. Jacob Bintliff said the ordinance is intended to be considered alongside a companion charter amendment (a housing trust fund measure) that would more than double baseline annual housing trust fund payments to roughly $125,000,000 per year and provide recurring local funding that the TAC recommended pairing with lower inclusionary requirements.

Public comment was extensive and divided. Labor unions and many development‑oriented speakers including construction trades, small developers and housing nonprofits supported the package as a pragmatic recalibration to restart projects and jobs; Trevor Long of Glazers Local 718 and Greg Hardeman of the Elevator Constructors urged supervisors to adopt the TAC recommendations so projects would pencil and members would get hours. Nonprofit affordable housing providers and TAC members (for example, Rebecca Foster, CEO of Housing Accelerator Fund, and Lily Lou Haylor of Mercy Housing California) emphasized that the 5% on-site rate should be paired with durable local funding through the housing trust fund. Opponents — including neighborhood and community groups speaking for Mission and Bayview concerns — warned that cutting on-site requirements citywide and exempting projects under 25 units risks breaking area‑plan bargains, accelerating displacement in priority equity geographies, and reducing guarantees of community benefits. Marie Sorensen and others framed the change as a threat to equity, while Young Community Developers warned the changes would disproportionately affect Bayview redevelopment typologies.

Supervisors questioned staff about methodology and contingencies if the housing trust fund measure fails. Supervisor Fielder (recorded in committee proceedings) pressed why 5% was chosen rather than a conditional step down to 10% if the trust fund did not secure recurring funding. OEWD staff said the TAC modeled many prototypes and landed on 5% to preserve some on-site production while moving closer to feasibility; staff also said the Board could revise the ordinance after the November ballot and that the 5% ordinance was timed to avoid an interim six‑month gap because temporary reductions from 2023 expire November 1.

On committee motions, the committee adopted OEWD's technical, non‑substantive amendments to the original file and then forwarded the original file as amended to the full Board with a positive recommendation. The roll calls recorded Member Felder voting no and Vice Chair Mahmood and Chair Sherrill voting aye; the clerk announced two ayes and one no and the motion passed.

What happens next: the ordinance (Board File 260538) and the companion charter amendment to expand the housing trust fund are both scheduled to be considered by the full Board on July 14, 2026. Staff told the committee they would work with supervisors to adjust inclusionary rates if the trust fund measure does not pass.