San Francisco has long been ground zero for calls to build more affordable homes. In recent years those calls have been amplified by the city’s new housing blueprint, approved in 2023, which requires making room for more than 40,000 below-market-rate units this decade.
But the bottom line casts a long shadow over this demand. It can cost up to $1 million to build a single affordable home in the city, depending on the details. The city has built 6,545 affordable units since 2021, according to the Planning Department.
A recent City Hall analysis put the public cost of affordable housing goals at $3 billion a year for the next six years. Short of a federal windfall, there’s no way to close that gap. But this fall’s jam-packed election will offer a few proposals to chip away at it. Meanwhile, rent and home prices, driven by the A.I. boom, are through the roof.
Two of the proposals are local and could funnel hundreds of millions of dollars a year into affordable housing construction. It’s a fraction of what the city needs, but backers of these measures promote them as an opportunity to guarantee more reliable funding for new homes.
Another proposal for November is an $11.25 billion state bond. After an even larger Bay Area regional bond failed to make the ballot two years ago, housing advocates see this state-level appeal — which adds veteran housing too – as a chance to catch up on the time lost to that mishap, especially as housing costs have accelerated exponentially during that time.
None of these measures will raise taxes, but the two SF proposals shift tax money around and are tied to budget battles past and present. They also have similar names, which means there’s a chance for voter confusion as forces, pro and con, start to line up in earnest once summer turns to fall.
One battle after another
The closure of the Great Highway, back on the ballot this November, seems like the San Francisco political fight that never ends. But the Affordable Housing Guarantee Act is a revival of an even older battle.
In 2020, then-Sup. Dean Preston authored a measure to increase SF’s transfer tax, which kicks in when a building sells for more than $10 million. Preston and allies said the extra cash would go to build public housing, or as it’s now known, social housing — affordable housing owned by the government.
The city controller said at the time the extra revenue could average nearly $200 million per year, but the reality has been about half that. A June report from the supervisors’ legislative analysts estimate Prop I funds at about $100 million a year through 2030.
Preston’s measure, Proposition I, won more than 57 percent of the vote in November 2020. But then-Mayor London Breed refused to dedicate the money to social housing, instead routing it to the general fund. She was flouting the spirit of the law, but not the letter. Without a two-thirds majority approval, the money couldn’t be earmarked for a specific purpose, and Breed was happy to preserve some budget flexibility while denying her rival Preston a political victory.
Preston lost his reelection bid in 2024 and is now rallying from the sidelines. Drawing courage from the victory of fellow Democratic Socialist Zohran Mamdani in New York, Preston wants to make the earmark official and ensure the extra funds go toward social housing once and for all. The proposal would not raise the tax above the 5.5 percent to 6 percent range, where it now sits thanks to Prop I.
Backers said earlier this month that they’d gathered enough signatures to qualify the proposal for the November ballot. And this time, Preston says it will only require a simple majority vote, not two-thirds.
Breed and Preston are no longer in office, but the transfer tax debate has carried over to their successors. Sup. Bilal Mahmood, who beat Preston in 2024, and Mayor Daniel Lurie floated a plan earlier this year to chop Prop I taxes in half to encourage housing construction. But they backed away from it after the city controller estimated it would shave about $400 million from revenues through 2030, all while SF struggles to close an enormous budget gap. (Mahmood did not return requests for comment.)
At least one Lurie ally, Sup. Stephen Sherrill, told The Frisc recently that he wants another shot at cutting the transfer tax, along with more of the fees that the city charges developers.
The upper tier of the transfer tax is 6 percent. “You might say 6 percent is not huge,” says Sherrill. But when added to the budget of a major redevelopment, it can sink a developer’s finances, he adds.
Preston says approval of his measure this fall would demonstrate public support of the transfer tax as it is: “It makes sense to keep the tax and spend the money on affordable housing.”
The other affordable measure
The second local proposal to boost affordable housing also has that phrase in its title: the Affordable Housing Trust Fund. Like Preston’s plan, it asks voters not to approve new taxes but to shift existing taxes into a dedicated affordable housing fund.
But unlike Preston’s measure, this one comes from good relations between a supervisor and mayor, or at least productive negotiations.
Lurie needed Sup. Myrna Melgar to shepherd his Family Zoning Plan last year through the Land Use Committee, which she chairs. Without her support, it might not have gotten through. (The board approved it 7 to 4.)
In exchange for her help, she forged a compromise with the mayor’s office: a proposal to carve out a chunk of city property taxes to fund affordable housing. SF currently puts $52 million a year into its housing trust fund. This measure would divert future property taxes to bump that figure to at least $125 million a year.
(In some years San Francisco spends more. For example, in 2024-25 the city spent $234 million, which came from the trust fund, the city’s general fund, bonds, and and state funds.)
The proposal comes as City Hall prepares a dramatic decrease in the percentage of affordable homes developers must include in market-rate projects. This “inclusionary” rate, which would drop from about 15 percent to about 5 percent, goes up and down every few years. Recently it has done little to spur new affordable homes because, overall, there has been little residential construction.
Melgar and Lurie are wagering that affordable developers and advocates won’t fight the inclusionary cuts if paired with the promise of the property tax carveouts. Melgar tells The Frisc that the Trust Fund plan also creates a reliable, annual source of affordable construction funds.
The calculus depends on the Family Zoning Plan spurring a wave of new homes across the city’s more well-to-do neighborhoods, adding new homes to tax and boosting property values of existing ones. There’s no consensus about how much new construction is coming. In the run-up to the zoning plan’s approval last fall, city economist Ted Egan projected more modest figures than the plan’s backers had hoped for.
Earmarks or bugbears?
Both San Francisco measures have one more thing in common. They’re both examples of earmarks, or guarantees, which good governance advocates say are not good budgeting practice. Promising funds for certain things might seem necessary, but as societal needs shift, it diminishes lawmakers’ bargaining power when crafting budgets.
San Francisco leans heavily on these promises. A 2025 analysis by the local urbanist think tank SPUR showed that a growing amount of SF’s budget is locked into set-asides, from about 15 percent in the year 2000 to more than 30 percent now.
Even though set-asides curb budgeting flexibility, supervisors are “not above resorting” to these measures to promote their policy goals, says Public Policy Institute of California survey director Mark Baldassare.
He also says the public tends to like these kinds of budget mandates, even as they resent the resulting budget gridlock — part of Californians’ long and complicated history with direct democracy.
The $11.25 billion state bond on the ballot is in some ways the opposite of a budget set-aside. Instead of slicing up an existing pie in different ways, the bond proposal would add a lot more dough to the recipe.
Local and state governments often borrow to pay for infrastructure — traditionally things like water systems, roads, schools, and bridges, and now more frequently housing. This bond’s backers say it will help fund tens of thousands of “shovel-ready” projects across the state and a projected 135,000 homes altogether.
SF has thousands of affordable units in the pipeline waiting for funding, and city projects will have to compete for the state bond money. In 2024, for example, SF qualified for some $38 million in state loans to build just 168 affordable homes. But that was from a state fund that totaled only $315 million. The new bond would add $5.1 billion to that same community chest.
San Francisco needs to build more roofs over its residents’ heads. As rents and home prices reach record highs, the urgency is clear. With three ballot measures to assess this fall, voters can weigh different methods of tapping into hundreds more millions of dollars per year.
