The Facts

Zero. That is the Controller’s recommended inclusionary rate for San Francisco right now. This rate determines how many subsidized below-market-rate units a home builder is required to include in new construction.

New data from the City Economist's office and an independent Technical Adivsory Committee says builders can't afford to build any subsidized units. In fact, they can't afford to build anything at all right now. Nearly every housing type that was modeled was financially infeasible under current market conditions.

The Context

San Francisco’s inclusionary program usually requires projects with 10 or more units to provide below-market homes, land, or fees.

This fight is not new. In 2017, the Technical Adivsory Committee recommended initial on-site rates of 14% to 18%, with a warning that 18% was the maximum feasible without being net-negative. But the pre-GrowSF Board of Supervisors promptly ignored that warning and set the mandatory minimum at 18% and scheduled it to increase by half a percent every year for the next fifteen years.

In practice, supervisors treated the maximum possible of the feasible range as a floor and planned to go higher, reality be damned.

The GrowSF Take

Homebuilders can't afford to build anything right now, let alone homes they are required to sell for below cost. The math indicates builders should be getting public subsidies to build market-rate homes, but that's not politically feasible. So we'll be stuck waiting for prices to keep rising unless the city futs more fees, speeds up timeliness, and loosens their grip on new home building.