San Francisco Unveils Reforms to Unlock Housing Pipeline

On July 21, 2026, the San Francisco Board of Supervisors approved a landmark legislative package designed to stimulate residential development and stabilize affordable housing funding. These reforms represent a strategic shift in the City’s approach to housing, moving away from high regulatory burdens to prioritize project feasibility. The legislation is paired with a proposed Charter Amendment to renew and expand the City’s Affordable Housing Trust Fund.

The legislation amends the City’s Planning, Building, and Administrative Codes to reduce financial obligations for residential projects.  As explained in more detail below, the amendments (i) reduce inclusionary affordable housing (a.k.a. BMR) requirements, including eliminating BMR requirements for projects with less than 25 units; (ii) delete a series of area-specific BMR and infrastructure fees; and (iii) reduce other development impact fees, and delay when those development impact fees must be paid. The changes are based on recommendations from the City’s 2026 “Triennial Review of Economic Feasibility,” which found that the “financial feasibility of market-rate housing development is currently very challenging” and concluded that the City’s previous requirements rendered each of the 10 studied multifamily housing development prototypes economically infeasible.

Reduced & Eliminated BMR Requirements

To further incentivize housing development, the legislation permanently reduces BMR requirements. Key changes include:

• BMR requirements will no longer apply to projects consisting of fewer than 25 dwelling units. Previously, the threshold began at 10 units.
• For projects subject to BMR requirements, the default on-site requirement has been steeply reduced to 5% Citywide. There are exceptions for projects subject to a development agreement or in an area with different BMR requirements (e.g., in a SUD or the Mission Plan Area).
• There will no longer be an annual 0.5% increase in BMR requirements.
• The legislation also modifies BMR requirements so that rental units must be affordable to households earning 55% and 80% of AMI and ownership units will be affordable to households earning 80% and 100% AMI.
• Project sponsors electing to pay an in-lieu fee or provide BMR units off-site will now see a reduced rate, at a baseline of 10% (up to 15% in specifically designated areas).
• In-lieu fees will no longer be applied to density bonus units authorized under the State Density Bonus Law.
• All projects now have the option to dedicate land to the City as an alternative to providing BMR units or in-lieu fees. The site proposed for dedication must meet specified requirements and receive a letter of acceptance from the Mayor’s Office of Housing and Community Development (MOHCD) prior to conveyance.
• The legislation adds an efficient process for sponsors of “Finally Approved” (as defined) projects to modify their projects, including changing the selected BMR Alternative or tenure (ownership vs. rental) of a project.
• The legislation allows project sponsors to benefit from reduced (or eliminated) BMR requirements for “Pipeline Projects” (i.e., projects that have not been issued a First Construction Document) and certain Finally Approved projects that have deferred full payment of all development impact fees.

Reduced Development Impact Fees & Expanded Fee Deferral

To further incentivize housing development, the legislation permanently reduces Planning Code Article 4 development impact fees and expands the existing Fee Deferral Program. Key changes include:

• Development impact fees other than in-lieu fees will be reduced by 67% at the time of collection. By removing the prior November 1, 2026, sunset and the conditional eligibility criteria, the legislation converts what had been a temporary, project-specific reduction into a broad, permanent cut.
• Project sponsors may defer payment of 85% of Article 4 development impact and in-lieu fees to prior to issuance of the first certificate of occupancy, paying only 15% (reduced from the prior 20% pre-payment) before issuance of the First Construction Document.
• The fee deferral and reduction provisions are extended to fees deposited into the Citywide Affordable Housing Fund, removing the prior carve-out that had excluded those fees.
• The legislation also reinforces fee certainty by (i) assessing development impact fees based on the types of fees in effect at the time the project application is deemed complete; (ii) assessing development impact fees based on the rates in the Development Impact Fee Register at Final Approval; and (iii) barring subsequently established fees or rate increases (including annual inflation adjustments) after Final Approval, subject to modification, renewal, and extension rules.
• “Pipeline Projects” and certain “Finally Approved” projects are granted express mechanisms to capture reduced or deleted impact fees following the legislative amendments.

Developer Opportunities

These reforms create a significant opportunity for residential developers in San Francisco. By drastically lowering the barrier to entry for projects between 10 and 24 units and reducing the on-site BMR burden for larger projects to a manageable 5%, the City strengthens its new pro-growth stance.

Developers with Pipeline Projects or Finally Approved projects should review their entitlements to determine if they qualify for the 67% development impact fee reduction and/or the ability to modify their conditions of approval to reflect reduced (or eliminated) BMR requirements.  Pipeline Projects may obtain the 67% development impact fee reductions. Projects that have obtained a First Construction Document (as defined) and that have deferred a portion of the impact fee amount owed may obtain a reduction to the remaining unpaid balance (as specified), but no refund will be issued for any portion of a development impact fee amount already paid.

Please contact our San Francisco Land Use team for a parcel-specific analysis or assistance in navigating the updated Planning Code.

Funding Implications

While the legislation reduces developer-funded affordable housing funds, the City is simultaneously hoping to fill the gap through a proposed Charter Amendment for the November 2026 ballot. This ballot measure aims to renew and expand the Affordable Housing Trust Fund (HTF), which was originally established in 2012.

To summarize, the ballot measure would: (i) extend the HTF until 2058, (ii) increase the annual appropriation into the HTF (starting in fiscal year 2028-2029) by allocating 20% of future property tax revenue increases until the fund reaches an annual appropriation of $125 million (targeted for 2036), and (iii) allow the City to freeze or reduce appropriations in the event of recession or large budget deficits.