New Report Proves SF Can Fund and Build Its Own Housing

Vienna-Style Social Housing Offers Key Opportunity to Jumpstart Housing Production

Earlier today, the City released its first report on mixed-income social housing development, concluding that the model can be financially feasible in San Francisco. As San Francisco works to deliver 46,000 new affordable homes under its Housing Element, the report on municipally sponsored social housing offers an exciting path forward for the incoming administration.

“The voters and a unanimous Board have called for the City to create social housing, but Mayor Breed has blocked it for years, while other jurisdictions have moved forward,” said Preston who commissioned the report and has advocated for social housing for years. “With a new mayor, and this groundbreaking report, San Francisco can finally move forward with this desperately needed strategy to provide housing for working class people in our city.” 

The report, released today by the Budget and Legislative Analyst, details the feasibility of constructing housing with permanent affordability through a model used for decades in cities like Vienna, and more recently piloted in U.S. jurisdictions, including Montgomery County, Maryland. In the BLA report, multiple scenarios show that municipal housing can succeed with a combination of public investment in construction, rental income that offsets operating costs, and favorable loan terms.

The approach is crucial at a time when the private market has largely stalled and federal and state funding for affordable housing is severely limited, all while San Francisco faces a mandate to build over 46,000 affordable housing units by 2031. The down market has also created significant opportunities for site acquisitions at lower prices. The report found that under 2024 conditions, social housing would be able to “accommodate a reasonable mix of lower- and middle-income tenants” with ongoing operating costs covered by rents. 

Supervisor Preston has long called for social housing, noting that in Vienna 60% of the housing is social housing, offering long term stability and affordability for a majority of the City’s population. In 2020, Supervisor Preston wrote and introduced two ballot measures to authorize and fund a social housing program in San Francisco. Prop K authorized 10,000 units of municipal housing, and Prop I taxed high-end real estate transactions to generate new funds for social housing. Both measures passed by a wide margin. At the same time, the Board of Supervisors unanimously passed legislation calling for the Prop I funds to be used for social housing. Despite this mandate, the Mayor (who did not support Prop I) refused to include social housing in her proposed budgets, stopping momentum for the development of mixed-income social housing in San Francisco.  Proposition I is cited in the BLA report as one of the available sources of funding for the investments in building social housing.1 

To create social housing where the rents cover ongoing operating costs, the report notes that a mix of incomes is essential, as are low interest loans at the front end. The report identifies “a public bank to be established by the City” and “a City-created revolving loan fund” as potential sources of low-interest loans. San Francisco is working to establish a public bank, following Preston’s legislation to create the Reinvestment Working Group, and the Board’s adoption of the RWG’s business and governance plan, work that is expected to be carried forward by incoming Supervisor Jackie Fielder, co-founder of the SF Public Bank Coalition. 

The BLA report also notes the availability of operating subsidies for thousands of new units through the federal Faircloth-to-RAD program. Preston led the effort to compel the Housing Authority to reserve funding for 3667 new deeply affordable units under this program. This funding could help subsidize ongoing rents in perpetuity, allowing even more of the units in self-sustaining social housing to be occupied by extremely low income households. 

“This report is a huge step toward realizing a broad vision that’s inclusive of city-owned housing alongside our nonprofits that have developed the majority of affordable housing in San Francisco,” said Shanti Singh, Chair of the Housing Stability Fund Oversight Board. “Obviously in the long run our City will need state and/or federal investment to fully scale up to meet the need, but the City can get started immediately to create good union jobs and build thousands of affordable homes for San Franciscans.” 

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 1 Prop I has already generated over $300m to date. While the Mayor has refused to budget the funds as intended, the Board has clawed back Prop I funds and directed them toward site acquisitions, affordable housing development, acquisition and preservation of rental properties, public housing and SRO repairs, and funding for innovative housing strategies including community land trusts. These investments have been detailed by the Housing Stability Fund Oversight Board in a June 2024 report.