Facing Affordable Housing Funding Shortfall in the Billions, Preston Calls on Prop I Funds to be "Starting Point" for Local Action

SAN FRANCISCO — New analysis revealed today at a Government Audit and Oversight Committee shows a massive shortfall in affordable housing funding – $1.3 billion annually starting in 2023, and growing to $2.4 billion by the end of the decade – putting the need for significant intervention in stark relief. Supervisor Dean Preston, who requested the hearing, called on city leaders to come together around local funding solutions, including making use of revenue from the Prop I transfer tax he passed in 2020 for affordable housing.

“If we’re at all serious about meeting our goals, allocating Prop I money to meet our affordable housing needs must be a starting point, not a point of contention,” Preston said. “Voters demanded this money go to affordable housing, and knowing how far we are from actually hitting our affordability targets, it should be a no-brainer.”

The report, prepared by the Planning Department and the Mayor’s Office of Housing and Community Development, analyzed performance to date on meeting regional allocation targets, both for affordable and market rate projects, and reviewed projected targets over the next decade.

For current performance, San Francisco has produced less than half (48%) of its targeted goals for affordable housing, while the city has produced 151% of its market rate goals, according to the 2015-2022 Regional Housing Needs Assessment (RHNA) data. (Slide 10 of the presentation)

Starting in 2023, the city’s affordable targets increase dramatically, as do our local funding gaps. Assuming San Francisco receives all of the state and federal money to cover projected needs, the local gap will be $1.3 billion for that year alone. That figure grows to $2.4 billion by the end of the decade. (Slide 19 of the presentation)

Significant intervention is needed to reach these goals, and among the listed options is Prop I, the real estate transfer tax we passed in 2020, which has brought in $223.8m as of this fiscal year, and is anticipated to raise $170m over the next five fiscal years.

Surprisingly, at the hearing today, department representatives were able to identify future funding gaps starting in 2023 through 2029, but could not identify the affordable housing funding gap in the current fiscal year, 2022. “What we learned today is that not only is there no plan to succeed going forward, but the departments we entrust with affordable housing can’t even tell us where we are right now. It’s deeply concerning and the City needs to do better,” said Preston.

The presentation today included a range of strategies at all levels of government, including Prop 13 reform, using state surplus land as cost-effective affordable housing sites, and advocacy for increased federal funding through COVID-recovery and other programs.

“Even with robust state and federal support, locally we need to come together to do our part,” Preston said. “We have offered an opening with Prop I, and I’m calling on Mayor Breed and my colleagues to recognize the moment and fully fund Prop I in the upcoming and future budgets.”

To access the Planning Department / MOHCD report, click here.

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