Momentum is Real: A Breakthrough in Affordable Housing Funding

How a CCHO idea became a $3 billion Charter Amendment — and why the fight isn't over.

The right idea at the right moment moves with the right convictions.

San Francisco can only build affordable housing with significant local dollars. Over the last eight months, what CCHO started as proposals for increasing the available funding has emerged as a ballot measure led by Supervisor Melgar and supported by Mayor Lurie.

We have come a long way since last fall.

San Francisco’s affordable housing sector was — and still is — facing a fiscal cliff unlike anything we have seen in a generation. Federal funding is contracting. State resources are stretched. Local budgets are in deficit. The organizations that build, preserve, and protect affordable housing for this city’s most vulnerable residents are being asked to do more with dramatically less — and some are facing existential questions about their own survival.

At the same time, the political ground was shifting fast. The new administration in Washington was signaling deep cuts to housing programs. Sacramento was tightening its belt. And here in San Francisco, the revenue streams that affordable housing has long depended on were under threat.

We could not afford another year of the status quo. We had to act. The question was what, exactly, that would be — in the middle of deep economic uncertainty, a volatile political environment, and a civic landscape where the wrong idea at the wrong moment could set the cause back rather than move it forward.

That’s why, last October, Kyle Smeallie from the SF Community Land Trust and I sat down with our colleagues at the Non-Profit Housing Association of Northern California — NPH. We were there to think through possibilities. To figure out what was viable, what would poll, what could build a broad enough coalition to actually win.

We put two ideas on the table.

The first: dedicate the revenue from Prop I — the voter-approved transfer tax on properties worth more than $10 million — to affordable housing, where voters always intended it to go.

The second: expand the existing Housing Trust Fund, growing it to $100 million a year, sustained over 30 years, and locked into the City Charter where it couldn’t be quietly defunded in the next budget cycle.

That second idea — expanding the Housing Trust Fund to $100 million a year and locking it into the City Charter — came from two years of CCHO staff research with member organizations. We knew the fund needed to be bigger and better protected. What we didn’t yet know was exactly how to get it there.

That’s where the Housing Accelerator Fund’s analytical work became decisive. They developed the mechanism: tying HTF growth to an increment of future property tax revenue, capturing the city’s increasing property wealth until the fund reaches $125 million a year — and protecting it constitutionally for 30 years. It was the kind of rigorous financial modeling that turns a good idea into a viable ballot measure.

Seven months after that October meeting, Supervisor Myrna Melgar introduced the result as a Charter Amendment for the November ballot — in partnership with Mayor Lurie, with the support of a growing coalition, and with real momentum behind it.

That doesn’t happen often enough in this city. When it does, it’s worth pausing to say so.

What the Housing Trust Fund Is — and What It Can Become

San Francisco voters created the Housing Trust Fund in 2012. The original measure was a hard-fought victory: a dedicated stream of City revenue for affordable housing, locked into the Charter, growing annually.

But the original fund was always too small for the scale of the challenge.

It started at roughly $20 million a year and grew modestly over time, reaching $52 million today. Meanwhile, the cost of building and preserving affordable housing in San Francisco exploded. Construction costs climbed. Federal resources dried up. The gap between what the Housing Trust Fund could finance and what our communities actually needed grew wider every year.

Today, more than 17,000 approved affordable homes sit in San Francisco’s pipeline — entitled, designed, and waiting. Ready for permits. Ready on zoning. Waiting only for funding.

The Housing Trust Fund, as currently structured, falls short of what that pipeline demands.

The proposed Charter Amendment can begin to change that.

What the New Proposal Actually Does

This is a transformation, and we should name it as one.

Under the proposed Charter Amendment, the Housing Trust Fund would grow by capturing an increment of future property tax revenue — money generated by increasing property values — until it reaches $125 million a year. After that, it grows at the same rate as General Fund discretionary revenue, up to 3% annually, through 2058.

Over 30 years, the average annual allocation is projected to triple — from $52 million today to an average of $160 million per year — generating an additional $3 billion for affordable housing beyond what the current fund would provide.

That is a real number with real consequences. It is the difference between a pipeline that moves and one that stalls. It is the difference between communities that stay intact and ones that scatter.

And critically — it is the difference between funding that exists at the pleasure of each year’s budget process and funding that is protected.

There is a distinction in housing finance that matters enormously and rarely gets discussed in public: the difference between financing and funding.

Financing is debt. It must be repaid. It can help move projects. But it cannot, by itself, make housing affordable to a family earning $50,000 a year in San Francisco.

Funding — gap funding, subsidy, the money that fills the difference between what low-income tenants can pay and what it costs to build and operate housing here — is irreplaceable. It is the most precious resource local government controls.

The expanded Housing Trust Fund is a funding commitment. A real, durable, protected source of gap funding for the people who need it most.

And let’s be clear about who that is.

Affordable housing is the infrastructure of a functioning city. It is for teachers and nurses and Muni drivers. It is for the people who keep this city running and deserve to live in it. It is for working families who have been here for generations and are watching their neighborhoods change around them — not because their neighbors chose to leave, but because the math stopped working.

The housing crisis is the defining quality-of-life issue of our time. And it touches virtually everyone in this city who does not already own property — which, in San Francisco, is most of us.

A Word About the Full Picture

We celebrate this proposal. And we mean it.

But celebration is the beginning of the work, not the end of it — and coalition building requires honesty, not just solidarity.

Alongside the Housing Trust Fund expansion, the Mayor and Supervisor Melgar have introduced an ordinance to significantly reduce inclusionary housing requirements — cutting the on-site affordable unit requirement from 12% to 5% for larger projects, and exempting smaller projects entirely. The rationale is economic feasibility. The Controller’s report supports it. And we understand the argument.

But San Franciscans deserve to understand what is being traded.

Inclusionary fees and units are a direct revenue stream for affordable housing — one that has produced real homes and real dollars for decades. Reducing them means less funding for the very pipeline the Housing Trust Fund is meant to fill.

The math is complicated and the tradeoffs are real. And the expansion of one funding source must stand on its own — it cannot become justification for eroding others.

Prop I — the transfer tax on high-value real estate transactions that voters approved in 2020 — remains under threat. The BUILD Act, which would significantly reduce that revenue, has not gone away. Inclusionary fees are being cut. Impact fees are being reduced in proportion.

Here is the uncomfortable truth: you can only solve an affordable housing crisis by increasing the funding that makes affordable housing possible. Deregulation alone is half a strategy — the half that benefits people who already have capital, and asks everyone else to be patient.

San Francisco can only become more affordable with more dollars, committed and protected.

The Housing Trust Fund expansion is new money. It must be additive — a genuine addition to the revenue voters have already approved and communities have already counted on. That is the standard we will hold this legislative package to. Because we have seen what happens when funding is traded away for promises — and the people who pay that price are always the ones with the least margin for error.

Credit Where It’s Due

Ideas don’t become Charter Amendments on their own.

Supervisor Melgar and her staff took what was a promising concept — one that polled well but still had to survive the grinding work of policy development, coalition-building, legal review, and political negotiation — and turned it into something real. That work is unglamorous and underappreciated, and it deserves to be named.

Mayor Lurie’s partnership was critical. A Charter Amendment requires a majority of the Board of Supervisors to reach the ballot, and a Mayor willing to put their political capital behind affordable housing changes what is possible in this city. That commitment matters — and we intend to hold it to its full promise.

The Housing Accelerator Fund’s analytical work helped push the target from $100 million to $125 million — a difference that will translate into real homes for real families over the next 30 years.

And the coalition forming around this measure — affordable housing developers, tenant advocates, community land trusts, nonprofit housing organizations — is the reason it will win in November.

What Comes Next

The Charter Amendment heads to the Rules Committee next month. It will need a majority of the Board of Supervisors to reach the November ballot. Then it will need the voters.

CCHO will be fighting to make sure it gets there — and fighting hard to make sure that when it does, San Francisco votes yes.

And we will be watching. Watching to make sure the Housing Trust Fund expansion is treated as the floor, actively built upon. Watching to make sure new funding strengthens the revenue streams voters have already approved. Watching to make sure the families, tenants, and working people this city keeps saying it wants to protect actually benefit from the dollars being promised in their name.

Because this city has talked about the affordable housing crisis for a long time.

This is a chance to do something real about it.

The right idea, at the right moment, with the right people behind it.

Let’s take full advantage of it. We did not fight this hard for a floor that becomes a ceiling.