Amid skyrocketing rents, a flood of evictions and an additional $25.1 billion needed to reach San Francisco’s state-set affordable housing production goals by 2031, Proposition I has sparked fierce debate.
One of several housing-related measures on the ballot this November, the Affordable Housing Guarantee Act — which could dedicate an estimated $120 million annually toward affordable housing — could create hundreds of units a year in mixed-income developments and bolster displacement prevention services. Evictions are at an 11-year high, prompting Mayor Daniel Lurie to declare a rent emergency.
“With rent skyrocketing 30-plus percent, our city needs to do better,” Christin Evans, co-founder of Small Business Forward, said to cheers at an Aug. 16 rally celebrating the measure. “With 100 million per year in revenue that’s expected from this measure, we can take more housing off the speculative real estate market, build more affordable housing and keep tenants in their homes.”
Proposition I would redirect money from a transfer tax on the sale of properties, dedicating revenue from sales valued at more than $10 million to a new House SF Fund. Currently, revenue from the tax on these sales goes into the city’s general fund, where it can be spent more freely.
The measure would not raise taxes and includes a tax break for new multifamily developments but Lurie calls it an “unaccountable slush fund” — even though the Mayor’s Office of Housing and Community Development would control the money the tax generates. Supporters of the measure, who include affordable housing advocates and tenants rights groups, said they put it on the ballot because elected leaders have been ignoring the will of the people since 2020, when voters increased the real estate transfer tax on high-value sales and approved an ordinance allowing the city to buy and/or develop up to 10,000 units of low-income rental housing.
What would the measure do?
A June report from the Budget and Legislative Analyst’s Office estimated that dedicating a substantial portion of the tax on the sale of buildings over $10 million could partially fund more than 200 mixed-income housing units per year at an average subsidy of $450,000.
The proposition would require that at least 60% of the funds raised through the measure go to construction of affordable housing, at least 25% go to the acquisition or preservation of existing units, and at least 10% go to homelessness prevention and tenant stabilization, such as eviction defense or emergency rent relief.
Supporters are trying to court those who want to increase the production of market-rate housing.
“If you’re saying, ‘Oh, we’re trying to stop private development,’ absolutely not,” said Aditya Bhumbla, a member of the campaign’s steering committee. “In fact, we’re throwing the private development heads a bone.” Bhumbla also noted a partial exemption on the real estate transfer tax for the first-time sale of multifamily housing developments within five years of the completion of construction.
The measure has opposition from some housing groups that typically embrace a “Yes in My Back Yard” approach, such as San Francisco YIMBY. That organization said transfer taxes discourage housing construction and noted that the measure shifts the power to reduce or repeal the tax from the Board of Supervisors to the voters.
Proposition I needs a simple majority to pass.
Why now?
Many residents are facing significant rent increases amid stagnant wages and a generally rising cost of living. While tenants in older, rent-controlled apartment buildings have some protection, middle- and lower-income residents seeking new housing are struggling to find affordable units: In San Francisco the median monthly rent for a one-bedroom apartment is $4,180 and for a two-bedroom is $6,020.
“We have the highest rents in the country and growing faster than anywhere else,” said Dan Raile, who is on the electoral board of San Francisco’s chapter of the Democratic Socialists of America, which helped get the measure on the ballot. “The best time to have done this would have been 10 years ago, and then the next best time is now.”
Many proponents said the measure would hold City Hall accountable to the will of the voters, who in November 2020 approved a measure to increase the transfer tax on high-value real estate transactions to 5.5% for properties worth over $10 million and to 6% for those over $25 million.
Voters also gave San Francisco power to develop city-owned affordable housing, sometimes called social housing. That month, the Board of Supervisors established the Housing Stability Fund and an oversight board with the purpose of creating and operating social housing developments.
Over the next two years, more than $200 million from the transfer tax hike went to offering emergency rental relief, buying land for developing affordable housing, acquiring and rehabilitating existing units, and expanding housing opportunities for extremely low-income seniors. A mere $300,000 went to a social housing feasibility study.
In 2023, the Housing Stability Fund Oversight Board recommended that $60 million expected from the tax in the next fiscal year go to social housing. However, that recommendation wasn’t implemented and the oversight board hasn’t met since April 2024.
“Rents right now are skyrocketing,” said Jacob Mata, pro-Proposition I campaign manager. “This will create a stable fund that cannot be diverted by politicians, by any policy change, or any change in administration.”
Supporters acknowledge that the measure would not provide the billions of dollars needed to reach state-created housing production goals by 2031. But they say it would help the city make progress with an additional route for building affordable housing.
Mayor’s opposition argument ‘patently absurd’
Lurie came out hard against the measure, calling it an “unaccountable slush fund” that would reduce funding available to support firefighting, law enforcement and other services. However, if the measure gets voters’ approval, the mayor’s own Office of Housing and Community Development will administer the funds.
Christopher Cook, a Proposition I campaign volunteer and affordable housing advocate, called Lurie’s comments “a patently absurd allegation with zero basis in fact.” (Cook is a former Public Press contributing writer.)
Fred Brousseau, director of policy analysis at the Budget and Legislative Analyst’s Office, said there are plenty of safeguards for funding in the Mayor’s Office of Housing and Community Development, which handles hundreds of millions of dollars every year: “That office is pretty skilled at dealing with large sums of money and putting proper controls and safeguards in place,” Brousseau said.
Proponents said also that the measure has more guardrails than Proposition C — a separate affordable housing measure Lurie is supporting — including annual reporting requirements.
“We are not going to submit ourselves to the counter narrative, whatever they make up,” said Reina Tallo, a community organizer with PODER SF, which endorsed the measure. “We know that San Francisco wanted this fund to go for affordable housing, for social housing. I would like people to look past the label of social housing and see what it actually means.”
Social housing on the vanguard
Proponents of the measure are excited about the possibility of demonstrating the feasibility of a type of housing popular in places like Vienna and Singapore but not widely used across the United States: mixed-income social housing owned by the local government or by public-private partnerships.
“Community-owned social housing is precisely the type of housing that everyone supports, from the staunchest free-market YIMBYs to the most fervent neighborhood character protectionists,” said Dylan Hirsch-Shell, co-founder of San Franciscans for Social Housing, at a July 2 rally to turn in signatures gathered to help the measure qualify for the ballot. “It makes perfect sense at this time, with construction costs rising, rents skyrocketing. This is the way that we’re going to be able to tap into the AI boom that’s coming.”
Supporters say also that social housing provides an opportunity to generate financing when fees that market-rate developers must contribute toward affordable housing have slowed.
“One of the biggest drivers that is preventing housing from being built is the financing, and funding for affordable housing has been drying up because there’s been no market-rate development,” said District 9 Supervisor Jackie Fielder, who endorsed the measure.
Brousseau said social housing is self-sustaining and can provide funding for more lower-income housing units from ongoing rental income.
“It offers some more payoff, I think, down the road,” he said.
If the measure passes, supporters hope it will provide more affordable housing in a city that desperately needs it and demonstrate on a national level that mixed-income housing is a reliable way to reduce displacement while accommodating growth.
“In San Francisco, we’ve always been a leader, a true leader at the vanguard of progressive movements,” Hirsch-Shell said. “We really should be taking up the mantle here and taking the lead, showing the rest of the country that this will work.”
