Measure C: Contributions to the Housing Fund

San Francisco currently pays for subsidized low-income homes (often misleadingly called "affordable homes") by taxing the construction of new homes. The tax is called inclusionary housing: builders must rent or sell a share of the homes in every new building below market, or pay a fee instead, and that loss comes out of the project just as a tax would. New UC Irvine research (https://bpb-us-e2.wpmucdn.com/sites.uci.edu/dist/b/5302/files/2026/06/IZ_Kouchekinia.pdf) found that these taxation schemes cut new home construction by nearly a third. And since subsidized low-income homes only get built when the regular market-rate projects around them do, the tax suppresses both kinds.

The current tax scheme raises rents for everyone. Adding up the higher rents everyone pays because of that lost housing, each subsidized low-income home the policy produces costs renters about $800,000. Building one directly, without this tax, only costs about $441,000.

In May 2026, Supervisor Melgar and Mayor Lurie made a deal (https://missionlocal.org/2026/05/sf-affordable-housing-fund-myrna-melgar-daniel-lurie/) with the nonprofits who build low-income housing: the nonprofits would stop fighting a cut to the tax, and in exchange the City would grow the Housing Trust Fund. The Board delivered the first half on July 14, 2026, when it cut the tax from 15% to 5% (https://growsf.org/news/2026-07-16-housing-math-fixed-except-mission/). Prop C is the second half.

We think this is a good deal, and Prop C is how voters keep the City's end of it. The lower tax is what makes every kind of home cheaper to build, which puts downward pressure on rents across the city. The bigger fund replaces the subsidy the tax used to squeeze out of builders, and it does so the cheap way, by paying for homes directly instead of through lost housing. Strictly speaking, the cut is already law and does not depend on Prop C. But the nonprofits stood down on the strength of this fund, and if voters reject it, the fight over the rate starts right back up.

We typically oppose set-asides, but this one is built well: growth caps at 3% per year (https://growsf.org/voter-guide/san-francisco-voter-guide-november-2026-election/measures/prop-c/legal-text/#prop-c-growth-cap) once the fund reaches $125M, and the Board can freeze (https://growsf.org/voter-guide/san-francisco-voter-guide-november-2026-election/measures/prop-c/legal-text/#prop-c-freeze) or trim (https://growsf.org/voter-guide/san-francisco-voter-guide-november-2026-election/measures/prop-c/legal-text/#prop-c-reduction) contributions in bad budget years.

Source (https://growsf.org/voter-guide/san-francisco-voter-guide-november-2026-election#prop-c)

Former Mayor Ed Lee created the Housing Trust Fund in 2012 as a permanent source of funding for affordable housing production and preservation. It has raised over $468 million since then, but to be honest it was a mixed bag: the original deal lowered the requirements for including affordable housing in private developments, and it’s been capped at $50 million annually which means we’re leaving money on the table. With our worsening affordable housing crisis and a looming 30-year sunset date on the original fund, the time is right for Prop C to re-up and raise the cap on the fund.

Proposition C simply the Housing Trust Fund through 2058 and raises its annual funding cap from $50 million to $125 million. But of course, nothing is ever easy in the land of housing policy! In 2026, the wheeling-and-dealing continues. While we’re not happy that another backroom deal was cut to gut our affordable inclusionary program (https://48hills.org/2026/05/new-melgar-lurie-plan-for-affordable-housing-is-great-a-deal-to-cut-other-funding-is-not/) in exchange for increasing the cap in this new version of  the Housing Trust Fund, the reality is that we desperately need any funding we can get. 

The new dollars for the Housing Trust Fund will come from predicted property tax increases that would come from more housing being built year over year. This means we won’t see any funds in the HTF for a couple of years, but once there’s money in the fund, the Board of Supervisors could bond against that debt (just like Prop I (#PropI)). 

Now, about that cap. Affordable housing providers testified at the Board of Supervisors that raising the cap to $125 million is the minimum needed to unlock the dozens of affordable housing projects in the queue in need of capital to break ground. This figure falls short of the $17 billion public subsidy that the Mayor’s Office of Housing says we’d need to meet state mandates for affordable housing, and the Capital Planning Committee puts it closer to $20 billion. But, like we said: we need it all, and we need it yesterday. If you claim to be “pro-housing” and are opposing funding for affordable housing, we call BS. (SF YIMBY, we are looking at you…). Vote Yes on C for more affordable housing (eventually)!

Source (https://www.theleaguesf.org/#PropC)

SPUR's Recommendation

Affordable housing is one of San Francisco's highest priorities, yet it consistently struggles to secure sufficient funding, and state and federal funding is increasingly unreliable. Historically, every dollar San Francisco invests locally in affordable housing has leveraged approximately $2 in additional funding from state and federal sources. Expanding affordable housing resources is even more critical as the city reduces its inclusionary requirements for market-rate projects to spur greater production. Although SPUR is cautious about charter-mandated General Fund set-asides because they reduce budget flexibility, Prop. C incorporates thoughtful fiscal controls by allowing temporary freezes or reductions during budget shortfalls. The urgent need for affordable housing funding, along with the measure’s fiscal safeguards and policy reforms to incentivize housing production, leads us to recommend support for Prop. C.

What Prop. C Would Do

Beginning in fiscal year 2028–2029, Proposition C would amend the city charter to increase mandated annual Housing Trust Fund allocations from the General Fund. The measure would increase annual contributions from approximately $52 million in the current fiscal year to approximately $125 million by around fiscal year 2036. Once the annual $125 million threshold is reached, annual allocations would continue to grow with General Fund revenues, subject to a maximum annual increase of 3%.

The Mayor’s Office of Housing and Community Development would administer the revenues to fund the construction and preservation of affordable rental and ownership housing for low- and moderate-income households. The revenues could also fund housing-related infrastructure, down payment assistance, and housing stabilization. The Housing Trust Fund supports projects that serve households earning up to 120% of the area median income (AMI). The measure does not change this AMI limit for affordable housing projects; however, it does increase the income limit for down payment assistance from households earning 120% of AMI to those earning 200% AMI.

Prop. C allows the city to freeze annual contribution increases when there is a budget deficit of $250 million or more. The city could also temporarily reduce the contributions by up to 10% if it has a fiscal emergency and must make a withdrawal from the Rainy Day Fund.

The measure would extend the trust fund’s sunset date from 2043 to 2058.

The Backstory

San Francisco has one of the nation’s most severe housing affordability crises. The median rent for a one-bedroom apartment in San Francisco is $3,592, up 18.9% from last year. Half of renter households are cost-burdened, meaning they spend at least 30% of their income on housing. Across all households, 38% are cost-burdened. By 2031, San Francisco is required to approve approximately 47,000 extremely low, low-, and moderate-income units. It has fallen behind on these targets. Among others, causes include a shortage of market-rate housing and insufficient public funding to subsidize affordable housing construction.

Earlier this year, the city convened its technical advisory committee to review its inclusionary housing requirements, which mandate a certain percentage of affordable housing units in market-rate buildings. A financial feasibility analysis showed that all housing types in San Francisco were infeasible to build because of high development costs. That analysis led the committee to unanimously recommend reducing the on-site inclusionary rate to 5%, among other changes. As a condition of lowering inclusionary rates, the committee members also encouraged the city to establish a significant and stable source of subsidy to maintain its commitment to build and preserve housing affordable to lower-income families. This inclusionary rate and in-lieu fee reduction is intended to spur all types of housing development, but it would result in fewer affordable housing units once that development becomes financially feasible. Prop. C would bridge the gap immediately by allocating General Fund money to the Housing Trust Fund.

San Francisco has a structural budget deficit, estimated to exceed $1 billion by 2030. This fiscal deficit may deepen if federal funding cuts are increased. The controller estimates that the proposed charter amendment would additionally impact the General Fund by $6.1 million in its first year and $13.6 million in its second. Subsequently, the General Fund would be impacted by $9 million annually, reaching approximately $60 million by 2035. To address concerns about General Fund set-asides during fiscally challenging times, Prop. C includes safeguards to allow for freezes in allocations and reductions during fiscal emergencies.

Supervisor Melgar and Mayor Lurie introduced Prop. C, accompanied by a proposed ordinance to reduce inclusionary requirements and fees on new market-rate housing. While the Board of Supervisors can adjust inclusionary requirements legislatively, this measure proposes an amendment to the city charter that would require voter approval to amend the Housing Trust Fund guidelines.

Ten of the 11 members of the Board of Supervisors have co-sponsored the measure. It requires a simple majority (50% plus one vote) to pass.

Equity Impacts

Affordable housing benefits lower-income households, including many Black and Latinx, senior, disabled, and single-parent households. Lowering housing costs can free up income for food, healthcare, transportation, and childcare, while improving long-term health and educational outcomes. Conversely, these mandated contributions may negatively affect other departments and programs funded primarily through the General Fund, including public health, public safety, childcare and youth programs, and other support programs targeted to low-income San Franciscans.

Pros

• Prop. C provides a dedicated, stable funding source to build affordable housing and leverage other subsidies.
• The measure funds programs that support affordable housing preservation and prevent displacement.
• It backfills funding that may be lost by decreasing the inclusionary requirement and in-lieu fees to ensure affordable housing production continues.
• It includes financial safeguards to allow for temporary freezes or reductions in case of a fiscal downturn.
• The measure was developed through a consensus process among a broad range of stakeholders.

Cons

• Prop. C reduces future General Fund flexibility to fund other important city priorities, which means policymakers will have less discretion to respond to changing fiscal priorities.
• San Francisco faces additional structural deficits, which may make maintaining the higher funding level more difficult over time.
• The measure changes the city charter, so future amendments could be made only through another ballot measure.

Source (https://www.spur.org/voter-guide/2026-11/sf-prop-c-housing-trust-fund)

Prop C raises the city's annual contribution to the Housing Trust Fund, which pays for subsidized housing construction, preservation, and downpayment assistance. The contribution climbs from about $51M today to $125M a year by the late 2020s, tied to growth in general fund revenue or property values, whichever is faster. The best thing about the Housing Trust Fund is that it doesn't tax new homes out of existence, but instead aligns the revenue incentives of the city to promote new growth. The measure also lets the Board pause or trim contributions in bad budget years, so it isn't a blank check. SF YIMBY is proud to endorse the single most consequential affordable housing-supply fix on this November’s ballot.

Prop C raises the city's annual contribution to the Housing Trust Fund, which pays for subsidized housing construction, preservation, and downpayment assistance. The contribution climbs from about $51M today to $125M a year by the late 2020s, tied to growth in general fund revenue or property values, whichever is faster. The best thing about the Housing Trust Fund is that it doesn't tax new homes out of existence, but instead aligns the revenue incentives of the city to promote new growth. The measure also lets the Board pause or trim contributions in bad budget years, so it isn't a blank check. SF YIMBY is proud to endorse the single most consequential affordable housing-supply fix on this November’s ballot.

Building homes in San Francisco is a climate issue. Housing in the region’s urban core, near Muni lines, BART stations, and walkable corridors makes car-free life possible, and means households aren't pushed into long commutes. That is why national Sierra Club policy calls dense, mixed-use communities "an essential strategy for reducing urban related carbon emissions." It’s also why the Club supported the Family Zoning Plan. Zoning changes alone, however, don’t get housing built. Public funding to accelerate the construction of additional affordable housing is critical, but San Francisco's main source of that money, the voter-created Housing Trust Fund, was built for a different time. This measure updates it to meet today’s needs. If passed, it would expand the Housing Trust Fund from $52 million to $125 million a year and extend it for thirty years, dedicating more than $3 billion to building and preserving affordable housing in San Francisco.

Another budget set-aside that locks up taxpayer dollars while the city faces a structural deficit. Vote NO.

Source (https://sfgop.org/nov-2026-endorsements)

Prop C - Housing Trust Fund

What it does: Prop C would increase the “set-aside” for the Housing Trust Fund from $50 to $125 million and amend the funds expiration date from 2043 to 2058.

Endorsement: NO on Proposition C

Virtue-signaling alert! Housing is good…but “set-asides” aren’t. A key predicament with the SF budget (one discussed extensively in the Lurie/Mandelman Charter Reform Working Group) is the cadre of restrictive set-asides: money carved out for one purpose that cannot be touched for any other reason, regardless of necessity.

Controller’s spending estimate? From $6 to $60 million a year.

SF has been “in the housing business” for decades. Dedicated funds feel virtuous because we believe they will address a specific issue. They also turn the budget into a set of locked drawers. “Dedicated” here means zero flexibility to deal realistically with the City’s changing needs in real time. Voters have already mandated roughly 30% of the General Fund. This adds another drawer and throws away the key until 2058.

There is a competing theory of housing finance on this same ballot (Prop I). Both are “lock it in and hope.” Neither is “build faster and stop treating every dollar as a morality play.”

Vote NO. Affordable housing needs production and discipline, not another sacred account that outlives three mayors and a recession.

Source (https://www.connectedsf.com/2026-voter-guide#prop-c)

What it does: Prop C would increase the “set-aside” for the Housing Trust Fund from $50 to $125 million and amend the funds expiration date from 2043 to 2058.

Endorsement: NO on Proposition C

Virtue-signaling alert! Housing is good…but “set-asides” aren’t. A key predicament with the SF budget (one discussed extensively in the Lurie/Mandelman Charter Reform Working Group) is the cadre of restrictive set-asides: money carved out for one purpose that cannot be touched for any other reason, regardless of necessity.

Controller’s spending estimate? From $6 to $60 million a year.

SF has been “in the housing business” for decades. Dedicated funds feel virtuous because we believe they will address a specific issue. They also turn the budget into a set of locked drawers. “Dedicated” here means zero flexibility to deal realistically with the City’s changing needs in real time. Voters have already mandated roughly 30% of the General Fund. This adds another drawer and throws away the key until 2058.

There is a competing theory of housing finance on this same ballot (Prop I). Both are “lock it in and hope.” Neither is “build faster and stop treating every dollar as a morality play.”

Vote NO . Affordable housing needs production and discipline, not another sacred account that outlives three mayors and a recession.