The overall estimated renewal needs for preserving existing affordable housing is approximately $1.6 billion over the next 10 years, including acquisition and rehabilitation of existing at-risk rent stabilized housing. While the sources identified at the beginning of this chapter, including recently passed bonds, will go toward addressing this need, the Plan allocates approximately $170 million to meet these needs.

The preservation of affordable housing includes maintenance and capital improvements to existing affordable units (both MOHCD and/or HUD funded projects) and preventing the loss of existing affordable rent stabilized units through acquisition and conversion from market-rate to permanently affordable units.

MOHCD-Subsidized Housing

MOHCD-financed housing is 100% affordable housing that is owned and managed by private developers and monitored by MOHCD. These buildings are deed-restricted to ensure permanent, long-term affordability, and need reinvestment for systems and unit upgrades approximately every 20 years. Many older buildings would also benefit from seismic retrofits. About 15,500 units in MOHCD’s portfolio do not have any project-based rental or building operating subsidies to leverage additional debt, so the City will need to provide a capital subsidy to recapitalize. The total estimated need is $1.5 billion over the next 10 years, excluding seismic retrofits.

HUD-Subsidized Housing

HUD-subsidized housing is affordable housing that is owned and managed by nonprofit or for-profit developers and monitored by HUD. Some HUD-subsidized buildings also have an MOHCD capital subsidy, but the affordability restrictions of exclusively HUD-subsidized units expire when the HUD contract expires, and rents may be converted to market rate rents. Projects that have opted out of HUD contracts, or have year-to-year or soon-to-expire contracts, are at high risk for loss of affordability. About 1,400 units of HUD subsidized housing fall into this high-risk category over the next 10 years. The City would need an estimated $127 million to engage private owners in preservation deals to ensure permanent or long-term affordability for existing HUD-subsidized housing.

MOHCD's planned preservation efforts also include acquisition and rehabilitation of at-risk housing for households between 0-120% AMI through the Small Sites Program, which protects small to mid-size multifamily rental buildings through acquisition support. These efforts prevent the displacement of existing residents and loss of affordability from Ellis Act and owner move-in evictions. Funding sources that can be used for the Small Sites Program include 10% of Inclusionary and Jobs/Housing Linkage Fees, 25% of condominium conversion fees, 40% of excess Educational Revenue Augmentation Fund (ERAF) allocated to MOHCD, the voter-approved 2019 General obligation bond, and the Housing Trust Fund. Additionally, the City makes below-market loans available for eligible projects through the Preservation and Seismic Safety (PASS) Program. This program was appropriated with up to $260 million when voters approved the modification of the 1990s-era Seismic Safety Loan Program in November 2016.

The estimated need to continue the City's level of effort in for acquisition and rehabilitation of affordable units according to the draft 2023-2031 RHNA targets for the next cycle is approximately $1.8 billion through FY2033. Preservation program needs for this period is approximately $1.6 billion.

SFHA – San Francisco Housing Authority

The most recent needs assessment of the SFHA portfolio was conducted in 2009 and determined a need of $269 million. This includes sites already converted and those slated for conversion. The needs of the post-conversion portfolio are likely to exceed the $3 million annual pot expected to be available through HUD. Funding for maintenance, including annual federal operating subsidies, have been and are expected to continue to be inadequate, making deterioration of these units a continual challenge.

OCII Hunters Point Shipyard Phase 1 Block 57 Landing, Photo Credit: Innes Ken

San Francisco is fortunate to count on a number of capital sources of funding to provide as subsidy to support the production of affordable housing.

General Fund

The Housing Trust Fund: Established in 2012 through the passage of Proposition C, the Housing Trust Fund is an annual set-aside in the General Fund. The Housing Trust Fund is a 30-year fund capped at $50 million per year, representing a total of $1.2 billion in funding for housing subsidies over the life of the fund.

Local Operating Support Program (LOSP): Local Operating Support Program (LOSP): These subsidies provide ongoing operating support to permanent supportive housing through 15-year contracts with affordable housing owners. LOSP subsidies cover the difference between tenant-paid rent (very low for formerly homeless households) and the operating cost of the units.

One-Time General Fund Appropriations: When San Francisco receives one-time sources, one-time capital uses such as affordable housing are the preferred use. San Francisco has committed one half of excess property tax revenues received through the Education Revenue Augmentation Fund (ERAF) to affordable housing.

Fees

Inclusionary and Jobs/Housing Linkage Fees: Jobs Housing Linkage Fees apply to development projects that increase the amount of commercial uses by 25,000 or more gross square feet. The 2019 Jobs Housing Linkage Fee for office development was set at $19.96 per square foot and will increase to $69.60 per square foot, and the Inclusionary Housing Program Fees are $199.50 per applicable square foot according to the most recently available local fee schedule.

Area Plan Fees: Area Plan Fees are development impact fees in the areas of San Francisco’s most concentrated growth: Eastern Neighborhoods, Market & Octavia, Visitaction Valley, Balboa Park, Rincon Hill, Transit Center, and most recently, Central SoMa. These fees are paid by developers for infrastructure needs to meet growth-driven demand, including affordable housing.

Debt

G.O. Bonds: In 2015 and 2019 San Francisco voters supported a $310 million and a $600 million G.O. bonds to support affordable housing. In 2020, voters approved the Health and Recovery G.O. Bond, including $147 million for permanent supportive housing. An affordable housing bond is planned for 2024, pending voter approval. Funds from the planned 2024 Affordable Housing G.O. bond, pending voter approval, would be directed to projects serving families, single adults, former public housing residents, and seniors.

Certificates of Participation (COPs): COPs are a General Fund debt instrument is used to support public infrastructure needs and new construction at HOPE SF sites. As a part of the FY2023 budget, the Board of Supervisors approved $112 million in General Fund debt to finance five different housing and community development programs: site acquisition ($40 million), community facilities ($30 million), elevator upgrades ($10 million), educator housing ($12 million), and repairs to public housing cooperatives ($20 million). The MOHCD, the Controller’s Office of Public Finance, and the Department of Homelessness and Supportive Housing are coordinating procurement, award, and timelines for these five programs in preparation for several bond issuances starting in 2023.

PASS Program: MOHCD manages one amortizing debt product called Preservation and Seismic Safety (PASS) Program that provides below-market rate debt to acquisition/preservation projects, thereby reducing the need for direct capital subsidy.

Tax Increment Financing: Tax Increment Financing (TIF) was historically the largest source of local financing for the San Francisco Redevelopment Agency. When California dissolved redevelopment agencies in 2012, this source of funding was discontinued for local governments. As the successor agency to the Redevelopment Agency, OCII can still make use of this source to meet its affordable housing production obligations.

Federal Funds: Federal funds come to San Francisco through formula grant programs, including HOME Investment Partnerships Program (HOME) funds (for new production) and Community Development Block Grant (CDBG) (for acquisition and preservation). Although the availability of federal funding has decreased over the years, HOME and CDBG continue to play a role in San Francisco’s housing production and preservation.

Leveraged Funds: For every dollar of City funding that is provided to produce affordable housing, additional funding from the project sponsor makes the project whole. These complementary funds may include federal or state tax credits, competitive state funding, or federal rent subsidies (Section 8, Section 202/811).

Market Rate Production: Although market rate residential production is often pitted against affordable housing, whether due to competition for land or concerns over gentrification, market rate production plays an important role in the City’s overall affordability. Market rate production reduces the competition for existing housing units by higher-income households who can afford new construction. Providing housing at market-rate satisfies some of the housing need, which reduces demand on existing housing. More directly, market rate production generates affordable units through inclusionary requirements and fees. Market rate residential developers must provide a portion of the units as below market rate (BMR) units, or they may opt to (a) pay an “in lieu” fee to be used by MOHCD to fund new production; (b) build affordable units on a separate site; or (c) dedicate land to the City for production of new affordable housing.

San Francisco has longstanding funding principles to prioritize our capital projects (see Introduction). The principles for affordable housing preservation and production are different but no less important for strategic planning and expedient project delivery.

Whereas the standard capital planning funding principles are tiered, the principles for affordable housing prioritize feasibility, balanced across the many categories of need within the affordable housing sector.

To maximize the number of units delivered, and in order to deliver units across as broad a geography and as broad a spectrum of need as possible, San Francisco must be both opportunistic and balanced in its approach to housing production. The City, acting primarily through MOHCD, must respond to opportunities as they arise and support projects that are as cost efficient as possible. Project feasibility depends on the availability of City and non-City funds, cost and availability of development sites, and cost of construction. Without eligible funds in hand, a project cannot proceed. Affordable housing developers must compete on the open market for sites, or sites may come to the City through land dedication. Construction costs have increased dramatically in recent years, and a project’s mix of uses and funds must be able to support those costs.

While focusing on cost efficiency and feasibility, the City prioritizes balancing the distribution of resources in an effort to address the range of need for affordable housing in San Francisco. The portfolio is inclusive of projects across neighborhoods, populations, and income levels. It must support renters and buyers through preservation and production strategies. With so many needs on so many fronts, public affordability supports multiple targets in consideration of the whole of San Francisco’s affordable housing needs.

HOPE SF Alice Griffith Phase 1, Photo Credit: Blake Thompson Photograph

Affordable housing is essential for San Francisco’s resilience and livability, but it is also distinct from the other facilities and infrastructure in the public portfolio. Unlike the City’s horizontal and vertical assets such as pipes, streets, and buildings, when it comes to affordable housing, the asset the City “owns” is the affordability itself. Affordability is ensured both through restrictions placed on title or through ownership of the land underlying affordable units. With only one exception, the City does not own the affordable housing asset itself. Affordable housing buildings are typically owned by partnerships where the managing general partner is a mission-driven non-profit organization. Typically, the partnerships receive funds from the City, but some legacy projects are funded solely by the federal government. Property management is provided either by the same ownership entity, or through contracts with third-party property management entities that specialize in affordable housing. Likewise, service provision for residents is typically provided through third party contracts between the owner and qualified service providers.

Financial support of affordable housing production and preservation is generally provided by MOHCD through loans to affordable housing developers. As such, the affordable housing projects supported by the City are not considered public works, though long-term or permanent affordability restrictions are recorded on the property. Qualified development teams are selected through Notices of Funding Availability (NOFAs) or Requests for Proposals or Qualifications (RFPs or RFQs). Those teams then carry out housing acquisition, preservation, and new construction projects. This financing approach allows projects to leverage sources of funding at the state and federal level such that local resources are needed to pay only a portion of the total cost of development.

Key Terms

Affordability

The term "affordable housing" refers to housing with a rent or cost of ownership equal to 30% or less of the household’s income and/or housing that is funded by the government, rented or sold at prices that are below the local market rate, and restricted to qualifying households with limited incomes. The levels of affordability are typically divided into the categories below.

• Middle Income: 120%-200% AMI
• Moderate Income: 80%-120% AMI
• Low Income: 50%-80% AMI
• Very Low Income: 30%-50% AMI
• Extremely Low Income: below 30% AMI

In 2020, San Francisco’s median income is $89,650 for an individual, $128,100 for a family of four. San Francisco publishes its own AMI levels that are different than those published by the U.S. Department of Housing and Urban Development (HUD) and by the California Tax Credit Allocation Committee (TCAC) for the San Francisco region. MOHCD uses an “unadjusted” AMI, which is lower than HUD’s published AMI that includes an upward high cost adjuster (which TCAC then follows). MOHCD also places limits on year-over-year increases to AMI levels. As a result, real incomes that correspond to MOHCD’s AMI levels are lower than those for the same AMI levels as published by HUD and TCAC.

Permanent Supportive Housing

Permanent Supportive Housing (PSH), also known as Supportive Housing, refers to affordable housing that is designed for households (adults with or without dependent children, seniors, veterans and Transitional Age Youth) exiting homelessness and offers voluntary on-site supportive services. In San Francisco, these services are provided by the Department of Homelessness and Supportive Housing, and future capital investments in PSH are discussed in the Health and Human Services Service Area Chapter.

Preservation and Production

Broadly speaking, affordable housing investments can be divided into two categories: preservation of existing affordability and production of new affordable homes. The City’s role in maintaining public housing resources is a combination of preservation and production efforts.

Preservation can be broken out into five categories: (1) preservation of MOHCD subsidized housing for continued affordability and habitability; (2) preservation of deed-restricted housing that is not subsidized and has affordability restrictions that will expire; (3) preservation of HUD subsidized housing that is not regulated by MOHCD for continued affordability and habitability; (4) the acquisition, rehabilitation, and preservation of rent-restricted or rent-controlled housing, vulnerable to Ellis Act and owner move-in evictions, and vacancy de-control; and (5) preservation of public housing.

New production of permanently affordable homes occurs primarily through one of a few mechanisms: units produced through San Francisco’s inclusionary zoning requirements, MOHCD’s multifamily lending program, and OCII-supported new multifamily production.

The Affordability Gap

San Francisco has increasingly become unaffordable to wider sections of the population in the past two decades, and is one of the most expensive housing markets in the country. According to the Planning Department’s San Francisco Housing Needs and Trends report, this trend has intensified in the past five years due to the high-wage job growth in the region. Low- and moderate-income households are being replaced by higher income households and many of our existing households are at risk of losing their housing at the current affordable rates. The result is that many households are cost burdened. HUD considers any household paying more than 30% of their gross income on rent to be cost burdened, and households that pay more than 50% of their gross income on rent to be severely cost burdened.

The affordability gap in San Francisco can be illustrated in four ways: (1) too little housing production to meet population growth, (2) increasing numbers of vulnerable households that are cost burdened or otherwise not sufficiently housed, (3) the loss of units affordable to low income households, and (4) a significant homeless population.

The Association of Bay Area Governments estimates the housing need based on population growth through the Regional Housing Needs Allocation process. Local jurisdictions must show that they have capacity to accommodate this growth. The 2023-2030 Regional Housing Needs Assessment (RHNA) targets increase significantly; San Francisco’s share increases from 25,000 units (2014 – 2022) to 82,000 units (2023 – 2031), including 46,0000 units of housing affordable at very low, low, and moderate incomes.

Mission Bay South Block, Photo Credit: Keith Baker

San Francisco’s unaffordability is wide-reaching. Housing costs have increased far faster than inflation since the late 1990s and have risen to the highest in the nation since the 2011 boom. High costs, rising income inequality and low supply of affordable housing bring personal hardship, accelerate displacement, undermine balanced economic growth, and cause environmental damage as workers endure longer daily commutes. To become a truly resilient city, San Francisco must tackle the challenges of unaffordability for residents today and proactively build to meet the affordable housing needs for the future.

Affordable housing is critical to the City’s economic and social health. Without housing that is affordable to a range of incomes, San Francisco runs the risk not only of losing vital components of its unique and diverse culture, but also risks incurring negative economic impacts as essential workers and families cannot afford to remain in the City.

Housing affordability is also crucial to the City’s efforts to advance racial equity. Not only have historic housing policies like urban renewal and redlining furthered systems of structural and institutional racism, these policies continue to impact Black,  Indigenous, and people of color today as they disproportionately experience homelessness, rent burden, substandard housing and overcrowding. Moreover, as the COVID-19 pandemic has shown, people of color have been most in need of housing stabilization resources. With the pandemic’s effect on the economy expected to last for the next few years, San Francisco must advance affordable housing as the long-term solution to housing stability and racial equity.

Overview

City leaders and voters have repeatedly demonstrated their support for policies and investments that address the housing needs of San Francisco’s workforce and vulnerable residents. Since 2012, San Francisco has passed a number of key initiatives to increase resources for affordable housing production, including:

• 2012: Housing Trust Fund as a set-aside within the City’s General Fund
• 2015: $310 million affordable housing G.O. bond
• 2016: Significant increase to the inclusionary obligations on market rate housing
• 2016: Repurposing of a $260 million bond for acquisition and conversion of housing as permanently affordable.
• 2018: Gross receipts tax to fund housing and services for people experiencing homelessness
• 2019: $600 million affordable housing G.O. bond
• 2020: Health and Recovery G.O. Bond included $147M for permanent supportive housing
• 2022: Recovery Stimulus and Critical Repairs Certificates of Participation allocated $112M to affordable housing efforts

Moving forward, San Francisco will continue to prioritize and enhance programs and projects that produce and secure affordable homes. This longstanding commitment includes additional investments in permanent supportive housing (see the Health and Human Services chapter) and housing affordability at low and moderate incomes, as well as increasing zoning capacity to allow more housing and affordable housing to be built equitably throughout the City. 

Capital investment for acquiring and building affordable housing is the most permanent and secure approach for the City to create deed-restricted affordable housing. This was formally recognized in the Board of Supervisor’s approval of the FY2020-29 Capital Plan to incorporate affordable housing into the City’s regular capital planning process. This chapter and related modifications throughout the Capital Plan represent the fulfillment of that direction. The content here defines the key terms of publicly supported affordable housing production and preservation; documents funding and feasibility principles for those efforts; describes planned, phased, and emerging projects that support greater affordability in San Francisco; and presents a comprehensive view of San Francisco’s projected investment in affordable housing.

Mayor’s Office of Housing and Community Development

MOHCD supports San Franciscans with affordable housing opportunities and essential services to build strong communities. The department works to create affordable housing, preserve affordability, protect vulnerable residents, and empower communities, neighborhoods, and people seeking housing. MOHCD’s programs to create and preserve affordable housing are multifaceted and include 100% affordable multifamily housing, HOPE SF (described in Economic and Neighborhood Development), down payment assistance loans, Small Sites, Preservation and Seismic Safety, and the monitoring of inclusionary mixed income housing.

Planning Department

The San Francisco Planning Department works with decision-makers to increase the livability through adoption of the City’s vision for the future, embodied by the General Plan. This comprehensive policy document guides public and private action concerning land use and zoning policy, community stabilization, urban design, public realm enhancements, and environmental planning. The City has adopted plans and programs to channel new development and to provide a framework for adding housing and jobs, including Area Plans such as Balboa Park, Eastern Neighborhoods, Market Octavia, SoMa, Rincon Hill, and Transit Center. In addition, the City has adopted new programs such as HOME SF and policies to encourage the addition of Accessory Dwelling Units. Together these plans and programs guide development growth, and the community benefits provided to the neighborhoods where growth occurs. The Planning Department updated its eight-year housing element in early 2023, the City's housing plan that determines housing needs and how to address them, defines priorities for decision making and resource allocation for housing programs, development, and services.

Office of Community Investment and Infrastructure

OCII is the successor agency to the San Francisco Redevelopment Agency, which was dissolved in 2012 by order of the California Supreme Court. The Office is authorized to continue to implement the Major Approved Development Projects: Mission Bay North and South, Hunters Point Shipyard and Zone 1 of the Bayview (Shipyard/Candlestick Point), and the Transbay Project Areas. The greater development and infrastructure needs for those developments are described in the Economic and Neighborhood Development chapter. The affordable housing components of the OCII Project Areas are represented in this chapter.

Treasure Island Development Authority

Treasure Island and Yerba Buena Island, located in San Francisco Bay, contain approximately 404 and 150 acres, respectively. In early 2003, the Treasure Island Development Authority and the Treasure Island Community Development, LLC (TICD) entered into an Exclusive Negotiating Agreement and began work on a Development Plan for the islands. The Treasure Island/Yerba Buena Island Development Project will consist of a new neighborhood consisting of up to 8,000 new residential housing units, new commercial, open space, and retail space, and transportation amenities. The greater development and infrastructure needs for the project are described in the Economic and Neighborhood Development chapter and the affordable housing components are represented in this chapter.

San Francisco Housing Authority

The San Francisco Housing Authority (SFHA) has converted the majority of its public housing units to permanently affordable sites owned by non-profit management firms to enable the use of tax credits as a funding source for those properties. SFHA will continue to ensure compliance with eligibility and other programmatic requirements at these sites, but the management of the facilities will no longer be SFHA’s responsibility.

The City has several sources of funding for capital projects that are derived from specific sources and designated for specific purposes. For example, the Marina Yacht Harbor Fund receives revenues generated by users of the Yacht Harbor and applies them to projects such as sediment remediation and security and lighting systems. The Open Space Fund sets aside funds from annual property tax revenues, outside private sources, and Recreation and Parks Department revenues, and applies those funds to open space expenditures. In the first year of the Capital Plan, these funds are expected to provide nearly $27 million, as shown in Table 5.6. These figures are pulled from Year 2 of the most recently completed budget cycle.

Table 5.6

Senate Bill 1 (SB1)

SB1, the Road Repair and Accountability Act of 2017, is a landmark transportation investment package that increased funding for transportation infrastructure across California by $54 billion over 10 years. SB1 investments, funded by a combination of gas taxes and vehicle registration fees, are split equally between state-maintained transportation infrastructure and local transportation priorities including local streets, transit, and pedestrian and bicycle projects.

SB1 provides San Francisco with over $60 million per year in formula-based funds that are used to repave and maintain our roads as part of the Pay-Go Program, maintain and upgrade our rail infrastructure, and increase Muni service on our city’s most crowded lines. In addition, regional transit providers like BART, Caltrain, and the San Francisco Bay Ferry will receive over $25 million per year for much-needed improvements including escalator upgrades, hiring more police officers and station cleaners, improving safety and reliability, and enhancing ferry service.

Regional Measure 3 (RM3)

RM3 was passed by voters on the June 2018 ballot in the nine-county San Francisco Bay Area to build major roadway and public transit improvements with increased tolls on all Bay Area toll bridges except the Golden Gate Bridge. RM3 would implement toll increases of one dollar in 2019, one dollar in 2022, and one dollar in 2025. The revenue would be used to finance a $4.5 billion slate of highway and transit capital improvements along with $60 million annually to provide new bus and ferry service in congested bridge corridors and improved regional connectivity at the future Transbay Terminal.

Gross Receipts Tax for Homelessness

In November 2018, San Francisco voters approved Proposition C, a business tax measure to fund homelessness services. The measure applies a tax of 0.175% to 0.69% on gross receipts for businesses with over $50 million in gross annual receipts, or 1.5% of payroll expenses for certain businesses with over $1 billion in gross annual receipts and administrative offices in San Francisco.

The San Francisco Controller estimated that tax revenues under Proposition C would total between $300 million and $350 million annually. Tax revenues from Proposition C will be allocated to permanent housing, mental health services for homelessness individuals, homelessness preventions, and short-term shelters. Though the expected use for Prop C funds is primarily services, costs for shelter construction, supportive housing, or capital costs that could help end homelessness are eligible uses for this source.

Hotel Tax for Arts and Culture

In November 2018, San Francisco voters approved Proposition E, which allocates 1.5% of the base hotel tax to arts and cultural purposes through the Hotel Room Tax Fund. Proposition E provides a set-aside for various arts and cultural services including grants and a cultural equity endowment. Arts-related capital projects such as those at the City’s cultural centers are an eligible use from this source.

Homelessness Prevention Housing Bonds Measure

In November 2018, California voters approved Proposition 2, authorizing the state to bond against revenue from the so-called “millionaire’s tax” for homelessness prevention housing for persons in need of mental health services. San Francisco has a longstanding need for homelessness prevention housing and mental health services and facilities, and a full spending plan for these revenues is under development. 

San Francisco has adopted numerous special financing districts in order to finance infrastructure improvements benefiting the public in newly developing areas of the City, such as Transbay and Mission Rock. Projects that may be financed by revenues from special finance districts include, but are not limited to streets, water and sewer systems, libraries, parks, and public safety facilities. 

Authorized under the City’s Special Tax Financing Law, Community Facilities Districts (CFD) (also known as Mello-Roos Districts) assess a special tax lien against taxable property within a district to fund capital projects and/or ongoing operations and maintenance costs. These districts are typically established either by a two-thirds vote of property owners or registered voters within the district and by approval of the Board
of Supervisors. 

Infrastructure Finance Districts (IFD), which are authorized under the California State Government Code, allow municipalities to fund improvements within the IFD geographic boundary. IFDs capture increases in property tax revenue stemming from growth in assessed value as a result of new development and uses that revenue to finance infrastructure projects and improvements. 

Each district has as a unique implementing agency (or agencies) responsible for the formation process and plan of finance for the use of the special taxes and/or tax increment. 

Table 5.5 provides an overview of many of the planned and existing Special Finance Districts in San Francisco. 

Table 5.5

San Francisco must expand its infrastructure to manage the impacts of a growing population as more residents utilize transportation networks, streets, parks, utilities, and other public assets. A large proportion of this new growth is concentrated in a few specific areas, which include Eastern Neighborhoods, Market & Octavia, Visitacion Valley, Balboa Park, Rincon Hill, South of Market, and Transit Center. The City established development impact fees, which are paid by developers, to fund the services that are required by new residents of these areas. The City’s Planning Department has created specific Area Plans to focus new capital investments in those neighborhoods. 

Development impact fees for the Plan Areas are programmed by the City’s Interagency Plan Implementation Committee (IPIC), which is chaired by the Planning Department. Each year, IPIC develops an expenditure plan for projects to be funded by impact fees with input from each Plan Area’s respective Citizen Advisory Committee. Funding for the expenditure plan is appropriated through the capital budget process each year. While impact fees are collected by the Planning Department, funds are transferred to the departments implementing those projects, such as Public Works, Recreation and Parks, or SFMTA. 

The City estimates it will raise approximately $543.8 million in Plan Area impact fees over the next 10 years. Table 5.4 shows that estimate by program area. 

Although the revenues projected from impact fees are significant, they are insufficient to cover all of the growth-related needs of the Plan Areas. The City will continue to seek opportunities to leverage these impact fees and identify complementary funding.

Table 5.4

Many of San Francisco's capital improvements are funded with voter-approved General Obligation Bonds (G.O. Bonds), General Fund debt called Certificates of Participation (COPs), or revenue bonds. 

Issuing debt is a typical method for financing capital enhancements with long useful lives and high upfront costs, which the City would not be able to cover through the Pay-Go Program. The use of debt also spreads the financial burden of paying for facilities between current residents and future generations who will also benefit from the projects.

General Obligation Bonds

G.O. Bonds are backed by the City’s property tax revenue and are repaid directly out of property taxes through a fund held by the Treasurer’s Office. 

The Plan structures the G.O. Bond schedule around the notion of rotating bond programs across areas of capital need, although the City’s debt capacity, election schedules, and capital needs also inform these levels. This approach was established in the original Capital Plan and has been maintained ever since. 

Priority areas of need for capital improvements include Earthquake Safety & Emergency Response, Parks & Open Space, Transportation, Public Health, and the Waterfront. As part of incorporating Affordable Housing into the Capital Plan, there is also a bond in that area. The Plan occasionally recommends bonds outside these categories if there is a demonstrated capital need that the City would otherwise not be able to afford. Table 5.1 lays out the planned G.O. Bond schedule for upcoming elections.

Table 5.1

Chart 5.1 illustrates the impact on the local tax rate of issued, expected, and planned G.O. Bond debt. The red line represents the property tax limit policy established in 2006 that sets the annual level of bond debt repayment. The space between the red line and the bars on the chart illustrates the projected capacity for bond debt for each year. All amounts attributed to future bonds are estimates and may need to be adjusted to account for new federal and state laws, programmatic changes, site acquisition, alternate delivery methods, changing rates of construction cost escalation, and/or newly emerged City needs. 

Chart 5.1

The G.O. Bond program’s capacity is largely driven by changes in assessed value and associated property tax revenues within the city. While the passage of recent bonds is a sign of the effectiveness of the capital planning process, it also impacts the available bond capacity going forward. The passage of four bonds for a total of $2.14 billion since 2018 means there is considerably less capacity for this 10-year capital planning cycle compared to previous ones. For more information on the G.O. Bond policies and past bonds, please see the Introduction chapter.

Certificates of Participation

Certificates of Participation (COPs) are backed by a physical asset in the City’s capital portfolio and supported through annual General Fund appropriations or revenue that would otherwise flow to the General Fund. The City utilizes COPs to leverage the General Fund to finance capital projects and acquisitions. Funding from COPs is planned to support basic City responsibilities such as relocating City staff from seismically deficient buildings. 

Table 5.2 shows the Capital Plan’s COP Program for the next ten years. This Program includes two years of issuances for critical repairs, and one issuance for street resurfacing, to mitigate cuts to the Pay-Go Program due to COVID-19.

Table 5.2

Chart 5.2 shows the planned COP Program against the policy constraint for General Fund debt not to exceed 3.25% of General Fund Discretionary Revenue, represented by the red horizontal line. The black line depicts the annual lease costs related to the Hall of Justice Administrative Exit efforts approved in 2018, which are also counted against this Program’s constraint.

The bottom portions of the columns represent debt service commitments for previously issued and authorized but unissued COPs, including the debt issued for the Moscone Center, the War Memorial Veterans Building, and the Animal Care & Control Shelter replacement. New obligations are represented in discrete colors, beginning in FY2024. As with the G.O. Bond Program, all amounts attributed to future COP-funded programs are estimates and may need to be adjusted in future plans to account for new federal and state laws, programmatic changes, site acquisition, alternate delivery methods, changing rates of construction cost escalation, and/or newly emerged City needs.

Chart 5.2

Revenue Bonds

Revenue bonds are a type of debt that is repaid from department or other revenue streams. Revenue bonds are typically used by the City’s enterprise departments (SFMTA, Port, SFPUC, and SFO), which generate their own revenues from fees paid by users of services provided by those agencies. This type of debt is repaid solely by users of those projects and therefore does not require payments from the General Fund. Examples of projects funded by revenue bonds are the SFPUC’s Water Systems Improvement Program and the Airport’s Terminal Renovation Program.

Table 5.3 shows the currently planned amount of revenue bonds to be issued over the 10-year term of this Plan. All revenue bond issuances are subject to change based on market conditions and cash flow needs of the associated projects. 

Table 5.3