An inclusionary housing requirement can be an important tool for generating below-market rate housing in San Francisco. However, it can backfire if it is not done right by reducing the overall amount of housing produced in the city — paradoxically leading to higher housing costs for most people. Based on our review of development pro formas, we do not believe the proposed 25 percent is workable as a baseline requirement. SPUR strongly recommends that, if changes are made, the new process should:
1. Establish a grand-fathering date for projects already in the pipeline.
2. Establish a process for changing inclusionary housing requirements based on analysis of their financial feasibility.