Per new legislation by Assemblymember Matt Haney (D-San Francisco), many teachers, nurses, firefighters, and police officers often earn too much for most affordable housing programs, yet not enough to keep up with local rents. A new state law aims to close that gap.
AB 1294, signed by Governor Gavin Newsom on September 29, 2026, creates a limited pilot program that lowers property tax costs for qualifying nonprofit developments serving middle-income households.
Assemblymember Haney authored the bill, and Mayor Daniel Lurie sponsored it. Governor Newsom signed it alongside AB 1556, also by Haney, which makes recovery housing eligible for state funding.
How the pilot works
The program covers three jurisdictions: Alameda County, Sacramento County, and the City and County of San Francisco. Under the pilot, California’s welfare property tax exemption expands to include qualifying nonprofit rental housing for households earning up to 120% of area median income, for up to 15 years.
The exemption is time-limited and targeted. Supporters say it improves the financial feasibility of mixed-income projects that include moderate-income units, with the savings passing to tenants as lower rents.
It’s meant to serve teachers, nurses, firefighters, police officers, construction workers, and other middle-income Californians.
The laws arrive as San Francisco has several housing projects underway. Affordable homes recently opened in Bayview-Hunters Point, the Mission, Hayes Valley and Haight-Ashbury. Construction began on 100% affordable artist housing on Market Street in July, and on 7,200 homes at the former Candlestick Park stadium site in September. A Housing Trust Fund measure will also appear on the November ballot.
“In San Francisco, we have been pulling every lever to build more homes more quickly, from rezoning the city to launching a new streamlined permitting platform, because we want this to be a city where you can put down roots,” said Mayor Lurie.
“And now, in partnership with Assemblymember Haney, we are taking a new step to help build affordable homes for teachers, nurses, firefighters, police officers, and working people who should be able to live in the city we all love.”