San Francisco has faced challenges in ensuring affordable housing for its low and middle-income residents. However, through a reevaluation of California's Density Bonus schemes, a solution has been achieved. This involves providing incentives for the construction of affordable housing by allowing developers to surpass construction regulations.

In California, the public administration does not have a lot of finance or land options to develop affordable housing. In a system relying on private investment, the USA and California have developed a way to push privates to build affordable housing. One of these options is the Density Bonus.

In a density bonus scheme, a developer is permitted to build a larger project on a site than would otherwise be permitted, in exchange for including specific elements such as a certain percentage of affordable housing units. In some cases, a developer can contribute land or funds for creating off-site affordable housing. In California, State law requires local governments to encourage housing development for all income levels and assist in the development of adequate housing to meet the needs of low- and moderate-income households. In 2016, the city of San Francisco revised its original scheme to adopt a 100 per cent “Affordable Housing Bonus Program”.

San Francisco encountered a significant issue with its density bonus scheme: the majority of housing units were allocated to low-income individuals, neglecting access for middle-income workers. Additionally, these schemes fell short of achieving the diverse mixture typical of a dense city like San Francisco. In response, the city introduced the "Affordable Housing Bonus Program" to address these challenges.

First, the program determines commercial corridors where developments can be made. The idea is to build in diversity and mixture of use. Then, the Local AHBP will offer incentives to project sponsors that elect to provide 30 percent or more affordable housing units on-site. Of this 30 percent, 12 percent must be permanently affordable to low- and moderate-income households and 18 percent permanently affordable to middle-income households. Projects that include 30 percent or more affordable units for low and middle-income households will be able to build more residential units and up to an additional two stories than currently allowed under existing zoning regulations. Yet, the Local AHBP includes special incentives for 100% affordable housing developments. These projects are generally built by non-profit developers, and usually require public subsidies. Projects with 100 percent affordable units will be able to build more residential units and up to three additional stories of residential development than currently allowed under existing zoning regulations.

This program goes beyond the State one, allowing for only one story more and having just a maximum of 20% of affordable housing.