Transferring Public Housing Sites to Community-Based Non Profit Management will Provide New Financial Resources to Preserve, Repair and Renovate Homes for San Francisco’s Lowest Income Residents
WASHINGTON, D.C. – November 24, 2015 – (RealEstateRama) — Mayor Edwin M. Lee and Supervisor Breed announced the historic transfer of 15 public housing sites and 1,425 units to community-based nonprofit ownership as part of the Mayor’s 2013 Re-Envisioning Public Housing Plan and the Department of Housing and Urban Development’s Rental Assistance Demonstration Program (RAD). All public housing is affordable to low- and extremely-low income households. By transferring the buildings from ownership and management by the San Francisco Housing Authority (SFHA), substantial new financial resources will be available to repair and renovate the buildings. Every unit will continue to operate as permanently affordable housing, rent setting will not change and residents will not be displaced, except temporarily to reconstruct units.
“This innovative tool allows us to revitalize and rebuild our distressed public housing,” said Mayor Lee. “Through this public-private partnership, we will finally be able to re-envision public housing for thousands of very low-income San Franciscans, and I thank HUD Secretary Castro, Leader Pelosi, President Breed and the entire Board of Supervisors for working together with our partners to ensure that San Francisco’s public housing is clean, safe and in good condition for our most in need families.”
“Today, San Francisco has taken another step forward in providing families with affordable, secure, and modern housing. Thanks to RAD, we have accelerated the pace of progress for residents and families across our city,” House Democratic Leader Pelosi said. “With the community-based nonprofit ownership of these public housing sites and units, our city continues empower residents, revitalize a community, strengthen our economy, and provide a fresh start for San Francisco’s low-income families.”
“This is the right step in ensuring public housing is safe and accessible to San Francisco families,” said Board President London Breed. ”I’m proud to be part of the process and the solution.”
Phase 1 implements the first component of a $1.69 billion transformation plan for San Francisco’s public housing system for extremely low-income households living in distressed conditions. This HUD partnership will allow San Francisco to leverage approximately $700 million in investor equity and other new resources and allow for the rehabilitation of over 3,500 public housing units for 8,000 low-income San Franciscans through HUD’s Rental Assistance Demonstration (RAD) program – among the biggest public housing portfolio conversions in the country.
To achieve this important goal, the development teams joined the Mayor’s Office of Housing and Community Development (MOHCD) to select Bank of America Merrill Lynch (BAML) and Freddie Mac as the project’s investor and lender. The collaborative effort will provide or phase 1:
• $360 million in construction financing
• $100 million in permanent mortgage debt
• $40 million in City funding
• $285 million in low-income housing tax credit equity
• $290 million in SFHA long-term seller financing
Through HUD, SFHA will also provide rental subsidies to all tenants that cover the cost of operations and allow low-income residents to pay just 30% of their incomes in rent. The overall funding program will address $220 million in long-deferred property repair needs. RAD Phase II will follow in 2016 with an additional $1 billion in investment in 14 additional public housing sites.
The City’s commitment to the preservation and improvement of formerly dilapidated public housing extends beyond the substantial financial resources invested in the buildings. It encompasses the unprecedented support of multiple agencies – the Planning Department, Building Department, Health Department, Human Services Agency, and Department of Environment, among others – that are all contributing resources and expediting the conversion under extremely rigid deadlines. San Francisco has also leveraged the talent and experience of its accomplished affordable housing developers, whose involvement will improve the quality of life for public housing residents through better housing conditions, supportive services at each site, and employment opportunities through the construction period and beyond.
The communal effort of coordinating the transformation of the RAD portfolio is significant. Mayor Lee’s Re-Envisioning Public Housing process to preserve and improve the City’s public housing requires an unprecedented commitment from the City and its partners. There is enormous public benefit this program offers existing and future residents.
“The Rental Assistance Demonstration program is creating far more sustainable living circumstances for the residents while keeping rent calculations the same, allowing for full scale rehabilitation at Phase 1 and 2 housing developments, and providing more security and resident engagement services, vastly surpassing the previous program,” said Barbara Smith, Acting Executive Director of the San Francisco Housing Authority.”
Mayor Lee’s $310 million Affordable Housing Bond, passed by voters without raising property taxes, also includes an additional $80 million to accelerate the transformation of two of the City’s largest and most distressed public housing sites into new, mixed-income communities at Sunnydale and Potrero. This is in addition to $200 million previously invested in public housing there over the last eight years.