S.F. supervisor proposes big funding boost for housing acquisition program
November 2, 2021
By Laura Waxmann, San Francisco Business Times
A total of 109 apartment buildings are currently on the market in San Francisco, but a shortage of funds and outdated regulations are hampering acquisitions through a program in which the city helps nonprofits buy and preserve small rental buildings, according to advocates working to secure these buildings as permanently affordable housing.
The available buildings comprise more than 1,065 units. Meanwhile, apartment sales and prices are below pre-Covid-19 levels, according to an Oct. 28 report from the Housing Stability Oversight Board — an advisory body to the Board of Supervisors — that I’ve obtained. These market conditions create a window of opportunity for the city to help meet its affordable housing preservation goals.
However, the city’s Small Sites Program — an acquisition and rehabilitation loan program for small multi-family rental buildings that was launched in 2014 — is unable to respond to many requests for loans to acquire buildings through the program because of a shortage of money, according to District 5 Supervisor Dean Preston. On Tuesday, he announced legislation to create a $64 million emergency acquisition fund that he hopes will allow the city to scoop up of “hundreds of these units” in the current fiscal year.
Preston’s legislation for an Emergency Acquisition Plan would direct revenue generated by Proposition I — an increase in the transfer tax for high-end transactions that is projected to raise $128 million this fiscal year — to fund the Small Sites program.
Prop. I was approved by voters last November, and the San Francisco Board of Supervisors last year unanimously approved a resolution for half of the revenue generated by the measure to be used for rent relief in the wake of Covid-19, while the rest would be used to fund permanently affordable social housing. Preston's legislation would make half of the Prop. I funds — or $64 million— available for the Small Sites Program. It will be considered by the Board’s Budget and Finance Committee on Nov. 17.
If approved, it would become the Small Sites program's first permanent funding source.
“Unless the city acts now, we will see thousands of residents put at risk as their buildings are sold to speculators,” said Preston on Tuesday. “We’ve been through this before, but this time we have not just an opportunity, but an obligation, to use Prop. I funds to prevent displacement due to the pandemic.”
The hope is that Preston's legislation will free up capacity and funding for the city to act quickly. Another city law passed in 2019 — the Community Opportunity Right to Purchase Act, or COPA — is intended to preserve the city’s affordable housing stock by taking rent-controlled buildings off the speculative market. The law gives local non-profit organizations the right of first offer and first refusal for large residential buildings hitting the market.
The limited funding and disagreement over how it should be spent is causing the city to be more discerning in buildings it acquires through the program, but housing providers say that the lack of clarity on what type of buildings the city is prioritizing for acquisition is leaving some tenants at risk of displacement.
Smaller buildings have a higher per-unit cost than larger buildings, said Fernando Marti, co-director of the Council of Community Housing Organizations, adding that if the goal is save people's homes that have been targeted for eviction, "you might say it makes sense to pay higher per unit cost per building."
But that is not the message that providers have gotten from the city.
