New community-based management to complete over $700 million in repairs and improvements to San Francisco Public Housing
WASHINGTON – (RealEstateRama) — Mayor Edwin M. Lee announced the completion of the historic transfer of ownership of all 29 public housing sites and nearly 3,500 units from the San Francisco Housing Authority (SFHA) to community-based affordable housing teams 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).
With the transfer of ownership and management now complete, all 29 buildings and units can begin repairs to address critical life safety issues such as seismic deficiencies, pervasive mold and mildew, dry rot, deficient elevators, water intrusion, fire alarm systems, fire damaged units, missing sprinkler systems.
“Once again San Francisco is at the forefront of creating innovative solutions to make government programs work better and benefit our most vulnerable residents,” said Mayor Lee. “For decades, San Francisco’s public housing has been under-funded, but today we take a significant step towards revitalizing and rebuilding distressed public housing for our extremely low-income families and residents. This milestone marks the end of many months of hard work by the City and our many partners.”
In 2014, led by Mayor Lee, the City and HUD worked together to address both the serious conditions of disrepair in the public housing stock as well as the region’s extremely high construction costs. By allowing the City to blend two separate kinds of rental subsidies across the portfolio, the City and SFHA, in partnership with eight different community-based, affordable housing development teams, were able to maximize all available financial resources for the project. Bank of America Merrill Lynch (BAML) led the $2.2 billion financing, including $1.06B in tax-exempt construction debt, $331 million in tax-exempt permanent debt, and $816 million in tax credit equity with Aegon. This resulted in one of the country’s largest and most complex RAD financial transactions, which also included BAML working with Freddie Mac and five other participant Banks.
“Bank of America Merrill Lynch is pleased to continue its work with the City of San Francisco and the San Francisco Housing Authority on the second phase of SF-RAD,” said Maria Barry, Bank of America Merrill Lynch community development executive. “Our team provided a comprehensive financing solution to rehabilitate nearly 3,500 affordable housing units, utilizing a combination of construction debt, permanent debt, tax-credit equity, subordinate forgivable debt and financing for services for the tenants as part of our continued commitment to help create safe and strong communities.”
“All San Franciscans deserve safe, affordable housing to live in and raise their families,” said Olson Lee, Director of the Mayor’s Office of Housing and Community Development. “By transferring the ownership and management of San Francisco’s public housing to our community-based partners, we have permanently preserved the affordability of these buildings, giving our most vulnerable residents assurances they can remain in San Francisco.”
The new owners, who specialize in affordable housing, are now in the process of completing over $700 million in deferred repair and capital needs, stabilizing residents’ tenancies with professional management and support services, and preserving the units as decent and affordable housing for the City’s most vulnerable residents, including seniors, disabled people, and families. Half of the projects transferred ownership in November 2015; the other half closed in October 2016.
“Under the leadership of our Mayor, distressed public housing is being transformed and preserved to provide better living conditions, connections to services and community based management for our lowest income San Francisco residents,” said Barbara Smith, Authority Acting Executive Director. “It’s a powerful example of what Housing Authorities and cities across the country can achieve for our communities through innovative collaborations like these.”
In addition to building improvements, properties converting to RAD will, for the first time, have a dedicated funding stream that can provide residents with service connection and referral, health and wellness activities, housing stability, and community building. These services are being funded through project operations and by a historic $2.8 million tax-credit equity contribution from Bank of America Merrill Lynch. Services and activities at the senior sites include coffee hours, exercise classes, public health nurse visits, support groups, community celebrations, nutrition classes, and games. Family site services include family literacy nights, outings, youth activities, nutrition classes, community gardening programs, and exercise classes. Referral to case management, mental health and substance abuse, and other more comprehensive services is available at all sites. RAD also provides for rigorous tenant protections and ensures a right to return for residents who may need to move temporarily while their units are rehabbed.
“Few communities have the will and talent to pull this off, and the rewards will be immense: high quality, well-managed housing for very low income individuals and families, affordable for decades and decades to come,” said Donald Falk, CEO of the Tenderloin Neighborhood Development Corporation. “The complexity and challenges of organizing a billion-plus dollar renovation of a citywide portfolio of buildings highlights the capacity of the San Francisco affordable housing community, including nonprofit developers, city staff, contractors, architects and many others.”
Improved housing means improved health, safety and habitability, and allows residents to focus on their other life goals. With the assistance of service partners, post-RAD conversion residents are less isolated, better connected to the City safety and services network, and more integrated into the broader San Francisco affordable housing network.