More than 1,400 distressed public housing units are undergoing a complete overhaul in San Francisco.
Through one of the country’s largest Rental Assistance Demonstration (RAD) transactions, the housing is being placed under the stewardship of the area’s top community-based affordable housing developers and undergoing extensive rehabilitation.
With a total development cost of $693 million, the first phase will improve 1,422 units in 14 properties across the city. About $200 million will be available to rehab the developments. That’s going to allow developers to address critical repairs at the properties, starting this year. That’s significant because the San Francisco Housing Authority (SHFA) typically only has a small fraction of that amount for capital repairs each year, says Olson Lee, director of the Mayor’s Office of Housing and Community Development, one of the lead agencies on the project. Another 15 properties will be redeveloped in a second phase.
The ambitious project is made possible by the federal RAD program, which converts public housing units to long-term Sec. 8 contracts. When a development obtains long-term rental assistance through RAD, it has a more stable funding platform, which puts the property in a better position to leverage additional financing to perform capital improvements.
Although the project functioned as one deal from the Department of Housing and Urban Development’s standpoint, it closed as 14 separate transactions.
The first-phase projects, while involving eight development teams and 14 limited partnerships, all used the same deal structure, financing terms, and document templates. There's one construction lender and low-income housing tax credit investor (Bank of America Merrill Lynch), one permanent lender (Freddie Mac), one seller-carryback lender (the SFHA), and one soft lender (the city and county of San Francisco). The California Housing Partnership Corp. coordinated resources and terms across all transactions, and one title company, Chicago Title, handled all the closings.
“It’s the entire San Francisco affordable housing ecosystem working together for the common goal of preserving affordable housing formerly run by the housing authority,” Lee says.
The project is also significant because the developments converting to RAD will, for the first time, have a dedicated funding stream that will help connect residents with services.
The developers involved include Bernal Heights Neighborhood Center, Bethel A.M.E., BRIDGE Housing, Chinatown Community Development Center, Community Housing Partnership, Glide Community Housing, John Stewart Co., Mercy Housing California, Mission Economic Development Agency, Related California, Tabernacle Community Development Corp., and Tenderloin Neighborhood Development Corp.