The affordable housing money that voters have approved several times in San Francisco, most recently Prop. I in 2020, was designed precisely for a building like 800 Divisadero.
The 18-unit rent-controlled property has mostly low-income residential tenants, along with Eddie’s Cafe, a legacy business that’s been a community institution for decades.
Under city law, when a building like this comes up for sale, the owner has to give local nonprofits a chance to bid. It’s call the Community Opportunity to Purchase Act.
The building was on the market for less than $3 million, which is such a tiny amount of money that the city’s Small Site Acquisition Program could easily have funded at least part of it. The Housing Accelerator Fund was also prepared to loan the money to a community-based nonprofit, the New Community Leadership Foundation, which was prepared to put in a $3 million bid.
Instead, the property went for $2.7 million to Richard Singer, a landlord who served time in prison after pleading guilty to soliciting an informant to burn down a residential hotel he owned in Oakland for the insurance money.
That’s led Sup. Dean Preston to seek legislation that would limit the ability of people who have a criminal track record like this from buying apartments. It’s an interesting concept that might be a stretch with the current city attorney, although it opens the door to the larger question of whether the city can and should license landlords.
But none of this needed to happen.
Emails between Preston’s Office, the city Controller, and the Mayor’s Office, and an interview with the real-estate broker representing NCLF, make clear that the city had the opportunity resources, and ability to make sure this building remained affordable and out of the speculative market, but the administration of Mayor London Breed essentially blocked an easy and obvious deal.
“This is exactly what the law exists for, and I am at a loss as to why this didn’t happen,” Richard Hurlburt, a lawyer and real-estate broker who was representing NCLF on the deal, told me.
When the property first came on the market, in October, Preston contacted Eric Shaw, director of HOPE SF in the Mayor’s Office of Housing and Community Development:
I’m writing because I recently learned of a property for sale in my district that seems like an excellent candidate for the small sites acquisition program. My understanding from your office’s recent testimony is that there is over $40 million available for such acquisitions.
The property I am referring to is 802-812 Divisadero. My understanding is that it is 18 units, 3 commercial, including Eddie’s Cafe, a Legacy Business that is a fixture in the community. The building is home to many long-term, low income residents, and the permanent affordability and housing stability offered by the Housing Preservation Program would appear to be extremely beneficial for the residents and the neighborhood.
I’m writing to let you know that should MOHCD find the project eligible and decide to move forward, our office would be supportive and would be happy to partner with you on any necessary neighborhood outreach or legislation before the board.
But Breed has shown little interest in doing anything to help Preston, who ran against her and defeated her chosen replacement. Shaw responded with a non-response:
My understanding is that the local community sponsor is coordinating with a funding partner that is also doing due diligence, and that there other offers for purchase of the property. You may be aware that for projects such as this the cost is not just acquisition but also rehabilitation – which I have heard at first glance will be significant due to deferred maintenance. Also some leverage financing tools from partners may be limited due to lending constraints on mixed use properties.
In addition, There are other projects that MOHCD has pending underwriting for which funds will be committed at close that will impact the fund balance available for an acquisition and significant rehab of a project of this type.
MOHCD exercises a number of tools for tenant support and stabilization, not just through the acquisition and preservation program. We are working closely with the community development tenant stabilization team to make sure these resources are available to support tenants.
Yes, Hurlburt told me, there would be renovation costs, but they were not prohibitive.
The Housing Stabilization Fund, according to the City Controller’s office, had $43.2 million as of June, 2023. During the budget cycle, the mayor removed $20 million, saying it was no big deal because there was plenty left.
But this fall, the controller told Preston that much of the money was committed to other projects, and that the uncommitted balance as of Oct. 25 was $1.6 million.
That still would have been enough to help fund the nonprofit acquisition, and it would have been easy to get the supes to approve what would have been a tiny supplemental appropriation to make this happen.
But it gets worse:
Hurlburt said the private Housing Accelerator Fund was ready to loan his client the money. All the Mayor’s Office had to do was write what’s known as a “soft commitment letter,” saying that the city supported the bid.
“They wouldn’t even write a simple letter of support,” Hurlburt told me.
So now, for reasons that make no sense except for petty politics, 18 low-income households and a legacy business are potentially at risk, when they could have had long-term stable housing and a long-term lease.
Preston:
Following up on my October email and our conversation last week. Has MOHCD committed funds (including but not limited to the ~$2m balance in the Housing Stability Fund) to this acquisition? If not, why not? This is an 18-unit property, mostly black tenants, and a legacy business. My understanding is that the deadline for buying this, instead of a private speculator completing their acquisition, has now come and gone. Please let me know. Thank you.
Shaw:
Thank you for sharing supervisor.
If San Francisco put anywhere near as much effort into creating and preserving affordable housing as it’s putting into making it easier for market-rate developers to make more profit, there might be some hope for coming closer to the state mandate of 42,000 new affordable units.
But this is the state of city policy under Mayor London Breed.
