Supervisors Unanimously Back Plan to Give Housing Nonprofits First Bid on Buildings For Sale

Competition is tough for nonprofits seeking to buy market-rate buildings to preserve affordable housing.

(Mike Koozmin/S.F. Examiner)

A long-awaited process to give affordable housing nonprofits right-of-first refusal for buildings on the market has the full backing of the Board of Supervisors.

With Wednesday’s addition of Supervisor Catherine Stefani, all 11 supervisors are co-sponsoring legislation brought forward by Board colleague Sandra Lee Fewer that allows nonprofits the first chance to buy a building up for sale for the expressed purpose of preserving affordable housing. The Mayor’s Office of Housing has a Small Sites Program that provides loans for nonprofits to preserve properties on the market for existing tenants but nonprofits say they have a hard time competing with cash buyers who can immediately swoop in.

Between its inception in 2014 and January 2019, the Small Sites Program has facilitated nonprofit housing groups to preserve 28 buildings with more than 200 residential units, according to the legislation. Under what’s known as the Community Right to Purchase Act (COPA), those numbers could see a boost by giving nonprofits five days to express interest in private buildings with three or more residential rental units, buildings under construction, and vacant lots citywide.

“This is a win-win for landlords and tenants,” Fewer said at the Budget and Finance Sub-Committee meeting on Wednesday. “It is critical that we invest in both the new construction of affordable housing as well as preserving existing affordable housing. We cannot continue to take two steps forward and one step back.”

Sellers would be required to notify qualified nonprofits, selected by the Mayor’s Office of Housing, and disclose the number of rental units. But they are still free to sell the building at market rate and reject the nonprofit’s offer, after giving it the chance to match a private buyer’s offer. Building owners would have the incentive of receiving a partial cut on the transfer tax.

More than a dozen public commenters wearing highlighter-colored “COPA now!” spoke in support of the legislation, calling it a grassroots, forward-thinking solution years in the making. Washington D.C. has a similar program called TOPA, or Tenants Opportunity to Purchase Act that’s more than 30 years old.

“There’s nothing that exists to give nonprofits a leg up to purchase,” said David Woo, community development coordinator for the South of Market Community Action Network (SOMCAN). “Many times that work ends with evictions.”

Even when passed, COPA will have unfinished business. Advocates repeatedly praised supervisors for unanimously endorsing the legislation and saving $40 million of windfall tax funds for small site acquisitions but called for a permanent funding source for affordable housing. Much of the current funding comes from developer fees based on what has been criticized as an outdated method, which supervisors are looking to retool

“The best way to stop displacement is by removing housing the housing speculative market,” said Alexandra Goldman, community planner for the Tenderloin Neighborhood Development Corporation, which buys properties to rent at affordable rates.

Affordable housing advocates cheered as supervisors wrapped up the item, which was amended and must be heard again at a later Budget and Finance Committee meeting before moving to the full Board, where it’s expected to pass.

“Understanding that this legislation is as critical in districts that are not seeing the same kind of development pressure but are also seeing evictions and transformations is also important,” said Fernando Marti, co-director of the Council of Community Housing Organizations. “It creates a pathway, both for small sites but also for larger buildings. We’re stabilizing families where they’re at.”

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