By Meghan Hall
The construction and maintenance of even market-rate or luxury housing product within San Francisco city limits poses a challenge, due to narrow profit margins and escalating costs. In 2015, the San Francisco Housing Authority (SFHA) had 28 affordable housing sites struggling with disrepair and a capital repair backlog of more than $270 million. Later estimates posited the capital backlog at closer to $1 billion. With just $10 million annually from the U.S. Department of Housing and Urban Development in funding, it would have taken the SFHA more than 50 years to restore its affordable housing portfolio up to date. However, with help from the Rental Assistance Demonstration (RAD) program, the City has partnered with numerous developers and stakeholders to revitalize San Francisco’s affordable housing stock. Last week, two of those projects, Hunters Point East West and Westbrook, were reintroduced into the market, delivering 436 updated homes.
“Thanks to the rehabilitation of these homes at Hunters Point East West and Westbrook, hundreds of families have a new, safe place to live,” said Mayor London Breed in a statement. “For too long, our public housing units have been left behind and have fallen into disrepair. The RAD program enables us to improve the conditions of our City’s public housing, and ensure that our most vulnerable residents can remain in their neighborhood with a place to call home.”
Related California, The John Stewart Company, Ridge Point Non-Profit Housing Corporation and the San Francisco Housing Development Corporation worked together to restore the properties and complete $127 million in rehabilitation.
Hunters Point East West (HPEW) and Westbrook were originally built in the 1950s, and today, total 35-acres of land. Much of the rehabilitation process worked on improving safety and accessibility, replacement of building systems, the roof, landscaping and updating units. A playground was added, as well as parking, and a community space at 90 Kiska Rd. was also updated.
The two properties are part of a widespread effort by the City to restore 3,500 affordable housing units throughout San Francisco. To date, about 3,200 units have been restored, all due to the implementation of the RAD program.
“These developments are part of a much larger effort, one that I have never really seen before in my career, where so many developments were taken on together” explained Ann Silverberg, CEO of Related California Affordable. “We have had a true partnership with the City of San Francisco, who really was a leader in this effort to make this happen for all of these public housing developments. Everybody brought something of value to the table.”
The RAD program allows public housing agencies, such as San Francisco’s, to transfer public housing stock to not-for-profit ownership.
“Though the project functioned as one portfolio from HUD’s standpoint, it closed as 28 separate but simultaneous transactions, half of them in November 2015 and half in October 2016. The closings involved 28 partnerships, 28 separate financings and document sets, and 28 building permits,” public documents state.
HPEW and Westbrook were two of those 28 properties.
“So, prior to the introduction of the RAD program in 2012, there really wasn’t away to bring the capital into these projects, the capital that was needed for the extensive renovations,” said Silverberg. “When RAD was introduced, it provided not just funds, but a mechanism for privatizing the homes and taking advantage of the tax program and other financial resources that could be used to address the physical and capital needs of the development.”
According to Silverberg, part of the reason that other methods of financing had not yet been introduced prior to the RAD program was hesitancy and discussion about what the most effective method
“I think there were lots of conversations in lots of settings of how to do this in the right way, and I think that those conversations about rental demonstration assistance programs were introduced in various forms,” Silverberg stated. “But this was the one that took into consideration all of the very important factors. It is important to take advantage of the capital sources are available but ensure that residents are well cared for in the process and that they have the right to return to their units. It had to be done in a way that was really supportive of the residents.”
Now, more than 400 families can return to their homes, homes that are updated, safe and reliable for years to come. The families’ return was celebrated by a re-grand opening last week.
“The grand opening is really a celebration of the completion of the work at the development, and I think it is a celebration first and foremost for the residents that live there,” said Silverberg. “This is their home and this is a chance to celebrate the completion of the renovation. We’re excited to be there with them. It is also a great opportunity for us to say thank you to everyone who participated in this effort. There are many, many folks who contributed to this work, the engineers, the architects, the contractors. It is just a true celebration of the entire effort.”