A Tale of Two Buildings: MEDA Small Sites Program Purchases Continue Across San Francisco Despite COVID-19 Community Challenges

Thirty-two apartment buildings. A total of 180,000+ square feet in 256 units, with 225 residential and 31 commercial spaces. The numbers say it all when it comes to MEDA’s Small Sites Program purchases in San Francisco over the past five years.

While focused in the Mission/Bernal Heights, there have now been seven purchases in other San Francisco neighborhoods, from the Excelsior in the southeast to the Richmond District in the northwest. The two latest purchases are in the Sunset and SoMa, as the Small Sites Program continues to scale — now a proven model for targeted preservation of four- to 25-unit apartment buildings with tenants vulnerable to no-fault eviction.

1382 30th Ave. – Sunset District
With the start of the Community Opportunity to Purchase Act (COPA) last September, realtors must now avail City-approved San Francisco nonprofits of all new listings. That’s how the MEDA Community Real Estate team heard about four-unit 1382 30th Ave. in the Sunset District (photo, left). Without initial capacity to investigate, the team flagged District 4 Supervisor Mar’s office that without intervention such a small apartment building with four parking spaces was perfectly positioned for a speculator to convert the units to Tenancies-In-Common (TICs). Translation: the displacement of longtime, rent-controlled tenants. 

So Daisy from the Supervisor’s office met with residents to determine if they wanted to be part of the Small Sites Program. Once all concurred, MEDA’s Johnny Oliver trekked to the neighborhood to further educate tenants on the ins and outs of the process. Tenants organized and, in this case, the seller was very cooperative, understanding that MEDA would need 90 to 120 days to close, with this landlord feeling good that the tenants would not be evicted by the new owner. In the end, a $1.48M offer was accepted, inspections were completed and, on June 4, the deal closed.

Compared to other Small Sites Program properties owned by MEDA, 1382 30th Ave. needs minimal repairs — a fact that made this particular deal fiscally feasible. Explains project lead Jose García, “Like most real estate transactions, each Small Sites purchase has a distinct footprint. This transaction was actually smoother because some property upgrades had already been done, such as seismic retrofit and the vacant unit was remodeled. So all MEDA will need to tackle is an electrical upgrade throughout, replacing all federal pacific subpanels, currently not to code by being in closets,  and then grounding all units. Minor work includes updating the front buzzer, replacing some appliances and exhaust fans, a bit of roof work and some in-unit painting. The tenants were responsive and collaborative — a key to the success of the purchase.”

Not as smooth was getting those inspections done. COVID-19 made that tricky, especially with a vulnerable population in the building. As these are longtime tenants of a minimum 10 years, with a number of seniors, resident safety was front of mind as the stringent rules of the City’s mandated shelter-in-place order were followed to a tee.

There will be no rent increases for current tenants; not having augmented rent is especially vital during the COVID-19 crisis, as several tenants saw their hours cut and are bringing home less monthly income. 

566 Natoma – South of Market (SoMa)
When the MEDA Community Real Estate team learned of a five-unit property at 566 Natoma (photo, right) coming up for sale, their initial trepidation to purchase was well justified. In contrast to 1382 30th Ave., this South of Market building was in utter disrepair.

States project lead Juan Diego Castro, ”This apartment building was owned by the same person for four decades. The tenants described her as a fair landlord who rarely raised their rents, which ranged from $550 to $850 a month, but that also left little incentive for upkeep of the property. Her children inherited the building when their mom passed away, and they wanted to sell.” 

Those challenging conditions include a legally overdue City-mandated soft-story retrofit to meet earthquake preparedness, especially needed in this liquefaction zone and leading to a possible cost of $350K. One bathroom is covered in black mold and has a sink that no longer works. Even the back staircase is riddled with issues. These safety and code violations must be addressed.

566 Natoma is a community within a community, with many of the residents Filipino family members — think uncles and godfathers — and the most-recent lease is from way back in 1991.

To organize the tenants, MEDA looked to South of Market Community Action Network (SOMCAN), formed after San Francisco’s initial dot.com boom and focused on keeping the tech-popular neighborhood inclusive. SOMCAN met with tenants and, with all on board, MEDA officially purchased the property for $1.8M on June 15.

The current pandemic presented a challenge of loss of income, so MEDA agreed to use post-COVID figures. The good news was that there was the support of SoMa Community Stabilization Fund, which assisted with building subsidies of $2.8M to make the deal work.

Now it’s time for those multiple repairs, which will, unfortunately, lead to temporary relocation of tenants. In the long term, 566 Natoma will not just be preserved affordable housing, but also quality housing. One project will be an expansion of the ground-floor apartment to double its size so that the adult child can stay with his parents. Additionally, lead abatement is needed.

HAF continues to provide critical bridge financing
To make Small Sites Program transactions possible, MEDA must secure bridge financing, as the City’s funds do not come in for around a year. That’s where the San Francisco Housing Accelerator Fund (HAF) has been pivotal in 16 purchases to date. That’s half of MEDA’s total Small Sites deals. 

For 1382 30th Ave., HAF’s loan to MEDA was for $1.8M; for 566 Natoma, it was $3.3M. 

Partnering with MEDA has been a major part of HAF’s mission of providing innovative financial tools to preserve and expand affordable housing. Explains CEO Rebecca Foster, “These acquisitions are the fruit of the strong and effective partnership between the Housing Accelerator Fund, MEDA and MOHCD. HAF is proud to have financed 16 MEDA-sponsored Small Sites projects to date, protecting 130 permanently affordable homes for current and future residents throughout the City.”

Despite the challenges of the COVID-19 crisis, MEDA is leveraging its strong partnerships and is still preserving affordable housing via San Francisco’s tried-and-true Small Sites Program. There are actually two more apartment buildings slated to close in July. That would bring the total Small Sites properties to 34. 

And that’s a number of which we are proud.


Leave a reply

Your email address will not be published. Required fields are marked *