Co-authored by:
Director of Fondo Adelante Nathanial Owen
Chief Strategy Officer Lucy Arellano Baglieri
(Part 2 of 2)
Small Sites. It’s anything but small.
Once a $3 million pilot program with MEDA, the San Francisco Small Sites Program is today a $40 million per year housing preservation strategy funded through a combination of City general funds and voter-approved affordable-housing bonds. MEDA has quickly become the City’s leading Small Sites Program developer, having purchased by far the majority of Small Sites properties, with 25 buildings comprising 202 units. While our portfolio is mostly in our own neighborhood of the Mission District/Bernal Heights, in the last year we have made a foray into three other San Francisco supervisors’ districts.
Our goal now is to build capacity of other San Francisco neighborhood organizations, so that they can lead housing preservation strategies in their own communities. Data from the San Francisco Planning Department shows that in the last decade, the City has built 6,577 affordable housing units, but it has unfortunately also lost 4,263 rent-controlled units. This means that for every two units the City builds, it loses one unit of affordable housing. The Small Sites Program is a solution that directly tackles the loss of our existing affordable housing and the resulting displacement of our low-income neighbors. The dire numbers speak for themselves.
In San Francisco …
- 71% of homeless San Franciscans were living in the city when they became homeless.
- More than 60% of low-income San Franciscans are officially rent-burdened.
- More than 17,000 evictions have occurred in the last decade.
Case Study: 520 Shrader St., Haight District
When a building in the Haight was ripe for speculation this year, MEDA decided not to make that Small Sites acquisition on its own. We knew that to best stem the tide of continued displacement, a developer committed to the ecosystem of that particular neighborhood was needed. That’s why MEDA brought in a co-developer, the San Francisco Housing Development Corporation (SFHDC), which was started in 1988 to combat displacement from neighborhoods with a significant concentration of African American households. With 520 Shrader St., MEDA embarked on a five-building technical assistance partnership to increase the preservation and asset-management capacity of SFHDC, focused in the Haight/Western Addition and Bayview-Hunters Point neighborhoods of San Francisco.
Longtime 520 Shrader St. tenants Alexandra, Joe and Jude (photo) were relieved and grateful that they could remain in their homes … and the community they helped build over many decades.
Just as exciting is that SFHDC, through technical assistance from MEDA, is now being equipped with the tools to tackle the challenge of purchasing other apartment buildings with low-income tenants vulnerable to eviction in the Haight community.
Capacity building
MEDA is uniquely positioned to assist other neighborhood-based housing developers in building Small Sites Program capacity. Our organization has developed the necessary housing preservation expertise, based on our track record and lessons learned (blog). That expertise includes: tenant organizing; rehabbing aging apartment buildings; acquisition nimbleness; and the cultivation of industry talent reflective of the community served.
MEDA recently announced that the real estate arm of sharing its model, called ¡Viva! Vivienda, has now been rolled into its overall ¡Viva! model. To help formalize sharing the model of the Small Sites Program, MEDA’s Lucy Arellano Baglieri was promoted to Chief Strategy Officer. She was the ideal choice, having shared the organization’s financial-integration models with 35 nonprofits nationwide. Now with Small Sites as another innovative model to share, Arellano Baglieri will deepen MEDA’s focus across San Francisco, while concurrently looking to share the ¡Viva! Vivienda model beyond these 49 square miles.
The critical equation for ¡Viva! Vivienda is that MEDA’s capacity-building technical assistance is now being combined with flexible, fast-acting bridge financing through our new Fondo Adelante Rapid Acquisition Fund.
Ready to scale … with the Fondo Adelante Rapid Acquisition Fund
Fondo Adelante – MEDA’s community lending arm – is a U.S. Treasury-certified Community Development Financial Institution (CDFI), and our new Rapid Acquisition Fund will work with many of the neighborhood-based developers in the ¡Viva! Vivienda to provide them fast-acting bridge financing to compete with highly liquid investors — ubiquitous in the Bay Area. While most acquisition financing for affordable-housing developers cannot close in under 90-120 days, we are aggressively undertaking a $28 million capital raise to launch our Rapid Acquisition Fund by Q1 2020. The capital stack is as follows:
- $10 million senior loan pool
- $15 million junior unsecured debt
- $3 million loan loss reserve (secured via a commitment from JPMorgan Chase)
It should be noted that we will be aggressively raising $13 million in additional unsecured debt by the end of Q1 2020.
The target junior investment amount is $1-3 million, although smaller investments will be considered. There will be five-year-plus terms at an unsecured 2 percent interest rate. Potential investors run the gamut from banks and foundations to impact investors and religious funds.
In its initial three years of operation, the plan is for two-thirds of the Rapid Acquisition Fund’s deployment to go toward Small Sites Program acquisitions. This will translate to the preservation of at least 100 existing homes across San Francisco, plus the creation of at least 400 new homes through land-banking strategies.
This work aligns with MEDA’s Theory of Change (watch), which is building equity through Latino wealth, place and power. Such work is integral in all communities of color facing displacement.
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Interested in investing in the Fondo Adelante Rapid Acquisition Fund?
Contact MEDA’s Nathanial Owen: nowen@medasf.org.
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