Director of Fondo Adelante Nathanial Owen
Chief Strategy Officer Lucy Arellano Baglieri
(Part 1 of 2)
How does a longtime community-based organization in a span of five years go from solely providing direct services to becoming an innovative affordable-housing developer? Well, MEDA’s trajectory has been unique, but it is a model now ready to share.
Pivoting due to a housing crisis
For four decades, MEDA successfully focused on building assets for Latinos in San Francisco, with two-thirds of clients being immigrants seeking opportunity in an adopted homeland. MEDA’s recipe for building generational family wealth included five main ingredients: financial coaching; small-business development; job training; free tax preparation; and housing counseling. The latter would prove instrumental in MEDA’s expansion.
At a 2014 housing town hall — held at a local Mission elementary school — an epiphany occurred for MEDA, as the organization realized that while direct services would always remain foundational, an escalating housing crisis meant there could soon be few clients left to serve in the community. At that emotional town hall, family after family lamented that they were severely rent-burdened, defined by HUD as spending more than 50 percent of monthly household income on rent.
The Mission District had long been a welcoming hub for Latino immigrants, but after the Great Recession a technology boom fueled hundreds of thousands of new jobs in San Francisco and the nine-county Bay Area. The number of six-figure earners moving into the Mission quickly skyrocketed, these newcomers wanting to live in an urban, transit-rich neighborhood with convenient freeway access to tech campuses in Silicon Valley to the south.
The effect? In just a decade, 8,000 Latinos were displaced from the Mission — over 25 percent of our community. A family household income under $75,000 was no longer enough to compete on the open market for one-bedroom apartments renting at an eye-popping $3,500. As families lost their rent-controlled units, mostly at the hands of speculators, they were displaced not just from the Mission, but San Francisco itself. Many wound up hours away from their jobs, their children displaced from the only life they had ever known. Some families left the state completely.
Pivoting due to a housing crisis
So MEDA leveraged its trust in the community, built over those four decades, to tackle affordable housing, initially via refurbishment of 439 units of public housing via HUD’s Rental Assistance Demonstration (RAD) program and then with 557 homes in the pipeline as new construction. When our Casa Adelante – 1296 Shotwell is completed at year’s end — with 93 units for our seniors, mainly formerly homeless — it will be the first 100 percent affordable-housing development built in the Mission in over a decade.
Even with MEDA’s aggressive strategies to preserve and produce affordable housing in the Mission, we still had to deal with the continued loss of San Francisco’s most abundant affordable housing stock: its rent-controlled apartment buildings. 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. Given this sobering fact, we realized it was not enough to simply build new housing. MEDA had to embrace a comprehensive strategy for neighborhood stabilization, producing new housing and preserving housing for existing residents.
To make this happen, MEDA collaborated with City Hall to develop the San Francisco Small Sites Program. This innovative program enables nonprofits, such as MEDA, to purchase four- to 25-unit apartment buildings that are home to longtime, low-income residents vulnerable to no-fault eviction. With permanent subsidy from the City ensuring all units become permanently affordable, neighborhood-based housing organizations own the buildings and keep families in their homes — and still at affordable rentals. These are artists. Teachers. Back-of-house restaurant workers.
Take the case of 3329 20th St. (photo), a 10-unit building where residents organized so they could stay in the Mission. MEDA is now their landlord. Alba Espinoza Garcia‘s family lives in a junior one-bedroom in this building. Alba’s husband, Ramiro, works hard as a day laborer so that his children can have a better life. Their two daughters attend nearby César Chávez Elementary and feared having to leave their school, friends and the only neighborhood they had ever known. A similar story is that of Rosa Maria Llamas, who has lived in her apartment in the same building for three decades — the only place she has ever resided in San Francisco since emigrating from Mexico. This is the home where Rosa raised her two children while working as a housecleaner in a hotel. Rosa expresses joy and relief that she can now stay in her home.
What started as a $3 million pilot program with MEDA, 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 developer, having by far purchased the majority of Small Sites Program properties, with 25 buildings comprising 202 units.
The bulk of MEDA’s Small Sites purchases have been in the Mission and neighboring Bernal Heights, both home to large Latino populations, but our organization has recently scaled across the City. Responding to requests from four city supervisors to save buildings in outlying districts, there are now three such properties in our growing portfolio (Excelsior, Haight and Sunset districts) and one closing next month (Richmond District).
Cultural placekeeping added to the mix
As MEDA successfully turned the curve on the displacement of Latino residents, we saw that displacement was not only hurting our residents. Displacement was an issue leading to the demise of family-serving businesses, neighborhood nonprofits and long-embedded arts & cultural organizations.
Detailing this issue with the City, the Small Sites Program was expanded to include mixed-use properties with commercial tenants also vulnerable to eviction. There is no commercial rent control in San Francisco. So once a lease expires, a landlord can raise the rent to any amount they think the market can bear. Some businesses have seen threefold rent increases: when your rent goes from $2,500 to $7,500 a month, your business model is no longer tenable.
To date, MEDA has kept 25 businesses in place via the Small Sites Program, with 10 other long-beloved neighborhood organizations slated to move into the five new large multifamily constructions we have underway. These commercial tenants run the gamut from art galleries, beauty salons, and dance theaters to youth services, early childcare centers, and even a historic queer bar.
Take the case of HOMEY, a social enterprise dedicated to serving at-risk Mission youth. The organization had been displaced to the SoMa neighborhood, so they were no longer in the community in which they served. That all changed when they moved back to the heart of the Mission into a first-floor commercial vacancy in a MEDA-owned Small Sites property.
While the Small Sites Program is still focused on keeping low-income residents in their homes, the expansion of the program to include commercial tenants is helping stabilize the neighborhood comprehensively. As we came to conclude in 2014, providing direct services to low-income families and local organizations is not sufficient in combating displacement. We have had to act aggressively to buy real estate and ensure that land and buildings are retained for community ownership.
Having honed our expertise as an equitable, placed-based developer, MEDA is poised to take our leadership of the Small Sites Program to a new level. Our organization has created a replicable, scalable model ready to be shared in every San Francisco community of color experiencing displacement.
We understand the underwriting, having streamlined that process with the City.
We understand the importance of organizational capacity, having built ours over the last five years.
We understand the urgency for our San Francisco communities of color.
And in our second installment, we will share how we are pairing MEDA’s technical assistance with financing through our community lending arm, Fondo Adelante, in our new Rapid Acquisition Fund.