No. 40, October 2004

Bold Proposition
Nonprofit developers,city ready to ease housing crisis

By Tom Carter

Nonprofit developers are at the starting line reviewing their hot leads as they anticipate a Proposition A go signal that will send them site-searching on the city’s closely watched affordable housing market. Poised alongside is City Hall.

If the $200 million Prop. A bond issue passes with a two-thirds vote Nov. 2 – $90 million of it for the homeless and near penniless – housing experts say that can leverage a $600 million total to transform homelessness in San Francisco.

The $90 million would become the major pipeline for the Care Not Cash program, which includes medical and social services in addition to housing. New sites in the Tenderloin and South of Market seem sure to be earmarked and approved for affordable housing, breaking a stagnation caused by dried-up federal, state and, more recently, local funds.

“We’ll have the ability to go after projects if the bond passes,” says Barbara Gualco, associate director of Mercy Housing. “I’ve had brokers calling and I have had to turn them down. Currently, there are very limited affordable housing dollars.”

Mercy was one of the nonprofits that tapped into the city’s last successful affordable housing bond, in 1996, when voters approved $100 million. It enabled Mercy to build the six-story, 93-unit Presentation Senior Community at Taylor and Ellis, completed in 2001.
In recent months, Gualco says, Mercy has kept its leads warm on a list not quite a dozen names long.

“We do have relationships with sellers so (sites) don’t get snapped up,” Gualco said. “These are sellers that don’t have to sell right away and they are waiting in the wings until there are acquisition funds and pre-development money. It would be great to get some of them. We would look at city-owned sites, too. Homeless housing is now the focus.

“But if we’re to address this issue, it’s important to be building in areas throughout the city that aren’t redevelopment areas.”

With Prop A. passage, insiders guess that bond funds would be ready in a year. But Matt Franklin of the Mayor’s Office of Housing says the city is prepared to move a lot faster.

“We can send out requests for proposals to the public in six months, maybe sooner,” Franklin said. “We’re ready to go. We’ll make 20% of the funds available each year for five years, and proportionately at all levels – supportive housing, rental, construction and down payment. The city recognizes that we have a severe crisis.”

The Department of Human Services, which oversees Care Not Cash, is developing strategies to land more money for supportive housing – from federal to private donations, according to Trent Rohrer, DHS executive director. The recent completion of a San Francisco Plan to Abolish Homelessness by the mayor’s Commis-sion on Homelessness, coupled with Prop A. passage, puts the city in line for federal funds previously untapped.

“We’re also looking at private businesses involved with the commission and philanthropy,” Rohrer said. “We are identifying our indigent population and the Department of Public Health is identifying the mental and medical population. Together it will be a master list to work from.”
With the city and its “sophisticated system of community providers” to battle homelessness, Rohrer said, “we‘re probably ahead of anyone in the country. Today a story in the Los Angeles Times said we are charting the course. I just hope people understand that the $90 million is for people on the street. It is critical to get this.”

The city is out of money for affordable housing. The $100 million from the bond eight years ago added 2,125 units of affordable housing and emergency or transitional housing. Plus it furnished 249 homebuyer loan subsidies. The San Francisco Planning and Urban Research Association concluded in an independent analysis that the funds had been “used effectively.”

In 2002, an attempt to continue the trend failed. The $250 million Proposition B affordable housing bond got only 57% of the vote, and bond-dependent projects such as Glide Development Corp.’s Tenderloin pavilion were stymied.

Glide’s $67 million Tenderloin pavilion, which would change the face of the neighborhood, could be set back if Prop. A loses, as it was when Prop. B failed.
Nearly half of the pavilion’s planned 735,000 square feet is designated for 400 units of housing in a 20-story tower. The two-acre site, bounded by Ellis, Eddy, Taylor and Mason, will add an estimated 838 residents to the block, create 230 new jobs and attract 2,500 visitors a day. Calls to Glide were not returned.

“The biggest difference between this bond and the 1996 bond,” SPUR said in its 2004 ballot analysis, “is the inclusion of a supportive housing component. This grows out of a remarkable consensus in the city that the most viable long-term solution to homelessness is to get people off the streets and into housing that is accompanied by the array of services homeless people need to put their lives back together.”

The bulk of the bond – $90 million – is for supportive housing; $60 million is for affordable rental housing for individuals and families earning up to 60% of the median; and $25 million more is for new housing for purchase by those making 60%-90% of the median and another $25 million is for down-payment loan assistance for people making 80%-100% of the median.

Housing is said to be affordable is when a household pays no more than 30% of its income for housing costs.

According to a study this year by Local Initiatives Support Corp., San Francisco needs 3,000 units of supportive housing for homeless families and individuals, many suffering mental and physical disabilities. Extremely low-income residents, those paying half their paychecks on rent, need at least 19,400 units, and 1,700 more units are needed for families with incomes that are 30%-50% of the area median income.

Sure to be near the head of the line for funds will be TNDC, the affordable housing developer that targets tenants making 10%-30% of the median income. TNDC has 21 buildings, most of them in the Tenderloin, and by 2007 will have 24 with a total of 4,500 tenants, according to its Web site.
“We were granted approximately $7 million from the 1996 housing bond,” says TNDC community liaison Jerry Jai, “and we were able to use this to leverage some $70 million of additional funding. It’s estimated the 1996 bond monies leveraged over three times the amount of the bond and we hope to see similar results this time. Prop. A opens the door for us to create more permanently affordable housing in the Tenderloin and surrounding neighborhoods.”

The 1996 bond propelled TNDC’s rapid growth. With it, TNDC built Curran House on Taylor between Turk and Eddy, which has 74 units of family housing, and the Studio and Family Apartments at Eighth and Howard, which has 88 studios and 74 family apartments. Also, TNDC renovated its Ambassador Residence on Eddy, which was completed this year.

Prop. A approval would indirectly impact other funding sources. A case in point could be the $240 million 10th and Market Redevelop-ment project that TNDC and Citizen’s Housing Corp. is putting together for low-income housing for seniors and low- to moderate-income housing for families.
“But if the bond issue passes,” says TNDC’s project manager, Valerie O’Donnell, “it may free up more Redevelopment money for us that might be spent elsewhere on projects that are getting funded with the bond.”

Another ripple occurs with jobs. Passing Prop. A would create an estimated 2,700 to 5,400 jobs in residential construction. Money spent by those wage earners in San Francisco and in nearby counties would send another ripple out and up to 3,700 more jobs would be created in the Bay Area economy.

The nonprofit Asian Neighborhood Design has worked with TNDC on many projects and would expect more business to come its way in the wake of Prop. A. That in turn means bringing more youth into its 14-week training program, which has graduated 2,000 in 26 years, according to Executive Director Grant Din.

“We work with a lot of kids just out of foster homes,” Din says. “We teach them a fair amount of construction skills and 80% graduate. As apprentice carpenters they made $18.75 an hour – 30% of them come from Hunters Point.”

Not every nonprofit developer is salivating. One of the last projects to be completed from 1996 bond money is Eugene Coleman Community Housing at Howard and Fourth Street. Built by Todco, the senior housing project with 85 studios and 1-bedroom apartments is to be ready in May.

“But we don’t plan on getting more city money in the near future,” says Executive Director John Elberling. “We’re focusing on projects we’re completing. It’s a cycle. In 1996, we were looking for new projects.”

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