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School board members say rent is too high on first teacher housing project in SF

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A skateboarder attempts a trick at Playland at 43rd Avenue at the Francis Scott Key Annex on Tuesday, April 10, 2018. The site is expected to be developed into affordable homes for San Francisco teachers. (Kevin N. Hume/S.F. Examiner)

San Francisco school board members called on the developer of an educator housing complex slated to rise in the Sunset District to lower the rents for future residents at a meeting this week.

The project will bring 130 units of housing — 60 percent of which will be reserved for teachers and 40 percent for paraeducators, according to representatives of the nonprofit developer MidPen Housing, who presented details of the proposal to the board at a hearing on Tuesday.

Rents will range between 40 to 60 percent of Area Median Income for paraeducators and 80 to 120 percent AMI for teachers, which translates to about $829 to $1,244 for a 450-square-foot studio for the former and $1,658-$2,488 per studio for the latter. Those price tags elicited mixed reactions from the board and audience members, some of whom could be heard muttering “that is too high.”

SEE RELATED: MidPen chosen as developer of SF’S first teacher housing project

After inquiring about the project’s financing — which will depend on a federal tax credit for the paraeducator portion and a traditional mortgage for the teacher portion —Board Vice President Stevon Cook agreed.

“I’m just seeing this for the first time, but I might as well say the rent should be half the price,” Cook said. “I notice it’s based on 2022 projections and that still seems high.”

Board President Hydra Mendoza McDonell echoed Cook’s concerns about the ability of future residents of the complex to afford the housing designed for them, specifically teachers.

“I was a little surprised on the rent ranges as well. And I’m assuming these are formula-based and that they’re based on the AMI and a variety of different things so that our educators, if they’re making a certain amount are not going well over what they could afford,” Mendoza McDonell said. “I’m really glad to see this is a higher amount in terms of where we are in contributing more to our teachers, but it does still feel a little — it still feels a little high. So I guess as we get closer to 2022, we’ll figure out where we are in the market because it may not look like that in 2022.

SEE RELATED: SF teacher housing project could require turnover every seven years

The projects will be comprised of a mix of units ranging from studios to three-bedroom apartments — a configuration that qualifies the project for a federal tax credit, according to Ali Gaylord, MidPen director of housing development. The City will also subsidize the moderate income portion of the project with some $30 to 40 million.
Gaylord informed the commissioners that all rental income will be used to service debt on the property. While the tax credit serves as equity and does not have to be repaid.

Rent ranges are based on a federally accepted standard, based on AMI levels, and the rents are “set at 30 percent of AMI” Gaylord said.

“The rents could be dropped but would require that The City put in even more subsidy,” Gaylord said. “Right now, the rents that residents would be paying are not enough for pay for operating expenses and cost of mortgage on the property.”

Born out of a collaboration between The City, the San Francisco Unified School District and its union, the United Educators of San Francisco, the complex has been envision for “almost 20 years,” according to Deputy Superintendent Myong Leigh, and is hailed as one solution in addressing the district’s struggle in attracting and retaining qualified educators in recent years.

“We’re really going to see educator housing built where our members can live and afford to be in San Francisco,” said UESF President Susan Solomon, adding that future residents will be selected through a lottery process. Teachers and paraeducators who have successfully completed their probation periods will be eligible to apply.

While teachers’ residencies will be limited to seven year terms, the units financed by low-income tax credits that are reserved for paraeducators, who face greater income restrictions, are legally not subjected to limited tenancies.

A Preliminary Planning Assessment will be submitted to the Planning Department in the next two weeks, according to Gaylord, and a full application will be submitted in January 2019. Construction is expected to begin in 2021 and stretch over 18 months.

lwaxmann@sfexaminer.com

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