San Francisco’s affordable housing nonprofits now have the first right to purchase properties up for sale and match any offer under legislation unanimously approved Tuesday by the Board of Supervisors.
Members of the board decried the continued speculation of San Francisco’s housing and the displacement of long-time residents at a rally before the vote.
Supervisor Sandra Lee Fewer, who introduced the proposal, said it was a “critical tool to stop the bleeding.”
Before residential buildings with three or more units go on the market, property owners will need to notify a city-maintained list of housing nonprofits to give them the first chance to offer to buy the site. The seller can decline the offer, but if they find another buyer, nonprofits would have a chance to match the sales price and buy the property instead.
The proposal grew out of The City’s popular Small Sites Acquisition Program, which provides funding for nonprofits to purchase sites. Launched in 2014, the program has helped nonprofit housing organizations to preserve 28 buildings, comprising 205 residential units and 13 commercial spaces.
Fewer said the legislation “combats the speculative model by providing a positive way for property owners to sell their property.”
“For too long we have stood by and watched speculators buy up our rent-controlled housing and push out existing tenants in order to flip units to market rate for major profits,” Fewer said. “According to the Planning Department’s latest housing balance report, less than 18 percent of net new units built in San Francisco in the past 10 years have been affordable. And for every two new affordable units the city builds, it lost one rent control unit to Ellis Act evictions, Owner Move-in evictions, demolition and condo conversions.”
Small site purchases generally range from between $3 million and $6 million. The proposal also includes a financial incentive for sellers to sell to nonprofits by exempting those valued at $5 million or more from having to pay a portion of the property transfer tax.
Last year, there were 112 residential properties that sold for more than $5 million with a total sales price of $1.37 billion, according to a budget analyst’s report. The amount of property sales tax that could have been waived under the proposal is $26.2 million, if all were sold to nonprofits.
Rents must remain affordable in the purchased buildings, meaning the average amount of all rents cannot exceed 80 percent of area median income and no income can exceed 120 percent of area median income.
Nonprofit affordable housing groups backed the legislation to more effectively purchase properties.
“Up to now we have not been able to compete with cash buyers who want a quick sale or the owner who wants a quick sale,” said Keith Cooley, an asset manager for the San Francisco Community Land Trust.
“Now this legislation levels the field and gives us a better chance to buy buildings and take them out of the speculative market forever.”
Supervisor Gordon Mar said the proposal is a needed strategy.
“For too long we’ve let the market dictate … who gets to live in San Francisco. We know this crisis isn’t just about supply and demand,” Mar said. “In a city with more empty homes than homeless people, trickle down housing doesn’t work.”
Mar continued, “Let’s envision a world where housing is a human right, where we focus on human needs, not the greed of speculators and for-profit luxury developers.”