Keep Me Informed

Expiring Use

Case Studies

San Francisco: A City Committed to Preservation

Tenants Take Charge in Anoka Minnesota

With a housing vacancy rate of less than one percent, low-income households rely heavily on subsidized housing in San Francisco. In 1997, in response to the change in federal guidelines that allowed the affordability provisions on subsidized housing to expire, the City created a groundbreaking Housing Preservation Program to preserve affordable housing throughout the County of San Francisco.

At the inception of the program, 9,000 households lived in 88 HUD-assisted housing developments that held project-based rental assistance contracts. Thirty-five of these developments were privately owned and deemed to be "at-risk" of a market-rate conversion at the contract's term. As of August 2002, the program successfully had acquired and transferred 17 of these at-risk developments to non-profit entities-preserving 1,745 units.

The Mayor's Office of Housing established the preservation program in the San Francisco Redevelopment Agency. The two agencies work to restructure funding terms of Community Development Block Grant funds and housing office bonds to extend the development's affordability. In most cases, the land is purchased by the Redevelopment Agency and leased to the owners of the improvements for use as affordable housing for up to 99 years.  Some properties enter a 50-year affordability contract with the Agency. The program's success depends on supportive local ordinances, financial assistance for tenant organizing and capacity building, substantial local funding, and the effective use of other fiscal resources for acquisition and renovation purposes. Since the inception of the program, San Francisco has not lost a single "at-risk" expiring use unit. 

Local Legislation

The City of San Francisco crafted four key ordinances to support the preservation of expiring use developments. Combined, these laws make it burdensome for an owner to profit from a market-rate conversion, as well as can open legal avenues for recourse if the owner fails to follow the requirements.

The Rent Control Ordinance (Administrative Code, Chapter 37) limits the amount of immediate financial rewards an owner can secure through a market-rate conversion.  The ordinance prohibits an overall increase of rents and protects the units' affordability. The administrators of the ordinance establish eligible rent increases based on the prior HUD contract rent. By restricting immediate profit growth, rent control serves as a persuasive motivation for a HUD contract renewal or the sale of the property to non-profit ownership.

The Assisted Housing Preservation Ordinance (Administrative Code, Chapter 60) gives a city-level tenant notice requirement that works in conjunction with the state and federal notice requirements. It requires an 18-month notification, providing tenants more time to organize, and the Agency time to negotiate terms. The preservation ordinance also establishes a first right of refusal requirement, permitting qualified non-profits and government entities the opportunity to bid on the development.

The Source of Income Ordinance (City Police Code, Article 33, Section 3304) prohibits any rental preference or limitation based on an applicant or tenant's source of income. It also establishes eviction protections for residents who receive tenant-based rental subsidies. This provision restricts an owner's ability to drop their project-based contracts and refuse vouchers in order to empty out the units and charge market rents.

The Just Cause Eviction Ordinance (Residential Rent Stabilization and Arbitration Ordinance, Chapter 37.9) restricts an owner's ability to evict without contractual grounds; curbing many other strategies owners use to force unwanted tenants to vacate the units.

Tenant Organizing

The Redevelopment Agency recognizes the need for tenant organizing to amass support, acquire important information on the development and persuade owners to begin negotiations. By providing Resident Capacity Grants and doing direct outreach, the Housing Preservation Program continuously engages tenants and builds organizing capacity. As a result of the large number of preservation acquisitions, these tenant groups now play a direct role in the decision making process for their respective buildings.

 

Early education is important because owners often begin actively marketing their properties years before their HUD contracts are to expire. To address this, preservation program liaisons begin contacting tenants and owners of every "at-risk" building prior to the contract's expiration date. Liaisons work to educate both parties about the preservation program and its options. In addition, liaisons work to inform tenants about the Section 8 program, community-based resource contacts, as well as assist tenant groups in applying for the program's Resident Capacity Grants and HUD's Outreach and Technical Assistance Grants.

Funding

The city has recognized the housing crisis and committed substantial financial support to the preservation of existing affordable housing. The program has also effectively used tax-exempt bond financing, low income tax credits and federal "Mark up to Market" funds for acquisition and rehabilitation costs. In addition to the Resident Capacity and Predevelopment Grants provided to 18 tenants groups, the Agency provided additional grants to the Agape Outreach Center, a community based non-profit for area-wide tenant organizing and education efforts in the targeted developments.

For more information on the program, see http://www.ci.sf.ca.us/sfra/housing.htm

In December 1997, the Anoka, Minnesota tenant-organizing group Home Line heard rumors that the Franklin Lane apartment building was going to be sold. Home Line kept a database of housing developments "at risk" of losing their affordability. Through contacts in other buildings under similar conditions, they were informed that the owner, Lang Nelson, intended to prepay his HUD Section 236 mortgage and sell the 66-unit building for market rate housing.

Anoka had very little affordable housing, and even less for seniors. Franklin Lane apartments served a considerably older and disabled population through very low rents. Their loss would be devastating to both the residents and the community. Home Line engaged the Minnesota Senior Federation, and they began a joint organizing effort to preserve Franklin Lane.

Tenants formed the Franklin Lane Tenants Association, retained an attorney from the Housing Preservation Project and within a month, presented their case to city, state and federal representatives. Many members of the Tenants Association were in their 80's. The majority were feisty former farm women who were determined to save their homes. They joined the National Alliance of HUD Tenants and petitioned HUD to review the case.  They prepared and submitted a resident impact report and demanded that HUD follow the Transfer of Physical Assets (TPA) requirements.  Although HUD provided tenants a two-week stay, it ultimately approved the sale of the building in October, 1998 to Sage Companies. At this point, the property was still under a forty-year Section 236 mortgage contract, which originated in 1975. It was apparent, however, that Sage intended to convert the property to market rate.

Tenants got the media to cover their plight, putting pressure on both the owner and on government officials. One week after the sale of the property, tenants called a meeting with Sage Companies to assert their intentions to stay in their homes. They demanded that Sage follow state and federal notification guidelines for prepaying the mortgage. Six months later, Sage Companies delivered a prepayment notice, asserting their intention to terminate the development's affordability. Their plan was to turn Franklin Lane into an assisted living facility, displacing all current residents.

Tenants hastily arranged a press conference at the building to draw attention to the loss of affordable housing both locally and nationally. Part of the national "Save our Home" campaign with the National Alliance of HUD Tenants, the Franklin Lane Tenants Association advocated support for the Preservation Matching Grant Bill (HR 425), which would provide federal matching funds to affordable housing preservation efforts when state and local governments commit resources. (HR 425 died in congress in 2001, but is now regaining momentum).

In the spring of 1999, the Franklin Lane Tenants Association decided to pursue a non-profit buy-out of the property. They met with the Mayor and city council and demanded that the owner be convinced to sell. One strong-willed tenant told Anoka's Mayor that he had better support them because she used to change his diapers! Tenants put consistent pressure on the owners through elected officials, public meetings, letters to the editor, and television press conferences. They began planning a full-scale metro area boycott of Sydney's Restaurants and the Great Clips haircutting chain, two companies in which Sage had significant ownership interest.

City officials met three times with Sage Companies, and in June of 1999, the owner agreed to enter negotiations with the Community Housing Development Corporation (CHDC) The building was sold to the CHDC in May of 2000 and underwent complete renovation over the next three months. In April of 2002, HUD allowed section 8 vouchers to be project-based on all units, and added 66 tenant-based vouchers, making the units more deeply affordable.

A huge celebration honored the preservation of their building-a victory that was possible because of the commitment and creativity of the Franklin Lane tenants.

 

For more information, visit Home Front at http://www.homelinemn.org.