The Mission Economic Development Agency has purchased a building on Precita Avenue, which houses the first location of the Precita Eyes Muralists as well as four rent-controlled tenants.
The $1.35 million deal will keep both tenants and muralists in place at affordable rents. Moreover, MEDA staff say they have developed a new funding mechanism – raising money from neighbors – to act faster in future acquisition.
“What MEDA does and what the Community Land Trust does is that they secure this property to remain as affordable for ever,” said resident Dennis Mackenzie, a high school teacher and proposal writer. “When I die, and I plan on living here until the day I die, it’ll be passed on to someone else in my type of income situation.”
The acquisition is the latest in a string of purchases by MEDA, many of them under the city’s Small Sites program, which converts small, privately owned apartment buildings into properties owned by nonprofits and preserved as affordable housing.
“It’s been over two years since this process started, so it’s a tremendous relief, that’s for sure,” Mackenzie said.
Money from the city for Small Sites, however, has run out. So when the nonprofit approached the owner of 348 Precita Ave. to bid on the building, they needed to work out a fundraising plan.
MEDA and Precita Eyes struck a deal with the building owner to raise $28,000 by the end of December 2015, and $200,000 by the end of January 2016.
MEDA’s Director of Community Real Estate, Karoleen Feng, explained that the nonprofit met the first deadline with a capital campaign and was then able to extend its next deadline by another month to gather the down payment of some $400,000.
Residents, muralists and friends raised $19,500, and MEDA provided the rest via its newly formed Neighbor-to-Neighbor fund, a new approach to financing nonprofit acquisitions that may become a key part of MEDA’s future ability to move quickly in the housing market.
The Neighbor to Neighbor fund asks neighbors with available capital or lines of credit to help provide funding for residents who anticipate eviction following the sale of their building. Lenders to the fund will be repaid within a year, with 5 percent interest, once funding from last year’s housing bond becomes available to replenish the Small Sites program.
Spike Kahn, founder of the artist space Pacific Felt Factory, originally proposed the fund and was able to raise $200,000 toward it within 24 hours.
“The small sites acquisition program takes a couple of months to get the money released from the city, and the real estate market doesn’t wait three months for the city to pay for them,” said Kahn. “They have restriction that private money doesn’t have so we can act quickly without going through a BOS vote and we want to step up and help our neighbors.”
MEDA also secured a $1 million commercial real estate term loan from Boston Private, a wealth management and private banking services company.
“Boston Private is committed to preserving affordable housing in San Francisco,” wrote Rebeca Patino, a senior vice president commercial loan officer at Boston Private, in a statement. “Unlike other financial institutions that may shy away from providing this type of financing given their complexity, Boston Private is skilled at financing affordable housing, and we were able to finance the property in a short time frame.”
The speed with which MEDA could react to a building going on the market with at-risk tenants makes it a viable new alternative for future acquisitions as well.
“Our intent is to continue to grow the neighbors who are putting in their money because they believe in their neighbors, and continue to grow that pot,” said Feng, adding that the fund would allow the nonprofit to “move a lot more quickly to meet the seller’s timelines.”
This story has been updated with new information about the involvement of Boston Private.
Disclosure: Mission Local rents a commercial office from a MEDA-owned building.