Supes OK $64M to buy, preserve housing in “small” buildings

On Tuesday, the Board of Supervisors voted to reallocate $64 million in reserve funds for a city program that acquires and rehabilitates buildings with 25 or fewer units. 

The Small Sites Program adds another social housing tool to combat displacement by allowing tenants to stay in their homes at affordable rents, supporters said. And, it saves buildings that would be otherwise scooped up by speculators. 

The vote passed 8 to 3 on first reading, with Supervisors Myrna Melgar, Ahsha Safaí and Catherine Stefani in dissent. While that is enough votes to override a veto from Mayor London Breed, the mayor is under no obligation to spend all or any of the allocation.

The supervisors opposed to the allocation questioned whether such a substantial amount of money should be allocated to Small Sites, which nearly all supervisors dubbed fundamentally good, but “broken.” 

Launched in 2014, Small Sites funds have purchased 53 buildings, preserving the affordability of 563 units. 

The lion’s share of those buildings are located in the Mission. Just this past summer, the Small Sites Merry-Go-Round House on 23rd Street near Harrison Street finished renovations, allowing artists and an 11-year-old to remain in their Victorian home. At least 16 can live there at a time, one resident said.

But the eligible buildings on sale aren’t cheap. And, some of the buildings are old and in need of significant repair or renovation, creating financial challenges for the city in maintaining them. 

However, if city partnered nonprofits don’t purchase these sites, the large corporate landlords would, argued Supervisor Dean Preston, who carried yesterday’s measure. If these companies bought the buildings, he continued, who is to stop them from implementing no-fault evictions and ushering in tenants willing to pay higher rents? 

He said that’s why Small Sites needs $64 million. Between that and a city law that gives nonprofits the right to make the first offer on certain properties, nonprofits can maintain the power to buy and thus “save” these buildings for low- and middle-income tenants. At present, approximately 100 buildings consisting of over 1,000 units are on the public market, with some in the process of sale. 

“It’s clear if we don’t act now that we will witness the displacement,” Preston said.  

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It’s a program that stabilized communities spanning from the Excelsior to the Richmond, supervisors said. But $64 million is a big ask, the dissenters said, and not one they were prepared to use on a program they weren’t convinced actually had the present capacity or feasibility to work as intended. 

At present, the city has $10 million earmarked for the program, and the Mayor’s Office of Housing and Community Development will allocate another $10 million.

The additional $64 million comes from Proposition I, which allows transfer taxes of large building sales to go into the city’s general fund. San Franciscans wanted that money to go to social housing supervisors said, a reason that ultimately pushed Supervisor Rafael Mandelman to vote for it. 

But before such a big deposit is made, the program’s issues need to be addressed, said Melgar. She said some nonprofit buyers were put at financial risk and “several buildings are in forbearance,” or when mortgage payments must be paused or reduced. She viewed the $64 million as “putting the cart before the horse.” 

“I would rather work with the admin to make sure we get folks on a good financial footing before we can start investing again and do it in a way that can protect people, not put people more at risk,” Melgar said. 

For example, Mayor’s Office of Housing and Community Development has “paused” its relationship with the Mission Economic Development Agency, which owns a majority of Small Sites buildings so far, as it works out financial issues. 

Ronen dismissed most issues as minor and “fixable.” The only fundamental problem she recognized was cost, but that could be fixed as the Small Sites program continues with the $64 million. “It’s not rocket science,” Ronen said. 

Meanwhile, middle-income workers like firefighters and seniors need housing. “If we are saying yes to the Small Sites program, there’s no reason we should say no to the supplemental,” Ronen said referring to the proposed $64 million allocation.

Until Tuesday, supporters fretted they wouldn’t score eight votes, the magic number needed to knock down a potential mayoral veto. 

However, it appeared to wrap up on a generally victorious note for supporters. On Tuesday, the mayor’s office proposed a separate plan with supervisors Safai and Melgar to fix the Small Sites Program.