Strategyfor

CommunityStabiliza3onintheSFBayArea

BayAreaConsor,umofCommunityLandTrusts

DisplacementCrisisinBerkeley

DisplacementRiskTypologies(byCensusTract):TheUrbanDisplacementProject

%Changeinrents(2000–2013)

ChangeinRents(byCensusTract):TheUrbanDisplacementProject

%ChangeinMedianHouseholdIncomes(2000–2013)

ChangeinIncomes(byCensusTract):TheUrbanDisplacementProject

SmallSiteAcquisi,on

•  SanFranciscoCitypolicyapprovedin2009•  “Small”=5-25units

•  Compe33vemarketrequiresamorenimbleacquisi3onprocess

•  ScaWeredsitesrequirenewapproachtopropertyandassetmanagement

•  Mixed-Incomeisnecessary

WhenisitFeasibleinBerkeley&OaklandMul,-familyProper,es?

Assump,ons:§  ForMul,-familyproper,es(i.e.separateunits)§  Citysubsidy=atleast$90,000to$275,000perunit(Average:$200,000)§  Annualopera3ngcostperunit=$3,000to$5,000§  $200,000to$350,000TotalCostperUnit(topurchaseand/orrenovate)

AffordableMonthlyRentperUnit

Isaffordabletoasinglepersonhouseholdearning:______%AMI

Cancoverthismuchofamortgage(5.5%amor,zedinterest)

Willneedthismuch“Subsidy”fromtheCitytocoverthegapbetweenincomeandexpenses

$492 30%($19,500) $12,000 $288,000

$658 40%(26,040) $35,000 $265,000

$822 50%($32,550) $55,000 $245,000

$986 60%($39,060) $78,000 $222,000

$1,151 70%($45,570) $100,000 $200,000

$1,266 80%($50,150) $115,000 $185,000

$1,644 100%($65,100) $165,000 $135,000

$1,973 120%($78,120) $210,000 $90,000

WhenisitFeasibleintheEastBay?Assump,ons:

§  Annualopera3ngcostperunit=$4,000§  $250,000TotalAverageCostperUnit(topurchaseand/orrenovate).

§  ThereneedstobeaSmallSiteAcquisi3onfund,whichhelplocalnonprofitstoacquiretheseproper3esandprovidelongtermfinancing

§  Whilewewaitforfunding(e.g.,Bond,etc.)wecouldleverageexis3ngfundsbutonlyiftheCityHousingDeptcanprovidestaff3meforpre-underwri3ngandpre-commitmentleWerstotake-outfundsinthefuture(withcondi3ons).

FindingstoDate§  Needawillingseller

§  (EllisEvictedProper3es,Pro-ac3veoffer,“ForSale”)§  Need100%acquisi,onfinancingwithcleartake-outplan(SF’sSmallSite

Acquisi3onLoanProgram&Citypar3cipa3onwithCDFIs)§  Needpublicsubsidyupfront:

§  Filltheacquisi3ongap§  CapitalizeReserves§  Providerenova3onstominimizemaintenancecosts

§  Compe3ngwithprivateinvestorsinahotmarketleavesNonprofitsliWlechoiceofproper3es,morequirky,fringeproper,esthatarenotasaWrac,vetoinvestors(non-conformingunits,verylowrents,mixed-use,sharedhousing).

§  CityofSFlaunchedtheprograminJuly2014.§  AsofSept.2015:$18millionusedtopurchase12buildings(84units–

averaging$214,000subsidyperunit)§  Duetoitssuccess,SanFranciscoislookingtoincreaseitsSSP(wasincluded

inthe$310millionbondpassedNovember2015...withupto$31milliontobeallocatedtotheSSP).

MidPen

Preservation Efforts

168 Pacific Avenue

Buy-and-Hold Financing Structure

•  $2,560,000 purchase price for 9 units

•  Only light rehab needed

•  MidPen bridged the acquisition to take-out

•  County contributed $1,420,000 ($157,778/du) to pilot a new preservation program

•  Working on maximizing a perm loan now

•  MidPen equity to remain in property, to be repaid through cash flow over time

Atherton Court

Two-Stage Financing Structure

•  $17,125,000 purchase price for 55 units

•  Vulnerable population, current residents include many County services clients

•  In purchase contract currently

•  Major rehab needed

•  Clear exit strategy needed

•  Intended to be syndicated in 2017

Two-Stage Financing Structure

Acquisition

•  County intends to contribute roughly $100,000 per unit

•  Negotiating short-term, interest-only bridge loan paid through NOI

•  Gap to be filled by combination of deferred bridge loan (MTC) and MidPen bridge loan

Syndication

•  County loan will stay in at syndication event

•  Will apply for project-based vouchers and 9% tax credits under special needs type

•  All bridge loans to be repaid at syndication closing

Preservation Challenges

•  Existing residents and their needs

•  Unknown household incomes; if qualified, achieving welfare exemption quickly

•  Short due diligence period, quick close

•  Need for (fast) acquisition gap financing

•  Potential need for patient bridge financing to get to exit event

•  Potential two-phase construction/rehab: may need early funds for critical repairs

TacklingtheRegionalHousingCrisis

Non-ProfitHousingAssoc.ofNorthernCaliforniaAnnualConferenceKenKirkey,DirectorofPlanning

1

LaggingSupply

•  35%oflow&moderatehomespermittedsince1999

•  125,000low&moderatehomesthatwerenotpermitted

2

RHNAFundingShortfall(2014-21)

Source: MTC & ABAG estimates

ReflectslossofRDAand80%offederalfunding

3

OneBayAreaGrantHousingInitiatives(adoptedJuly2016)

► RewardJurisdictions-$30millionBonusforcities/countiespermittinglow&moderateincomeunits(2015–2020)

► DirectInvestment-$10millionPilotpreservationloanfund

► RequirementsforotherProgramsAlljurisdictionsgrantedOBAGfundsneedHCDcertifiedhousingelementandresolutionofcompliancewithAB2135PublicLands

Photo: Bridge Housing, Armstrong Place

4

NOAHPreservationFund

5

•  High costs of new construction & limited grant funds

•  Flat incomes •  Rising displacement

pressure far and wide •  A chance to Pilot

•  Requires5:1leverageonregionalinvestment

•  Eligibleproper9esinTransitPriorityAreasand/orPriorityDevelopmentAreas

•  TotalfundingpoolisTBD•  Complementsprevious$20million

investmentinTransitOrientedAffordableHousing(TOAH)investment

WhatLiesAhead:Self–HelpforHousing?

•  BayAreaSelf–HelpforTransportation•  1990-$0annually•  2016-$1billionannually

•  CountySalesTaxes&VehicleLicenseFees•  RegionalMeasure2

•  CountyHousingBonds–OneTimeFunding•  $300million–SanFrancisco(adopted)•  $500million–Alameda(anticipatedballotfall2016)•  $50million–Oakland(anticipatedfallballot2016)

•  ShouldMTCdevelopaself-helphousingstrategy?

6

InfrastructureFinanceFund

•  UseBATA’sapprovedinvestmentpolicy

•  Providelowinterestinfrastructureloanstosupport

InfillprojectsconsistentwithPlanBayArea

7

•  Establishesafeeonlocationinefficientcommercialdevelopment•  Onetime•  EmployerthresholdTBD

•  Fundaffordablehousingforlow-andmoderate-incomehouseholds

•  FundTDMprograms

RegionalJobs-HousingLinkageFee

8

RegionalHousingBond/FeeandTrustFund

•  EstablishaRegionalHousingTrustFund

•  FundingfromRegionalHousingBondorFee

•  Providearegionalfundingvehiclefornewinitiatives•  Salestax•  Parceltax•  Realestateormortgagefee•  Other

9

ThankYou

KenKirkey,PlanningDirector,MTC

ForFollowup--DougJohnson,MTC•  415-778-5246•  djohns@mtc.ca.gov

10