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Mayor Lee Announces U.S. Department Of Housing & Urban Development Partnership to Re-Envision, Revitalize & Rebuild City’s Public Housing

HUD Partnership to Transform City’s Public Housing for 5,400 Low-Income San Franciscans & Provide Model for U.S. Cities to Maintain & Preserve their Public Housing & Protect Nation’s Most Vulnerable

Mayor Edwin M. Lee and U.S. Housing and Urban Development (HUD) Secretary Julián Castro today announced an historic agreement for a $1.4 billion transformation plan for San Francisco’s public housing system. This HUD partnership will allow San Francisco to leverage approximately $780 million in investor equity and other new resources and allow for the rehabilitation of up to 4,584 public housing units for 5,400 low-income San Franciscans through HUD’s Rental Assistance Demonstration (RAD) program – among the biggest public housing portfolio conversions in the country.

“This partnership will finally allow San Francisco to fully re-envision public housing for thousands of very low-income San Franciscans,” said Mayor Lee. “This innovative tool paves the way to revitalize and rebuild our distressed public housing – without displacing existing tenants. I thank HUD, Secretary Castro, Leader Pelosi and all our partners for working together to ensure that San Francisco public housing is clean, safe and in good condition for our most in need families.”

“The effort to preserve public housing and create new affordable units has long been hindered by tight federal budgets and scarce city and state funding,” said HUD Secretary Julián Castro. “HUD’s Rental Assistance Demonstration initiative turns that stalemate on its head. The innovative partnership we’ve launched today will spur millions in private investment to address long overdue capital repairs, spark economic development, enhance this city's urban life and secure its affordable housing future.”

“Today, we join our neighbors, especially those struggling to afford life’s most basic necessities, in celebrating as we repair, rebuild and preserve 4,500 dilapidated public housing units,” said Congresswoman Nancy Pelosi.  “By working together – uniting private capital, public oversight, and local housing nonprofit experts – we are able to transform both these apartments and the lives of families who live here.  This innovative public-private partnership offers a bold new model for the nation in repairing public housing without losing units or shortchanging residents. It is my pleasure to work alongside Mayor Ed Lee, HUD Secretaries Donovan and Castro, Regional Administrator Ophelia Basgal, and the Mayor’s Office of Housing Director Olson Lee to secure federal resources to help make this project a success.”

This innovative agreement is the centerpiece of the Mayor’s 2013 Re-Envisioning Public Housing plan and takes advantage of a new program unveiled by HUD in 2012, the Rental Assistance Demonstration Program (RAD). The agreement green-lights over $500 million of repairs for over 4,500 distressed San Francisco Housing Authority (SFHA) public housing units completed over the next three years. Thirty-five hundred of the apartments will be rehabilitated as a portfolio and converted to new ownership and property management by community based non-profit affordable housing developers.  The City is providing over $50 million toward the effort, which is in addition to the City funds dedicated to the HOPE SF work. On its own, it would take the San Francisco Housing Authority over 50 years to provide the kind of capital improvements that will now occur within 3 years.

In San Francisco, the RAD program will allow, for the first time, SFHA, with the assistance of the Mayor’s Office of Housing and Community Development (MOHCD), to access resources such as debt financing and low income housing tax credits to complete this significant rehabilitation program and preserve the long-term viability of the units. In addition to improvements, all buildings will have tenant engagement services and access to neighborhood resources. The plan will also provide for rigorous tenant protections and a right to return for residents who may need to move temporarily while their units are rehabbed.

An important part of the portfolio transformation program is HUD’s provision of additional resources through its approval of eight “Section 18” applications submitted by SFHA, which identify buildings with the most severe rehabilitation needs.  These resources are essential to the success of the overall transformation program and, in addition to extending the buildings’ useful lives and improving habitability for tenants, demonstrate to the nation the effectiveness of RAD.

In 2013, as the federally funded San Francisco Housing Authority was responding to federal sequestration cuts and difficult administrative problems, Mayor Lee convened a community re-envisioning process led by City Administrator Naomi Kelly and Mayor’s Office of Housing and Community Development Director Olson Lee to help preserve and improve our City’s troubled public housing stock. A key component of the re-envisioning was to adapt the SFHA’s organizational structure and to develop partnerships with the City, HUD, affordable housing developers, and residents. The City’s, SFHA’s, and HUD’s agreement for the RAD program meets these goals.

The portfolio rehabilitation work is broken into two phases (Phase 1: 1,425 units; Phase 2: 2,066 units). Each phase includes immediate repairs necessary at 29 SFHA buildings comprising 3,500 units located across nine of San Francisco’s 11 Supervisorial districts. The remaining 1,000 units in the program already have non-SFHA owners and will proceed with needed work on a more staggered schedule.

The proposed schedule for the RAD transformation plan is:
Phase 1 Construction closing and construction commencement: November 2015
Phase 2 Financing applications: December 2015
Phase 2 Construction closing and construction commencement: July 2016
Phase 1 Completion: August 2016 – April 2017
Phase 2 Completion: December 2017

Separately, Mayor Lee has authorized $200 million in funds to build mixed income communities on the HOPE SF sites at Hunters View and Alice Griffith. The City has also committed additional local funds to fully rebuild Potrero and Sunnydale according to an inclusive mixed income HOPE SF plan.  

As of January 2015, the RAD initiative has allowed HUD partners to raise more than $500 million in new capital across the country. Congress recently raised the cap of eligible units to 185,000 from 60,000. This increase to 185,000 units will generate over $6 billion in new investment. To support this growing demand, the President’s FY 2016 budget proposal requests to eliminate the RAD cap, and provide $50 million to help local public housing agencies to finance the recapitalization of more than 185,000 units of public housing and stimulate private investment.