By Oscar Perry Abello.
In hot real estate markets like San Francisco, even the most frivolous of neighborhood rankings can move mountains of money. Speculative developers hear rumors and begin snatching up buildings left and right. In some cases, they pay fully in cash. They purchase buildings with rent-controlled or rent-regulated units, expecting to kick out existing low- to moderate-income (LMI) tenants and replace them with higher-paying ones. In some cases, banks have provided commercial mortgages to developers to buy buildings in so-called hot neighborhoods on the expectation that they will similarly kick out existing LMI tenants. A California watchdog group ran a successful campaign in 2015 to get one bank to stop making what it labeled “displacement mortgages” in San Francisco.
In 2015, 344 Precita Avenue in Bernal Heights found itself in the crosshairs. An online real estate brokerage had already dubbed the area as America’s “hottest neighborhood” in 2014. Supporters of Precita Eyes Muralists, which has been on the ground floor of 344 Precita since its founding in 1977, organized protests to discourage prospective buyers; some held fundraisers to help neighborhood residents purchase the building. Ultimately, the community-based Mission Economic Development Agency (MEDA) was able to purchase the building, and save the community arts space and its affordable housing units above.
The “Small Sites” pilot program from the city of San Francisco that provided the loan MEDA used to acquire 344 Precita Avenue is about to get a new and hopefully permanent home, at the San Francisco Housing Accelerator Fund (SFHAF), a new nonprofit that’s combining public and private dollars to support citywide affordable housing preservation and development.
“We expect a lot of the initial loans we do to be Small Sites stabilization loans,” says Rebecca Foster, executive director at SFHAF. “The hope is that will make [community-based developers] a more competitive buyer for these sites. They’re competing in some cases with all-cash buyers. It’s a very competitive market especially in places like the Mission District.”