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February 16, 2016

San Francisco Affordable Housing

David Leopold
Article By
David Leopold, VP Targeted Affordable Sales & Investments*

I’m writing this from San Francisco, where we just took part in an exciting celebration to mark the improvement, and preservation, of more than 1,400 homes for low-income families and seniors.

The event celebrated the commencement of the rehabilitation of 15 properties throughout San Francisco under the Rental Assistance Demonstration (RAD) program — an effort to improve and maintain properties as affordable rental housing for very low-income families and seniors in the nation’s toughest market for renters.

It was great to be on the ground with our partners to see firsthand the fruits of our labor. I also was honored with the chance to speak on the podium together with San Francisco Mayor Ed Lee and other partners, to shine a light on this national model.  

Mission Critical

The cost of rental housing in areas of high opportunity, like San Francisco, is growing increasingly out of reach for those residents in greatest need of access to those opportunities. Preserving and revitalizing affordable housing is mission critical. The city took a leading role in this effort because it realized that affordable housing is a community asset, benefiting not just the individual household, but also a vital component of a vibrant economy and culturally rich community.

The RAD program of the U.S. Department of Housing and Urban Development (HUD) allows for the conversion of public housing to private ownership to facilitate capital improvement and provide more stable funding while maintaining affordability. Public housing across the country needs more than $26 billion in essential repairs. In San Francisco, these properties have more than $270 million in deferred capital repairs — the transactions we celebrated today will help make possible some of these much needed repairs.

National Model

The first phase of San Francisco RAD stands out as a national model in several key ways:

  • Scale – 15 properties, 1,400 units and seven development partners
  • Complexity – the largest RAD conversion in the nation, with multiple layers of financing
  • Commitment to the residents – resulting in zero displacement, and a strong engagement with local service providers to tap opportunities for long-term success
  • Efficiency – the City’s leadership helped unite a variety of different groups, each lending their specific expertise, to follow a single, streamlined process. This drove down costs, achieved economies of scale, and got us all to closing a whole lot quicker.

These investments are long-term, impacting not just a generation or two of families, but promoting affordable housing in San Francisco in perpetuity. We’re excited to have already started Phase II of the project.

$83 Million in Mortgage Financing

Freddie Mac’s part of this broad partnership is $83 million of permanent mortgage financing, structured as a directly placed tax-exempt loan. We priced this deal to support ongoing affordability, and tailored the financing to fit each of the 15 properties.

430 Turk Street, San Francisco

430 Turk Street, San Francisco

Initiatives like these are important to us at Freddie Mac. We have a long history of supporting affordable, livable rental housing. And our commitment is stronger than ever.

Last year, we had a record year in affordable rental housing, financing more than $5 billion in 42 states which included more than 70,000 units for very low-income families. And we look forward to an even stronger 2016.

Even at that scale, improving 1,400 units of housing for the most vulnerable in the city with the worst affordability crisis stands out as extraordinary. I am proud of the TAH teammates who worked tirelessly to deliver for our clients. Cities across America can, and I hope will, benefit from San Francisco’s example. And we’ll be there to help them do it.

Turk Street, San Francisco

939-951 Eddy Street, San Francisco

Read the article from Affordable Housing Finance on this effort.

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