Mission Housing Locks In Funding For SoMa Redevelopments
Mission Housing Development Corp. has secured $34.2M in construction financing to convert three hotels in San Francisco's SoMa neighborhood into affordable housing, a process the company said it expects to complete by next fall.
Located on South Park Street, the assets total 108 units. Mission Housing, a San Francisco-based affordable housing nonprofit, has owned two of the assets, Hotel Madrid and Park View, since the 1980s.
Many residential buildings around S.F. were built when it was common to develop 25- or 30-unit buildings, according to Mission Housing Development Corp. Executive Director Sam Moss. Hotel Madrid, Park View and Gran Oriente are 44, 40 and 24 units, respectively, with each property built over 100 years ago, according to the San Francisco Assessor's Office.
All 108 of the units will become affordable housing for formerly homeless and very low-income adults. Mission Housing declined to provide rent rate specifics.
Affordable housing for very low incomes is generally considered to be up to 50% of the area's median income, or about $45K for a one-person household this year. One-bedroom rents in the South Park Street area of SoMa can start at $1,350.
Mission's 2018 purchase of Gran Oriente Filipino Hotel made refinancing and rehabilitation of each of the three properties as a whole possible because of the scale it added, according to Moss.
“Securing ownership of the Gran Oriente made it so that we had just enough units to structure a refinance so that now we’re going to be able to manage all three buildings as one asset," he said. “The nature of affordable housing right now is such that anything less than 75 units most likely isn’t going to kick off enough money in rent revenue to justify the loans that it takes to do a significant rehab.”
JPMorgan Chase & Co. provided the $34.2M of construction tax-exempt bond financing for the project, which Moss said will total into the tens of millions of dollars in construction costs. Folsom, California-based FPI Management is the property manager for the three properties.
Mission Housing's purchase of Gran Oriente happened amid community worries over the site falling into the hands of a market-rate developer.
In 2018, the property was heading to market when then-District 6 Supervisor Jane Kim, in conjunction with the South of Market Community Action Network, SOMA Pilipinas and other stakeholders, made way for Mission Housing to step in. The company received a $5M loan from the mayor’s Office of Housing and Community Development's Small Sites Program, one of several anti-displacement programs run by the city, as well as SoMa Community Stabilization Fund money.
"I’m ecstatic that MOHCD was able to invest using SoMa Community Stabilization Funds in the creation of permanently affordable housing at the historic building that housed the Gran Oriente Hotel,” MOHCD SoMa Fund Director Claudine del Rosario said in a statement.
Filipino Community Development Corp., which, along with SOMCAN and SOMA Pilipinas, helped alert Kim to the building's potential sale, said it is still supportive of Mission Housing's plans for Gran Oriente.
"Mission Housing preserving Gran Oriente to remain intact within the South of Market was a milestone for the community," Filipino Community Development Corp. Board President Juslyn Manalo said in a statement. "Mission Housing truly understood that they are a conduit to ensure lower-income residents in the building remain."
Moss said Mission Housing's work with the three properties, all within a block of one another, is similar to work it is doing at other projects like at the Abel Gonzalez Apartments, senior housing in the Mission District, and consistent with its mission to provide high-quality affordable housing.
Similar to the rest of the Bay Area, San Francisco has seen its homeless population explode in the last several years in a trend experts attribute to a worsening housing crisis. Conducted in 2019, the last count showed S.F.'s homeless population had grown more than 14% from two years prior.
In the last decade, Moss said Mission Housing has focused on rehabilitating its existing portfolio, which includes about 3,000 residents, 1,600 units and 38 buildings it owns or manages, making its 2018 acquisition a rarer occurrence that provided the scale needed to serve part of its existing portfolio.
Even so, Moss said the nonprofit has a pipeline of about 1,000 units of affordable housing expected to come online in the next five years at a time in which the need may be as dire as ever.
“Right now, with people just being check-to-check and the pandemic, people are very much at risk," Moss said.