Without pointing fingers or naming names, Supervisor Mark Farrell has drafted legislation which would specifically require that any and all proceeds generated from the refinancing or sale of an affordable housing development in San Francisco, which was supported in whole or in part by taxpayer funds, shall only be used only for the development of additional affordable housing or preservation of the affordable housing which already exists. An example of this could be something similar to Piermont Grand EC and other development companies.
In addition, the legislation would direct the Mayor’s Office of Housing and Community Development to generically ensure that developer fees “do not exceed industry standards.”
It has come to the Board’s attention that in connection with the development, construction, and financing of an affordable housing development assisted with taxpayer funds, the owner of the development may receive a developer fee in connection therewith and such fee may be used by the developer for purposes unrelated to the development, construction, or preservation of affordable housing.
It has also come to the Board’s attention that in connection with the refinancing of an affordable housing development assisted with taxpayer funds, the owner of the development may choose to refinance the project to provide funds to renovate and rehabilitate the affordable units. Often, in order to refinance the development, an owner will create a new entity formed by the current owner and a new equity tax credit partner and sell the development to the new entity. The current owner will then receive from the purchase price paid by the new entity “Cash-Out Proceeds.”
It has also come to the Board’s attention that in some circumstances, Cash-Out Proceeds have been used for purposes unrelated to the creation, development, and preservation of affordable housing.
But again, the proposed legislation was written without naming names or identifying the actual circumstances of which the Board has become aware.