Findings and Purpose. | |
Definitions. | |
“Sale of a Multi-Family Residential Building” Defined. | |
Qualified Nonprofits. | |
General Provisions. | |
Right of First Offer. | |
Right of First Refusal. | |
Preservation as Rent-Restricted Affordable Housing; Tenant Protections. | |
Incentives. | |
Enforcement. | |
Implementation. | |
Undertaking for the General Welfare. | |
Construction with Other Laws. | |
Severability. | |
(a) The City faces a severe and continuing housing crisis. Many City residents are unable to obtain or retain affordable housing.
(b) This crisis has profoundly negative effects on the City. It causes dislocation, which frays the social ties that bind our neighborhoods and communities together. It forces vulnerable residents to leave their home, the City, for new communities where they are strangers. And it contributes to homelessness—which is itself a severe and continuing crisis in the City.
(c) The City’s housing crisis is caused, in large part, by a shortage of affordable rental housing. The creation and preservation of such housing is therefore of paramount public concern.
(d) Obstacles to the creation and preservation of affordable rental housing include off-market sales, the transfer of multifamily residential building by foreclosure or deed in lieu of foreclosure, and rapid turnover in the City’s real estate market. Nonprofit organizations seeking to create and preserve affordable housing may be willing and able to pay market prices to purchase residential buildings for sale, but nevertheless find themselves often unable to purchase such buildings before they leave the market. Nonprofit organizations serving the broader public interest must often move more deliberately and borrow purchase money from non-traditional lenders in such real estate transactions than private entities concerned solely with profit. Nonprofit organizations may also have access to public funds dedicated to acquire multifamily residential buildings under the threat of foreclosure or subject to foreclosure proceedings, but such nonprofit organizations sometimes do not have the benefit of notice that such multifamily residential buildings are available for purchase.
(e) The purpose of this Chapter 41B (which may be referred to as the “Community Opportunity to Purchase Act”) is to enhance nonprofit organizations’ ability to purchase multi-family residential buildings, at market prices, within a reasonable period of time, and to thereby promote the creation and preservation of affordable rental housing.
(f) This Chapter 41B is intended to complement existing anti-displacement and preservation programs administered by the Mayor’s Office of Housing and Community Development (the “Agency”). In particular, this Chapter is intended to complement the Small Sites Program and Preservation and Seismic Safety (“PASS”) program.
(1) The Small Sites Program was created to establish and protect long-term affordable housing in smaller properties throughout the City, particularly at sites were1 market pressures may otherwise result in tenant evictions and rising rents. By January 2019, the Small Sites Program had empowered local nonprofit housing organizations to preserve 28 buildings, containing 205 residential units and 13 commercial spaces.
(2) The PASS program provides low-cost, long-term senior financing to fund the acquisition, rehabilitation, seismic retrofitting, and preservation of affordable multi-family housing, funded through bond revenues previously approved by City voters. It is anticipated that the PASS program will preserve up to 1,400 units of affordable housing in the City.
CODIFICATION NOTE
1. So in Ord. 79-19.
For purposes of this Chapter 41B, the following definitions apply:
“Agency” means the Mayor’s Office of Housing and Community Development, or any successor agency, department, or office.
“Area Median Income” means the Unadjusted Area Median Income published by the U.S. Department of Housing and Urban Development for the geographic area that includes the City.
“City” means the City and County of San Francisco.
“Fee Interest” means ownership of real property in fee simple absolute.
“Multi-Family Residential Building,” or “Building,” means any privately-owned real property in San Francisco improved with three or more residential rental units (whether or not the property also includes non-residential uses), any privately-owned real property on which three or more residential units are under construction, and any privately-owned vacant lot on which the Planning Code and other applicable laws would permit the construction of three or more residential rental units.
“Notice of Special Restrictions” means an agreement executed by a Qualified Nonprofit and recorded against a Multi-Family Residential Building Purchased by such Qualified Nonprofit, substantially in the form published by the Agency.
“Purchase of a Multi-Family Residential Building,” or “Purchase,” means to acquire any interest that is transferred pursuant to the Sale of a Multi-Family Residential Building.
“Purchaser” means the individual, individuals, entity, or entities engaged, or seeking to engage, in the Purchase of a Multi-Family Residential Building.
“Sale of a Multi-Family Residential Building,” or “Sale,” is defined in Section 41B.3.
“Sell” means to engage in the Sale of a Multi-Family Residential Building.
“Seller” means the individual, individuals, entity, or entities engaged, or seeking to engage, in the Sale of a Multi-Family Residential Building.
“Qualified Nonprofit” is defined in Section 41B.4(a).
(Added by Ord. 79-19, File No. 181212, App. 5/3/2019, Eff. 6/3/2019)
(a) General Definition. As used in this Chapter 41B, “Sale of a Multi-Family Residential Building,” or “Sale,” means any of the following:
(1) The transfer, in exchange for money or any other thing of economic value, of a present interest in the Multi-Family Residential Building, including beneficial use, where the value of the present interest is the Fee Interest in the Multi-Family Residential Building, or substantially equal to the value of that Fee Interest; or
(2) If an interest in the Multi-Family Residential Building is held by a trust, the transfer, in exchange for money or any other thing of economic value, of a beneficial interest in the trust, where the value of the beneficial interest in the trust is substantially equal to the value of the Fee Interest of the Multi-Family Residential Building; or
(3) If an interest substantially equal to the value of the Fee Interest of the Multi-Family Residential Building is held by any kind of corporate entity or partnership (including, but not limited to, a corporation, limited liability company, general partnership, limited partnership, or limited liability partnership), and if that interest is substantially equal in value to the total value of assets held by the corporate entity or partnership, the transfer, in exchange for money or any other thing of economic value, of a controlling interest in the corporate entity or partnership; or
(4) The transfer of the Fee Interest or other beneficial interests of the Multifamily Residential Building made under a deed in lieu of foreclosure and/or related agreement related to the repayment of a loan and avoidance of foreclosure.
(b) Multiple Owners. For purposes of this Section 41B.3, in any instance in which multiple entities (whether those entities are natural persons, trusts, corporate entities, partnerships, or any other kind of entity, or any combination of different kinds of entities) hold interests in a Multi-Family Residential Building, the transfer of multiple interests by or in those entities shall be considered the transfer of a single interest, if the transfers are made in connection with substantially the same transaction or set of transactions.
(c) Exclusions. Notwithstanding subsections (a) and (b), “Sale of a Multi-Family Residential Building,” or “Sale,” does not include any of the following:
(1) Any transfer made under a mortgage or deed of trust; or
(2) Any transfer made in connection with any bankruptcy proceeding (including, but not limited to, any transfer made by a bankruptcy trustee); or
(3) Any transfer of an interest in real property held by the Federal government, by the State government, or by any special district created by State law (including, but not limited to, any transfer of any such interest held because of a taxpayer’s nonpayment of tax); or
(4) Any transfer by devise or intestacy, or any other transfer made in connection with a bona fide effort to pass an interest in real property to one’s devisees or heirs (including, but not limited to, such transfers made in connection with a living trust); or
(5) Any transfer between or among spouses, domestic partners, siblings (including, but not limited to, half-siblings, step-siblings, and adoptive siblings), parents (including, but not limited to, step-parents and adoptive parents) or guardians and their children, grandparents and their grandchildren, aunts or uncles and their nieces or nephews, great-aunts or great-uncles and their grand-nieces or grand-nephews, or first or second cousins, or any combination thereof; or
(6) Any transfer of an interest in a Multi-Family Residential Building income-restricted at or below an average of 80% of Area Median Income for a minimum of 10 years, if such transfer is to an entity controlled by a California public benefit corporation, and that entity also participates in the management, direction, or control of the Building; or
(7) For the purpose of a land dedication under the Planning Code or a development agreement or similar agreement approved by the Board of Supervisors, any transfer to the City or its designee of an interest in any privately-owned lot on which the Planning Code and other applicable laws would permit the construction of three or more residential rental units.
(a) Annual Selection of Qualified Nonprofits. The Agency shall establish a process for certifying nonprofit organizations that meet the following criteria:
(1) The organization is a bona fide nonprofit, as evidenced by the fact that it is exempt from federal income tax under 26 U.S.C. § 501(c)(3);
(2) The organization has demonstrated a commitment to the provision of affordable housing for low- and moderate-income City residents, and to preventing the displacement of such residents;
(3) The organization has demonstrated a commitment to community engagement, as evidenced by relationships with neighborhood-based organizations or tenant counseling organizations;
(4) The organization has demonstrated the capacity (including, but not limited to, the legal and financial capacity) to effectively acquire and manage residential real property at multiple locations in the City; and
(5) The organization has, within the previous five years, acquired or partnered with another housing development organization to acquire at least two residential buildings using funding provided by the Agency, or has acquired or partnered with another nonprofit organization to acquire at least two residential buildings under this Chapter 41B.
Nonprofit organizations that the Agency certifies as having met these criteria shall be known as “Qualified Nonprofits.” An organization’s certification as a Qualified Nonprofit shall be valid for three years. The Agency shall solicit new applications for Qualified Nonprofit status at least once each calendar year, at which time existing Qualified Nonprofits shall be eligible to apply for renewed certification as Qualified Nonprofits. In the absence of new information raising doubts about whether the organization qualifies as a Qualified Nonprofit, an existing Qualified Nonprofit’s application for renewed certification as a Qualified Nonprofit shall be routinely and swiftly granted.
(b) Existence and Publication of Qualified Nonprofits List. The Agency shall publish on its website, and make available upon request, a list of Qualified Nonprofits. In addition to such other information as the Agency may include, this list shall include contact information for each Qualified Nonprofit. This contact information shall include, but need not be limited to, a mailing address, an e-mail address that the Qualified Nonprofit monitors regularly, and a telephone number.
(c) Disqualification of Qualified Nonprofits. The Agency shall promptly investigate any complaint alleging that a Qualified Nonprofit has failed to comply with this Chapter 41B. If, after providing the Qualified Nonprofit with notice and opportunity to be heard, the Agency determines that a nonprofit organization listed as a Qualified Nonprofit has failed to comply with this Chapter, the Agency may suspend or revoke that nonprofit organization’s certification as a Qualified Nonprofit.
(Added by Ord. 79-19, File No. 181212, App. 5/3/2019, Eff. 6/3/2019)
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