Achieving Scale Achieving Equity L e s s

Achieving Scale, Achieving Equity: L e s s o n s f r o m S an Francisco’s RAD Conversion R A D C O L L A B O R A T I V E N O V E M B E R 1 6 , P R A C T I C E D A Y 2 0 1 6 1

RAD IN SAN FRANCISCO: By the Numbers • 3, 480 units • 29 properties in 28 Limited Partnerships o 2/3 senior disabled o 1/3 family • 8 private developer owner/manager teams • 2 phases over 3 years • Affordability ensured through 99 -year ground leases RENTAL ASSISTANCE DEMONSTRATION PROGRAM 2

SF RAD: What’s Different? • Housing Authority Role o Soft lender o PBV administrator o Not in ownership entity • Mayor’s Office of Development Role o Project manager o Soft lender o Asset Manager o Program Monitor Housing and RENTAL ASSISTANCE DEMONSTRATION PROGRAM Community 3

SF RAD : Deal Specifics • Combination of RAD and non-RAD PBVs achieved through Section 18 Demo/Dispo of 8 properties • 54% RAD units • 46% PBV units • Transfer of assistance and rent bundling • $815 million in equity and $331 million in private debt leveraged • $700 million in rehab; average of $199 K per unit • Bank of America Merrill Lynch (BAML) and Freddie Mac investor/lender for both phases; Aegon on 3 deals RENTAL ASSISTANCE DEMONSTRATION PROGRAM 4

SF Portfolio Financing: “One deal, 28 executions” • Goals o Equity across projects – no special deals! o Coverage of all projects (including the “dogs”) o Ease of execution o One form of bond documents, ground lease, loan docs o Economies of scale on execution o Single schedule RENTAL ASSISTANCE DEMONSTRATION PROGRAM 5

SF Portfolio Financing: “One deal, 28 executions” • Strategies: o Issue lender/investor RFP for all 28 projects o Include developers in selection process o Leverage CRA interest o Demonstrate City commitment to all projects and developers through $$ and staffing o Pitch as high profile project for hometown banks (BAML, Wells) o Complete due diligence ahead of time to reduce risk and maximize pricing RENTAL ASSISTANCE DEMONSTRATION PROGRAM 6

SF Portfolio Financing: “One deal, 28 executions” • Challenges: o SIZE! Maxing out construction debt and equity o Capacity and workload issues for all o Prior developer relationships with lenders o Herding cats Keeping on schedule o Interest rate risk RENTAL ASSISTANCE DEMONSTRATION PROGRAM 7

SF Portfolio Implementation: Equity across all projects • Goals: o All residents and all properties benefit from RAD o All properties rehabbed to similar level o SFHA waitlist clients are screened in o Consistent resident communications across properties o Resident input into design of operations and transition o Supportive services added at all sites o Uniform RAD house rules RENTAL ASSISTANCE DEMONSTRATION PROGRAM 8

SF Portfolio Implementation: Equity across all projects • Strategies: o Convened developer “cohort” (Enterprise Community Partners): ongoing TA, peer support o 8 RAD Working Groups convened by MOHCD with critical support from Enterprise Community Partners o Leadership team developed clear resident messaging, disseminated by SFHA staff and leadership, City, services partners, tenant advocates across all properties o Uniform tenant screening guidelines with minimal barriers to housing RENTAL ASSISTANCE DEMONSTRATION PROGRAM 9

SF Portfolio Implementation: Equity across all projects • Strategies, continued: o Single RAD Relocation plan with uniform resident protections and benefits o Uniform house rules, vetted by residents in community meetings o Resident input into design of operations and transition on a project-by-project basis o Supportive services budgeted according to building size and tenant composition o RAD protections included in Ground Lease and loan documents RENTAL ASSISTANCE DEMONSTRATION PROGRAM 10

SF Portfolio Implementation: Labor • Goals o Minimal worker displacement o Labor peace o Maintaining morale at agency post-RAD conversion RENTAL ASSISTANCE DEMONSTRATION PROGRAM 11

SF Portfolio Implementation: Labor • Strategies o Engage labor partners early and often on RAD o Execute PLA with Building Trades Council for all construction work ($700 MM) o Create additional City jobs for displaced workers o Require developers to interview SFHA staff (RFQ) o Transparency and consistency on severance, early retirement options o Retrain workers for new roles in HCV program RENTAL ASSISTANCE DEMONSTRATION PROGRAM 12

SF Portfolio Implementation: What It’s All About Kitchen, Robert B. Pitts, before Kitchen, Robert B. Pitts, after RENTAL ASSISTANCE DEMONSTRATION PROGRAM 13

SF RAD Lydia Ely Senior Project Manager Mayor’s Office of Housing and Community Development Lydia. Ely@sfgov. org (415) 701 5519 RENTAL ASSISTANCE DEMONSTRATION PROGRAM 14