PRESS RELEASE: SUPERVISOR FARRELL AIMS TO STEER DEVELOPERS’ PROFITS TOWARD AFFORDABLE HOUSING
SAN FRANCISCO — At today’s Board of Supervisors meeting, Supervisor Mark Farrell will introduce a law mandating that excess profits resulting from the purchase or refinancing of an affordable housing development be used to build affordable housing.
“When developers build City-funded affordable housing, profits gained from those projects should be dedicated to affordable housing needs, period,” said Farrell. “Recently, a local ‘affordable housing developer’ refinanced an affordable housing development, made millions off the transaction, and then spent it on dark-money political campaigns. It’s outrageous.”
While City funds are outstanding on an affordable housing development, Farrell’s ordinance prevents the expenditure of such funds for purposes unrelated to the creation, development, or preservation of affordable housing.
Farrell’s ordinance will direct the Mayor’s Office of Housing and Community Development (MOHCD) to enter into all necessary agreements to ensure that any excess proceeds resulting from the purchase or refinancing of an affordable housing development be used solely for:
· Capital and tenant improvements;
· The purchase or acquisition of property for affordable housing;
· Building new affordable housing; or
· Payment of operating and staff costs required for the creation, development, construction or preservation of affordable housing.
Through the development, construction, and financing of an affordable housing development built with taxpayer funds, the owner of the affordable housing development may receive fees, or payments that can be used for private purposes unrelated to the creation, development, or preservation of affordable housing.
“Profits from public subsidy should be directed towards public needs, not private interests,” said Supervisor Mark Farrell. “The majority of affordable housing developers are good actors, but we’re in a housing crisis. We must ensure that every penny available for affordable housing is being used for affordable housing needs.”
As one recent example, local affordable housing real estate developer John Elberling, admitted to the San Francisco Chronicle that he gained millions in profits from refinancing his group’s properties that were initially built with a mix of public funds. Elberling created a dark-money shell entity to funnel those profits to local ballot measure campaigns all while one of his buildings had multiple notices of violations for failing to make sorely needed tenant improvements for the residents of the Knox Hotel.
Farrell expects to bring his ordinance to the Land Use and Transportation Committee in just over a month, and then to the full Board of Supervisors for a vote in early March.