Denise Smith and her youngest son, Roland Byrd, Jr., 23, moved into 626 Mission Bay Boulevard in 2018. They’re the first family to occupy a two-bedroom, one-bath townhome in the 100 percent below-market-rate (BMR) rental building, which opened last fall under Tenderloin Neighborhood Development Corporation (TNDC) management.
Smith was born in San Francisco in 1956. Her family was displaced from their home in what became the Hunters Point Redevelopment Project Area by the former San Francisco Redevelopment Agency (SFRA) when she was a pre-teen. They moved into the Ingleside neighborhood. In 1980, Smith settled in Bayview-Hunters Point, where she raised five sons.
As a single mother during the 1980s and 1990s, gun-related fatalities and street violence took a toll on the family’s sense of well-being. A 2001 San Francisco Chronicle article cited feuding between small local gangs as the major cause of the area’s unsolved homicides over the previous decade.
Smith started a career focusing on at-risk youth in 2002. She worked with Shawn Richard, executive director of Brothers Against Guns, and as a caseworker at the Mission Neighborhood Center, where she handled a caseload of 25 to 30 kids. But the “bad things” the family saw happening around them prompted her to seek a safer setting in the East Bay when Byrd turned 12, in 2008.
“I stayed the course and stayed strong as long as I could,” Smith said. “My youngest didn’t experience what my first four sons did.” She added with mixed pride and relief that they’ve all made good lives for themselves, with families and jobs outside the City.
After living briefly in East Oakland and Emeryville, Smith and Byrd found a home in Pittsburgh, where they stayed for eight years. The $930 monthly rent she’d been paying had just been raised to $1,680 when she received a postcard from the Mayor’s Office of Housing and Community Development (MOHCD) telling her that she’d placed fourth in a housing lottery for 626 Mission Bay Boulevard. The displacement that occurred early in her life had enabled Smith to obtain a Certificate of Preference (COP) from SFRA in 2001, which secured her the highest priority in City-sponsored housing lotteries.
MOHCD administers the COP program through an agreement with the Office of Community Investment and Infrastructure (OCII), the successor agency to the SFRA, which was dissolved in 2012. Residency at an affected address that suffered displacement can be demonstrated with a birth certificate, public school records, assistance payments, utility bills, and/or an identification card or driver’s license showing the residency period.
“There’s always a wait list” for applicants seeking a spot in one of the City’s affordable housing programs, Smith testified. When notified in 2018 that she’d been selected, she grabbed the chance to move into a townhome in San Francisco’s newest neighborhood.
“I like the environment in Mission Bay,” Smith said. “I love this area. I really do.”
Smith works two days a week at Woodlands Creature Outfitters, a novelty shop at 1310 Fourth Street. “My passion has always been working around, and with, kids,” she said. The store is operated by 826 Valencia, a nonprofit that offers an afterschool writing program to public school students. Working there has inspired her to start writing her life story; she used to write when she was younger. She’d been offered an opportunity to work a second part-time at the Chase Center when The View spoke with her.
Byrd works at the United States Postal Service facility on Evans Street as a mail handler, though he expects to transfer to a new position as a truck driver, transporting the post to branch offices. Between his earnings and her part-time job that accommodates a physical condition for which she receives Social Security Disability Insurance benefits, they cobble together their monthly rent of $1,555. The $18,660 annual fee they pay is more than a third of their household income.
“We make it work,” Smith said. “Sometimes I get help from my other kids. I don’t have to pay water and garbage; they’re included. That helps a lot.”
To be eligible for placement at most of 626 Mission Bay Boulevard’s 143 units, the applicant’s household income has to be 50 percent or less than the Area Median Income (AMI). Last year that was $47,350 for a two-person household, according to the federal Department of Housing and Urban Development (HUD). The minimum income required for a two-bedroom home in the building is $3,110 a month; the maximum $4,887. The development has 27 units designated for formerly homeless families, at 30 percent or less than AMI, $28,400 for a two-person household in 2018. The building has 53 one-, 47 two-, and 43 three-bedroom units.
“626 is a lot of different people with different backgrounds and abilities to cope,” Smith said. She plans to stay in the townhome as long as she can. She sings in her church’s music ministry and is happy to be a grandmother. “That’s my life now, my children and my church,” Smith said. “God has been good to us.”
A mile and a quarter to the south, in Dogpatch, Leslee McCray, 39, is a first-time owner of a BMR condo in Knox, a mixed market rate and BMR building located at 645 Texas Street that opened in 2017. Of the 91 condos, 11 are BMR.
McCray was born in Oakland, grew up in Tracy, and moved to the City when she was 18 to study at San Francisco State University. She switched to beauty school, which led to her career as a direct sales consultant for a line of hair care products, working from home and meeting with clients in Marin County and San Francisco. Friends, playing soccer, cooking, and visiting family fill her life. She plans to finish college through online courses. She likes that Dogpatch’s industrial feel has been retained as it morphs into a neighborhood of denser residential buildings. “It’s still got its character,” McCray said.
There were four units in the old Victorian North of the Panhandle she’d lived in for 10 years when a fire broke out, jumped to a second building, and displaced 25 people between the two structures. She’d been paying $1,025 a month for her rent-controlled apartment. As a result of the conflagration leaving her homeless, McCray received a Displaced Tenant Housing Preference (DTHP) certificate. A DTHP helps renters, moved by no-fault eviction or fire, find new housing. A DTHP gives applicants second-highest priority in many housing lotteries after a COP.
No BMR housing was available after the fire destroyed McCray’s apartment. During her 18-month transition from temporary lodging to ownership, McCray shared a place in Oakland with a roommate for a few months, then sublet an apartment in San Francisco she knew wouldn’t be permanent, while hunting for an affordable place. She counts herself exceedingly fortunate to have won the second of two certificate spots available for the ownership lottery at Knox. It helped that she’d managed to save enough money to cover the down payment.
In 2017, McCray paid $267,000 for her 700 square foot, one-bedroom, one bath condominium. She met the eligibility requirement with income a little under 100 percent AMI, which was $75,400 for one person in 2016, according to HUD.
“Probably close to a third of my monthly income goes to housing,” McCray said. “I’m on commission and a small base pay, so it’s hard to say if it’s always a third of my income.”
McCray’s $2,000 monthly housing cost consists of mortgage payments, taxes, and a homeowner association (HOA) fee of $600, which covers her share of the building’s maintenance and operating expenses, in which all owners participate. McCray’s HOA payment provides her with access to a gym and media room. Although the complex is only a couple of years old, HOA charges have already escalated by six percent, with another six percent hike planned for next year, with no limits on increases. As rates rise for services that’re collectively shared – common area energy, water, and garbage removal – and as buildings age and maintenance costs surge, HOAs, including all-BMR homeowner associations, can similarly elevate their assessments.
Ownership means McCray has to pay for repairs when anything inside her unit needs to be fixed. Recently, she received a $900 plumber bill to fix her shower. Despite these expenses, McCray knows she landed well.
“I never realized how much more secure it makes you feel to own,” she said. “You don’t know what’s going to happen with a rental. You can’t save while renting. I can budget and enjoy my life.”
Her year and a half between long-term homes impressed upon her how exorbitant market rate rent has become in San Francisco. People accustomed to rent-controlled apartments who’re displaced for any reason feel insulted when they encounter double, triple, or quadruple rent levels, McCray said.
“How did it get this out of control?” she asked.
According to HUD, the 100 percent AMI level McCray qualified at three years ago has risen to $86,200 for a single person in 2019, a 14 percent increase.
Households earning up to 120 percent of AMI are eligible to apply for homes in MOHCD’s affordable housing portfolio; currently $103,450 for an individual, $147,800 for a family of four.
MOHCD offers a broad palette of BMR rental and ownership programs, such as the City’s Inclusionary Affordable Housing Program, and the former SFRA’s Limited Equity Program. Both rentals and condos are available in buildings that are 100 percent affordable, mixed market rate and BMR, at a range of AMI levels. A preference certificate isn’t necessary to apply, but applicants must meet program eligibility criteria.
McCray advised anyone who’s considering applying for a BMR unit, “Ask a lot of questions. Be aware what the program you’re getting into is all about, and the details. Stay on top of your lender. My lender almost timed out with MOHCD. Reach out to other BMR people. There’s kind of a network out there of people in BMR units who will give advice.”
She cautioned applicants to be prepared for the MOHCD vetting and approval process to be slow. For McCray, it took five months after she’d won a lottery to move into her new home. “They don’t tell you upfront how long it’s going to be,” she said.
BMR owners can expect the process of selling their units to take a while as well. The MOHCD Ownership Bulletin, mailed to BMR owners quarterly, states in its Summer 2019 bulletin, “Selling a BMR unit will require more steps and more time than selling a market rate home. Make sure you choose the right realtor who has BMR experience.”
Rob Belli, a realtor with Home Quest Realty, an agency that specializes in reselling BMR homes, has sold more than 400 such units in the past 10 years. Buyers are “a cross-reference of everyone. Doctors, teachers, people who have entry level jobs making $50,000, $60,000 a year. Old people, young people, tech workers,” Belli said. “Retirees are looking to buy because they want stable housing. Rentals can be very scary for retirees because rent can go up, or an eviction can happen. This provides stability for retirees.”
Sellers generally are people experiencing a major life change. “Something happens,” Belli said. “They start to have a family and need more space, or someone has died, and I’ve helped family members sell the unit. Or they’re elderly and have to go into assisted care.”
BMR deed restrictions limit resale value. Owners preserve their capital based on the equity they build while making monthly mortgage payments, but don’t reap a windfall profit selling on the open market. The current AMI level at which the unit was originally purchased is used in a formula to calculate the maximum resale price. According to the MOHCD Ownership Bulletin, “If that price is higher than the price affordable to the next qualified buyer, you may have to lower the price in order to complete the sale.” BMR condos must be owner-occupied and cannot be rented or subleased, another restriction that prevents profit-taking.
For more information on affordable housing programs: www.sfmohcd.org.