OCII conditionally assigns $250,000 1994 loan to Mayor—s housing office to support 20 Fourth Street affordable project

The Office of Community Investment and Infrastructure on Wednesday conditionally authorized transferring a 1994 $250,000 loan to the Mayor—s Office of Housing and Community Development so the funds can be modified and applied to a planned 35-unit affordable housing project at 20 Fourth Street in San Francisco's Mission District. The commission voted 3 ayes, 1 absent to adopt the resolution.

OCII staff told commissioners the loan originated under a 1994 20 Fourth Street Revitalization Program that required acquired properties to be used for commercial purposes and leased to for-profit tenants. Christine Maher, OCII senior real estate development specialist, said the loan remains secured by deeds of trust, has a maturity date recorded as November 2014, and includes a forgiveness provision that applies only if "all the terms and conditions of the loan agreement and the program have been met." She said the agency could not find evidence that some key conditions were satisfied, including the required conversion of certain spaces to commercial uses.

Victor Marquez, general counsel for Mission Neighborhood Centers, told the commission that converting the Balmy Alley property to commercial use proved impossible because of residential zoning and later historic-preservation constraints. Marquez summarized the proposal: once MNC sells the Balmy Alley asset, it would contribute $250,000 of the sales proceeds—the amount of the agency loan—to the larger affordable housing project. "The best outcome today is the language the key language that's in the assignment is that we would take once we sell the asset, we would take to a total of $250,000 and allocate it to the bigger project," Marquez said.

Maher said OCII staff worked with MNC and the Mayor's Office of Housing and Community Development (MOHCD) on a transaction they believe complies with redevelopment dissolution law and would permit MOHCD to modify the loan's term and scope to fit the affordable housing project and fill a funding gap. Theresa Yonge of MOHCD told commissioners that the office is "looking forward to the assignment of this particular loan to our kind of jurisdiction so that we can move forward with MNC on making that affordable housing possible at their 20 Fourth Street site."

Commissioners asked whether the 1994 instrument was a loan or a grant and whether interest or payments had been made; staff said it is structured as a loan that could be forgiven only if all contractual conditions were met and that interest under the loan is payable only if the loan is called due. Commissioners also raised concerns—voiced on behalf of an absent colleague—about returning a community asset to the open market; staff and MNC representatives said MNC's board had authorized the sale while noting that subsequent negotiations after assignment to MOHCD could address any terms around reuse or retention.

The commission's action is conditional and the assignment requires coordination with MOHCD and compliance with redevelopment dissolution law. OCII staff and MNC representatives said they expected the assignment and subsequent loan modification to allow the project to move forward; Marquez said MNC and the mayor's office planned a financing meeting later in the week to pursue opportunities.

The commission adopted the resolution by roll call: Commissioner Mondehar voted yes, Commissioner Singh voted yes, Commissioner Bustos was absent, and Chair Rosales voted yes. The commission recorded the formal adoption and moved to the next agenda item.