Budget panel backs limited payment guarantees to protect Treasure Island affordable housing deal

The San Francisco Board of Supervisors' Budget and Finance Committee voted on April 15 to forward to the full board a resolution authorizing limited payment guarantees intended to protect the financing of a Treasure Island affordable housing project if construction is halted by litigation.

Committee members approved amendments and then forwarded the resolution, which would authorize a limited guarantee for Silicon Valley Bank of up to $43,000,000 plus accrued interest and other costs and a limited guarantee for Raymond James Tax Credit Investment Inc. of up to $3,200,000. The guarantees would apply only if construction is stopped or delayed by a court order tied to the current lawsuit, and payment would first draw on the Treasure Island Development Authority's accrued master developer housing subsidy, with the Mayor's Office of Housing responsible for any remaining obligation.

Courtney McDonald of Supervisor Haney's office described the project as the first new development on Treasure Island, a 105-unit development (Maceo May) that will replace units for formerly homeless veterans and provide additional affordable rental housing. Dan Adams of the Mayor's Office of Housing said the project is part of a modular pilot and that tight bond-closing deadlines and a limited construction schedule make timely financing critical. "The lender and investor are requiring a guarantee that is limited to any injunction that might happen due to this particular lawsuit," Adams said.

Severn Campbell of the Budget Analyst Office told the committee the guarantees under consideration are $43,000,000 and $3,200,000 and described funding sources and residual risk. "Our discussions with the Mayor's Office of Housing indicate that loan repayment would be low risk," she said, while acknowledging some risk and calling the resolution a policy matter for the full board.

The office of the project developer and the Treasure Island Development Authority said the parcel for Maceo May (Parcel C32) sits outside the primary area referenced in the lawsuit and that they believe the litigation risk is minimal. They also noted the guarantee would be limited to defaults triggered by a judge-ordered work stoppage related to the suit and said payment obligations would be met first from TIDA subsidies and then MOHCD funds.

During the hearing the administration introduced two amendments to clarify that the city controller is authorized to transfer legally available Mayor's Office of Housing and Community Development appropriations to make any guarantee payment and to confirm the guarantee amounts as up-to amounts consistent with prior approvals; the committee approved those amendments by roll call.

Public commenters raised concerns about Treasure Island contamination and about access to the meeting phone line during the hearing. Chair Sandra Lee Fewer rescinded an earlier vote when the committee experienced a conference-line outage, reopened public comment, heard the concerns, and then the committee re-approved the amended resolution and forwarded it to the full board by recorded vote.

The committee recorded ayes from Supervisors Shamann Walton and Rafael Mandelman and Chair Sandra Lee Fewer on the final vote (3 ayes). The full Board of Supervisors will consider the resolution at a later meeting.