This map of all foreclosures in San Francisco shows a heavy concentration in the southern part of the city, home to many low-income communities of color.
When Mayor Gavin Newsom and Sup. Sophie Maxwell convened a task force in July 2007 to figure out why African Americans are leaving San Francisco and how to reverse this trend, the subprime loan market crisis was about to send a shock wave of home foreclosures sweeping through southeast San Francisco.
Hope SF, the promised rebuild of the city’s public housing projects, is underway at a cost of $95 million. The city’s certificates of preference program, giving housing priority to black residents displaced by redevelopment, has been expanded and extended. But little has been done to address the immediate problem.
Instead political leaders have focused on a plan to subsidize Lennar Corp.’s construction of thousands of new condos in the southeast section of the city the heart of the San Francisco’s remaining African American community and have done nothing to promote a plan that could convert hundreds of foreclosed homes into affordable for-sale or rental units there, right here, right now.
African American Out Migration Task Force (AAOMTF) members recall warning that the crisis would likely hit San Francisco’s already dwindling black population extra hard. And Sup. John Avalos, who was running for election in District 11, remembers seeing impacts in the Excelsior District as early as 2007.
"I was telling people in early 2007 that this was a problem in District 11, and even real estate people didn’t believe me," recalled Avalos, who is exploring legislation to hold banks accountable and spoke at an ACORN protest in support of Excelsior homeowner Genaro Paed, a Filipino native who just staved off eviction orders pending the outcome of his lawsuit against Washington Mutual concerning what Paed describes as "a predatory loan" secured in 2006.
Avalos also planned to introduce legislation on May 12 that would expand protection of renters, including those in foreclosed homes who are now being evicted by banks.
This isn’t the first time city leaders have studied the African American exodus or ways to prevent low-income and minority households from being preyed upon or displaced. Indeed, this task force’s initial findings, (released last summer after Lennar spent millions to persuade voters to support building 10,000 condos in the city’s southeast) suggests San Francisco’s entire black community is at risk unless proactive and immediate steps are taken.
According to U.S. Census data, the city’s African American population shrank to 6.6 percent of the city’s total population by 2005 (a 40 percent decline since 1990) and will likely slip to 4.6 percent by 2050, according to the California Department of Finance. And these findings were made before the foreclosure crisis heated up.
In 2008 Maxwell and other elected officials convened a Fair Lending Working Group (FLWG) to figure out how to respond to the wave of foreclosures. By year’s end, there were 667 home foreclosures in San Francisco, almost all in the city’s southeast sector.
These numbers sound small compared to Contra Costa County or Oakland, where thousands of foreclosures occurred. And they aren’t big enough to qualify for the first round of President Barack Obama’s National Stabilization Program grants, which were released earlier this year. Based on a census-driven formula, the grants sent $8 million to Oakland and no money to San Francisco.
But with half the city’s foreclosures in the Bayview, home to most of the city’s remaining African Americans, the fact that little has been done to save these homes or to follow early recommendations to do so is a gentrification crisis in the making.
Ed Donaldson, housing counseling director at the San Francisco Housing Development Corporation in the Bayview District, served on the FLWG and remembers suggesting a two-tier track. First, take steps to protect renters in places that have been foreclosed and second, buy as many foreclosed properties as possible with the aim of reselling or leasing them as affordable units. While the FLWG liked the renter protection angle, it did not support the foreclosure acquisition program.
"The idea fell on deaf ears," recalls Donaldson, who was disappointed his foreclosure purchase plan didn’t make it onto FLWG’s recent recommendation list. FLWG members include financial institutions such as Wells Fargo, Washington Mutual, and Patelco Credit Union; community-based organizations such as Housing and Economic Rights Advocates, SFHDC, Mission Economic Development Agency; and city agencies. The agency also has received staff support from Assessor-Recorder Phil Ting, the Mayor’s Office of Housing, Treasurer Jose Cisneros and the Office of the Legislative Analyst.
"We’d already seen the spike in foreclosure numbers, so how did these recommendations get pushed out? We need something with teeth," Donaldson said.
SFHDC executive director Regina Davis says she suggested a foreclosure purchase and resale plan as an AAOMTF member and was concerned when she noticed that her recommendation was not included on the list discussed at the April 23 meeting. Billed as a closing-out session, that meeting took place at the San Francisco Redevelopment Agency and was attended by Davis, chair Aileen Hernandez, Redevelopment director Fred Blackwell, the Rev. Amos Brown, Barbara Cohen of the African American Action Network, Tinisch Hollins of the Mayor’s Office of Criminal Justice, and former supervisor and assessor Doris Ward, among others. The AAOMTF is finishing up its work this week.
"I got involved because I believed that in exchange for participation, we would see things done and/or funded. Part of what we want to see are real action items that keep African Americans in San Francisco or bring them back. So we really want this issue to move forward with substance," Davis told the Guardian.
Recognizing that San Francisco is facing massive budget constraints, SFHDC is proposing to borrow $1.5 million from Clearinghouse CDFI, a Los Angeles community development financial agency, to acquire and rehabilitate these foreclosed properties.
Davis’ group would then turn it around and offer residents several options: buy (if the prospective buyer qualifies for the city’s $150,000 downpayment assistance and a $50,000 loan from the California Housing Financing Agency); lease (in which SFHDC sells the home to the buyer but leases the land, making the price affordable), lease-to-own. Or, Davis adds, people could rent the units at affordable rates.
But to make the plan work, SFHDC need the banks to sell the properties AT below market rates. Noting that foreclosed properties are still selling in the Bayview for $400,000, Davis says her nonprofit intends to purchase 100 to 200 homes during a 24-month period at less than $200,000 mark.
Yet Davis remains optimistic about the plan’s chances as SFHDC negotiates with major banks for a 50 percent discount, noting that there is a monthly average of 50 foreclosures in the Bayview-Hunter’s Point, and SFHDC has access to 100 qualified buyers.
Blackwell said the Redevelopment Agency hasn’t developed an initiative or a funding pool to respond to the foreclosures in the city’s southeast sector. But, he said, the agency is looking at ways to apply for National Stabilization Program funds even though "federal guidelines mostly don’t apply well in expensive markets like San Francisco.
"We are engaged in advocacy so San Francisco can take advantage of any federal stabilization funds, but we don’t have an agency-specific proposal," he continued.
"Frankly, I think community-based organizations are the best to do programs like that, especially since there is so much anxiety about the Redevelopment Agency and property acquisition in the southeast," Blackwell added.
He believes that given the city’s current budgetary constraints, the AAOMTF "will likely look for leadership from the Mayor and the Board of Supervisors in cases where members have made recommendations and there is an opportunity to bring in public money."
Blackwell feels the city is still getting its mind around its foreclosure problem. "We’ve been spared the wholesale neighborhood-by-neighborhood devastation that places like Antioch faced," Blackwell said. "So, there wasn’t the same sense of urgency. And there’s a need to look more closely at the data. A lot of the information is based on anecdotes."
Yet the feds seem willing to help if city officials take the initiative. Larry Bush, spokesperson for the U.S. Department of Housing and Urban Development’s regional office, says San Francisco and Oakland could file a joint foreclosure plan application.
"If they can identify 100 homes, they’d be eligible for $5 million," Bush said, noting one snag that could unravel the plan locally. "Foreclosed properties must be vacant for at least six months. And as you know, in San Francisco, foreclosed homes still sell."
Maxwell says the city could do more to confront predatory lenders and enforce tenant rights, as well as developing a plan to buy foreclosed properties. "But in San Francisco it’s an issue because of relatively high prices," she told us.
Yet the city’s high prices are the very problem pushing out low-income residents. African American home ownership actually increased after 1990, even as out-migration among black renters increased. But now, if the foreclosures stand, that exodus will likely accelerate.
Asked if she supports SFHDC’s current foreclosure plan, Maxwell said, "It makes sense to me. If that could be done, it would be optimal."
Myrna Melgar of the Mayor’s Office of Housing says she’s not sure that a foreclosure resale plan would work in San Francisco for folks who bought a couple of years ago, when house prices hit $700,000, only to see house prices fall to around $400,000.
"San Francisco is a very different universe from Detroit," Melgar said. "Properties don’t sit around empty and vacant. They are bought by speculators who are betting that in two or three years, their values will go up. So if we had money to buy these properties, which we don’t, we’d be in competition with the speculators, who have lots of money with no strings attached, and who drive the prices up."
Another difference, Melgar said, is that San Francisco banks are holding onto 50 percent of their foreclosed properties, whereas Antioch banks are only holding onto 22 percent. "We’d like to keep folks in the homes," Melgar said. "But it’s a policy issue related to the reality that we have such limited funds."