Committee forwards plan to release $2.9M in SoMa reserve for small‑sites purchase at 566 Natoma; SoMa spending reduced to $114,800

The Budget & Finance Committee on Sept. 13 moved three related housing items to the full Board with recommendations: (1) release up to $2.9 million in committee reserve funds to the Mayor’s Office of Housing and Community Development (MOHCD) to support a small‑sites loan for 566 Natoma Street; (2) an amended spending resolution for the SoMa Community Stabilization Fund reduced from about $3,014,800 to $114,800 to support two capacity‑building grants; and (3) designation of two city‑owned parcels as exempt surplus land to improve competitiveness for state affordable‑housing funding.

Amanda Fukatomi Lopez, a preservation project manager at MOHCD, asked the committee to release $2,900,000 from a $10,000,000 SoMa reserve originally set aside for small‑sites loans. She said 566 Natoma is a three‑story, five‑unit building (four 1‑bedroom units and one 2‑bedroom unit) that was acquired and rehabilitated using interim financing from the San Francisco Housing Accelerator Fund. "The permanent financing of 566 Natoma through the small sites program will result in both permanent affordability and preservation of 5 units of housing for long term households," she said.

Dan Goncher of the Budget Legislative Analyst’s Office summarized the fiscal mechanics and program guidelines. BLA noted that the small‑sites program’s updated guidelines set maximum local subsidies at $400,000 per 1‑bedroom unit and $450,000 per 2‑bedroom unit, while the report’s exhibits show an average subsidy of about $580,000 per unit for small‑sites projects — a level that exceeds the guideline caps but can proceed with the director’s approval under current rules. BLA recommended approval of the proposed reserve release but observed that local subsidy levels are comparatively high and that establishing a not‑to‑exceed operating subsidy metric citywide would be a useful policy safeguard.

Claudine Del Rosario, manager of the SoMa Community Stabilization Fund, asked the committee to amend the spending resolution (item 3) so that only $114,800 remains available under that item; the remainder would instead be provided through the reserve release for the small‑sites loan. The $114,800 would fund capacity grants to Cultivate Labs ($74,800) and United Players ($40,000). MOHCD and BLA explained that, if approved, the loan package for 566 Natoma would include MOHCD financing that, together with other previously committed sources, totals roughly $3,975,000 to repay interim financing, cover accrued interest and closing costs, and fund reserves.

Supervisors asked staff about geographic equity scoring and per‑door subsidy variability across districts; MOHCD staff said geographic equity points are pre‑set by supervisor district in the updated rubric and that project acquisition dates and pandemic delays (including permitting and geotechnical requirements for liquefaction zones) contributed to higher costs for some sites. The committee voted to release the $2.9 million reserve and to amend item 3 to $114,800; both motions passed 3–0. The committee also forwarded items 3 and 4 (as amended) to the full Board with a positive recommendation; Supervisor Asha Safaei was added as a sponsor for items 3 and 4.

Next steps: The items will appear on the full Board agenda (expected Sept. 19) for final action. MOHCD said it will record a permanent declaration of affordability for 566 Natoma and pursue the financing and lease actions required to place the property under long‑term affordability restrictions.