San Francisco Mayor Ed Lee and Supervisor Malia Cohen today announced a proposal to finance up to 1,500 loans for middle-income families buying their first homes through an investment of up to $125 million by the city employee pension plan.
The proposal, which Cohen introduced today to the San Francisco Employees Retirement System board in the form of a resolution, would see the city’s retirement system invest the funds in the Mayor’s Office of Housing and Community Development’s Downpayment Assistance Loan Program over the next 10 years.
“We are in the midst of a housing affordability crisis in San Francisco, and people of every income are struggling to find a place for themselves and their families in our city,” Lee said in a statement today. “Today’s first in the nation investment by our public pension system will bring the dream of homeownership into reach for up to 1,500 middle-class families in San Francisco.”
The resolution calls for an initial investment of around $25 million, with future investments of up to $10 million per year every other year. The loan program is considered a safe investment, with a loss rate of less than 1 percent, officials said today.
“Homeownership should not be out of reach for our city’s residents and we need to be creative about the tools we are providing in order to keep low and middle income families in San Francisco,” Cohen said in a statement.
The down payment loan program provides a silent second loan of up to $200,000 or 15 percent of the purchase price to cover down payment and closing costs for eligible homebuyers. It is repayable along with a share of the appreciation after 40 years or when the property is sold or transferred.
The program currently only makes loans to homebuyers making up to 120 percent of the median income in San Francisco, but the new funding would allow it to cover families earning up to 175 percent of the median income, officials said.