San Diego Housing Commission (SDHC)
Deed-Restricted Affordable Housing Preservation Ordinance Framework
Presentation to the SDHC Board of Commissioners
October 13, 2023
Wendy DeWitt
Vice President, Preservation
Policy and Land Use
Naader Ho
Special Programs Manager
Policy and Land Use
San Diego Housing Commission
Slide #2
SDHC – Preservation Ordinance Framework
Introduction
• May 28, 2020: SDHC completed a yearlong study and published a report, Preserving Affordable
Housing in the City of San Diego.
• October 27, 2020: City Council approved seven actions to implement a strategy for affordable
housing preservation, including convening an Interagency Working Group and Preservation
Collaborative Stakeholder Group.
• April 8, 2021: SDHC convened the first meeting of the Interagency Working Group.
• February 4, 2022: SDHC Board of Commissioners (Board) approved the nomination categories
and representative organizations to serve on the first Preservation Collaborative Stakeholder
Group, which continues to meet quarterly.
• March 2, 2023: Staff presented an informational update about the City Council-Approved
Preservation Strategy Action items to the City Council’s Land Use and Housing Committee.
‒ The Committee directed SDHC to return to the Committee by the end of the year to present
parameters for a deed-restricted preservation ordinance that provides a right of first offer and
right of first refusal to qualified entities, including nonprofit and for-profit, for consideration.
• Preservation Action Item No. 5: Develop an Affordable Housing Preservation Ordinance to
require that owners of deed-restricted affordable housing properties who wish to sell their property
provide a notice of intent to sell to the City of San Diego, SDHC, and qualified nonprofit or for-
profit affordable housing developers; and to further provide both a right of first offer and a right of
first refusal, to qualified nonprofit or for-profit affordable housing developers.
• The public has invested substantial resources toward the creation of affordable housing and
desires to protect the affordable housing stock wherever possible by keeping if affordable in
perpetuity.
• A local ordinance would expand the opportunities granted under state law to preserve deed-
restricted affordable housing and increase housing opportunities for people with very low, low and
moderate income.
San Diego Housing Commission
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SDHC – Preservation Ordinance Framework
Deed-Restricted Affordable Housing Ordinance
San Diego Housing Commission
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SDHC – Preservation Ordinance Framework
Proposed Framework
State Law (Government Code Sections
75863.10 – 13)
Proposed Local Ordinance
Notices to
“Qualified
Entities”
Required at intervals prior to expiration of deed
restrictions (at 3 years, 12 months and 6 months)
Required at intended sale
of property
Right of First
Offer
Required Required
Right of First
Refusal
Required Required
• Notice when a property is for sale provides a better opportunity for qualified entities to acquire
and preserve the property’s affordability in perpetuity.
San Diego Housing Commission
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Stakeholder Meetings
Stakeholder Groups Meeting Dates
San Diego Housing Federation Affordable Housing Developer Stakeholder Group
(Part 1)
July 13, 2023
Affordable Housing Developer Group Meeting July 25, 2023
Southern California Rental Housing Association Stakeholder Group August 3, 2023
San Diego Housing Federation Affordable Housing Developer Stakeholder Group
(Part 2)
August 23, 2023
San Diego Housing Federation Policy Committee Stakeholder Group September 13, 2023
Downtown San Diego Partnership Stakeholder Group September 14, 2023
Tenant Organizations Stakeholder Group September 14, 2023
San Diego Housing Commission Developer Collaborative September 21, 2023
General Public Stakeholder Meeting October 11, 2023
SDHC – Preservation Ordinance Framework
Proposed Framework (Continued)
San Diego Housing Commission
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Properties Subject to Local Deed-Restricted Preservation Ordinance
• Deed-restricted multifamily affordable housing properties of five units or more in the City of
San Diego.
When Preservation Ordinance Applies
• The owner of a deed-restricted, multifamily affordable housing property may not sell or otherwise
transfer ownership of the property without first providing a notice of intent to sell that includes a
right of first offer and right of first refusal to the City of San Diego and SDHC (collectively the
“Local Government Entities”) and “Qualified Entities” as defined by the state.
Required Noticing Timeline
• Notice of intent to sell:
‒ Owners of deed-restricted affordable developments who wish to sell their property are first
required to provide a notice of intent to sell to affected households, Local Government
Entities, and to Qualified Entities (adopt state definition).
‒ The right to make a first offer to purchase and a right of first refusal shall be provided to Local
Government Entities and Qualified Entities only.
SDHC – Preservation Ordinance Framework
Proposed Framework (Continued)
San Diego Housing Commission
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• Qualified Entities to whom a notice and opportunity to purchase shall be provided include only:
(1) The tenant association of the development
(2) Local nonprofits and public agencies
(3) Regional or national nonprofit organizations; regional or national public agencies
(4) Profit-motivated housing organizations or individuals committed to maintaining the affordability
of the property for very low-, low- or moderate-income households.
• Qualified Entities must be approved by the state and listed on the state Qualified Entity List.
SDHC – Preservation Ordinance Framework
Proposed Framework (Continued)
San Diego Housing Commission
Slide #8
• Response - Letter of Interest
‒ Local Government Entity/Qualified Entity has 30 days from receipt of notice of intent to sell to
indicate interest in submitting an offer to purchase.
• Offer to Purchase
‒ Local Government Entity/Qualified Entity has 60 days from letter of interest to make an offer
to purchase.
• Offer to Purchase Rejected – Right of First Refusal
‒ Where a Local Government Entity or Qualified Entity’s offer to purchase is not accepted by
the owner and the owner markets the property and gets an offer from a non-qualified entity
that the owner intends to accept, the owner must provide the Local Government Entity or
Qualified Entity whose offer was not accepted 7 days to make a counter-offer.
‒ The counter-offer must mirror the terms and conditions of the pending offer to purchase,
unless modified by mutual consent.
SDHC – Preservation Ordinance Framework
Proposed Framework (Continued)
San Diego Housing Commission
Slide #9
• Purchase Agreement
‒ Upon owner acceptance of the offer to purchase, the Local Government Entity or Qualified
Entity has 30 days to enter into a purchase agreement.
• Close of Escrow
‒ Upon execution of a purchase agreement, the Local Government Entity or Qualified Entity
has 120 days to close escrow.
‒ Upon the sale to a qualified entity, the property must be preserved at current income levels,
and tenants cannot be involuntarily displaced unless the tenant has breached the terms of
the lease.
Method of Notice Delivery
• All notices to affected tenants must be made by prepaid, first-class mail postage or electronically.
• All notices to affected public agencies must be made by either prepaid, first-class mail postage or
electronically to any public entity that has provided an email address for that purpose.
SDHC – Preservation Ordinance Framework
Proposed Framework (Continued)
San Diego Housing Commission
Slide #10
Exempt Transfers of Ownership
This ordinance does not apply to the following transfers of ownership:
• A government taking by eminent domain or negotiated purchase
• Forced sale pursuant to a foreclosure
• Transfer by gift, devise, or operation of law
• Sale to a person who would be included within the table of descent and distribution if there were a
death intestate of an owner
• For purposes of refinancing, where control of the property remains unchanged
• Upon exit of the Limited Partner in a tax credit limited partnership Year 15 restructuring
• Owner who certifies under penalty of perjury the existence of a financial emergency during the
period covered by the first right of refusal requiring immediate access to the proceeds of sale
• Where owner intends to sell to another Qualified Entity
• Transfer of a property with affordability restrictions required by a local affordable housing land use
program where 25% or less of the units are restricted as affordable
SDHC – Preservation Ordinance Framework
Proposed Framework (Continued)
San Diego Housing Commission
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Method of Enforcement
The provisions of this section may be enforced either in law or in equity by any qualified entity
entitled to exercise the opportunity to purchase and right of first refusal under this section or any
tenant association at the property or any affected public entity that has been adversely affected by
an owner's failure to comply with this section. In any judicial action brought pursuant to this
subdivision, the court may waive any bond requirement and may award attorney's fees and costs
to a prevailing plaintiff.
SDHC – Preservation Ordinance Framework
Proposed Framework (Continued)
• Qualified Entity means an organization or individual qualified by the state to participate in the
opportunity to submit an offer to purchase that meets the eligibility criteria, which includes:
1. The entity is the tenant association of the affected development; a local, regional, or national
nonprofit organization or public agency; or a profit-motivated organization or individual;
2. The entity is capable of purchasing residential properties for the purpose of maintaining long-
term affordability and rental restrictions;
3. The entity is financially capable of managing the housing and related facilities for the
remaining useful life, either by itself or through a management agent;
4. The entity agrees to obligate itself and any successors in interest to maintain the affordability
of the project for very low-, low- or moderate-income households for either a 30-year period
from the date the entity takes legal possession of the project or the remaining term of the
existing federal government assistance, whichever is greater;
San Diego Housing Commission
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SDHC – Preservation Ordinance Framework
Proposed Framework (Continued)
5. The entity agrees to maintain the occupancy profile of very low-, low- and moderate-income
tenants in the approximate percentages specified in the existing use restrictions at time of
intent to sell;
6. The entity agrees to renew subsidies if available and sufficient to maintain the project’s
economic feasibility;
7. A local nonprofit organization or public agency ensures no officers or directors will have a
financial interest in the project to be purchased;
8. The entity agrees to record affordable rents and use restrictions in a regulatory agreement.
San Diego Housing Commission
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SDHC – Preservation Ordinance Framework
Proposed Framework (Continued)
San Diego Housing Commission
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Summary of Comments Received
Can an owner selling to a qualified entity be exempt from these noticing requirements?
Having adversely affected parties enforce by going to court is not an efficient way of enforcement.
Eliminate timelines and allow for the purchase agreement dictate the timelines.
120 days to close escrow is not sufficient time to secure affordable housing financing.
Extend time to submit letter of interest from 15 days to 30 days.
Extend period of time for qualified entities to make offers from 30 days to 60 days.
These added regulations can restrict an owner’s property rights.
SDHC – Preservation Ordinance Framework
Comments Summary
San Diego Housing Commission
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• November 16, 2023: Proposed Local Preservation Ordinance Framework presented to Land Use
and Housing Committee
• January 2024 – June 2024: Drafting of preservation ordinance language with City Attorney
• June 2024 – November 2024: Stakeholder Meetings about Draft Ordinance
• First Quarter 2025: Final Draft preservation ordinance presented to Land Use and Housing
Committee for consideration and to City Council for potential adoption.
SDHC – Preservation Ordinance Framework
Next Steps
Questions & Comments
San Diego Housing Commission
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SDHC – Preservation Ordinance Framework
