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Report regarding a resolution authorizing the sale of a City-owned Below Market Rate (BMR) housing unit at 2210 Gellert Boulevard, Unit 5107 (APN 104-470-070) and authorizing the City Manager or designee to execute related sale documents. (Elia Moreno, Management Analyst I)
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RECOMMENDATION
Recommendation
Staff recommends that the City Council adopt a resolution approving the sale of a City-owned Below Market Rate (BMR) housing unit at 2210 Gellert Boulevard, Unit 5107 (APN 104-470-070) to a qualified buyer earning up to 120% of the area median income (AMI) in accordance with the City’s BMR restrictions and authorizing the City Manager or designee to execute a Grant Deed, Affordable Housing Resale Restriction Agreement, and any other documents necessary to effectuate the sale of the BMR unit.
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BACKGROUND
On June 10, 2026, City Council authorized the purchase of a BMR ownership unit located at 2210 Gellert Boulevard, Unit 5107 (“Property”), as detailed in the staff report (Attachment 1). The condominium complex where the Property is located is referred to as South City Lights and includes multiple buildings along Gellert Boulevard.
City Council approved the purchase after the initial marketing did not produce any qualifying buyers and to ensure the unit would not be sold at market rate. The City is expecting to take title of the 1- bedroom, 1-bathroom unit on July 31, 2026, for a purchase price of $550,000. A resale restriction agreement executed between the City and the current BMR owner set the regulations of the sale to the City. Under City ownership of the unit, the City may evaluate the income eligibility of the unit and set an appropriate sales price that aligns with market conditions and the community’s housing needs.
DISCUSSION
The City acquired the Property using Commercial Linkage Fees, Fund 823, which requires investment in housing for households making 120% or less of the Area Median Income (AMI). Households between 80 to 120% AMI are referred to as moderate-income households. The Property was previously sold to a 100% AMI household, and the unit was restricted to being resold to a new household at that same income level by its resale restriction agreement. Therefore, a smaller percentage of moderate-income households could qualify (see Attachment 2 for a table of incomes by household size at all AMI levels). While the City spent $550,000 to acquire the Property, the City does not have to fully recoup this expense. The City may opt to further subsidize the unit, offering it for sale at an even lower price in order to be affordable to more households.
The City’s Inclusionary Housing Program, regulated by the Inclusionary Ordinance, requires that BMR units are sold at two income thresholds: to households earning up to 80% AMI, and to households earning up to 120% AMI. There are some 100% AMI ownership BMRs, such as the aforementioned Unit 5107, that were either restricted prior to the Inclusionary Ordinance or through negotiated Development Agreements. Below market rate units are not typically marketed to households of very or extremely low income because of other homeownership readiness qualifications that might be more challenging, such as sufficient down payment, high credit score, and manageable monthly debt obligations. Households in lower income bands are often served by affordable rental housing, which is a vital housing type that can provide economic stability and allow households to pursue future ownership opportunities when their finances support that possibility.
City staff determines the sale price for affordable housing units using established affordability calculations. Inputs used to calculate pricing include monthly and annual cost estimates, including property tax, insurance, utilities, HOA fees, mortgage loan interest rate (a rolling six-month average prior to pricing the unit), and a five percent down payment. See Attachment 3 for sample pricing.
Although South City Lights remains one of the area’s more established condominium communities, prospective buyers are increasingly evaluating the long-term financial health of the homeowner’s associations (HOA). The South City Lights HOA is expected to increase monthly dues by the end of 2026 due to rising vendor, labor, and maintenance costs, which are affecting condominium communities throughout the Bay Area. In addition, based on recent HOA board discussions, a special assessment remains a possibility if reserve funding proves insufficient to address future capital projects. Potential triggers include unexpected structural repairs, insurance-related requirements, and continued construction cost inflation. These conditions are supporting reasons for pricing the Property within the moderate-income range to locate a buyer that may be well equipped to absorb potential cost increases.
Staff also consider current market conditions for both BMR and market rate condominiums. Comparable units that have sold in the past six months have transacted for $400,000 to $750,000, as shown in the Residential CMA Report (Attachment 4). Due to a softening in prices for market-rate units, the expected BMR pricing is landing in the same range as market-rate units, which could be disincentivizing for potential BMR buyers. Based on current affordability calculations, the maximum affordable sale price for a 120% moderate-income unit would be approximately $574,640. This purchase price range did not sell when listed by the current owner. Should the Property be marketed to households earning under 80% AMI, it would need to be priced at approximately $215,353 to be truly affordable. This amount is approximately $334,647 below the City’s acquisition cost of $550,000. As staff have highlighted, the expected increases to HOA-related fees do not make this a recommended ownership unit for under 80% AMI, low-income households.
Staff Recommendation
Taking these factors into consideration, staff are proposing the affordable sale price, within the moderate-income range, of roughly $485,000, which is below the expected sales price for a comparable for-sale market rate condominium at this location. To increase the probability of a well-qualified buyer purchasing the property, staff recommend marketing the unit to all moderate-income households (those making between 80-120% AMI). Marketing the current property to households earning up to 120% AMI will further broaden the pool of eligible buyers to improve the likelihood of a successful sale while maintaining the unit’s long-term affordability and the future stability of the qualified, affordable buyer(s).
Alignment with Past BMR Sales Prices
Previous sales of City-owned BMR units have demonstrated the effectiveness of appropriately pricing affordable ownership units. In two similar circumstances, the City found itself in the position to intervene to prevent two BMR units from being sold on the open market. Following City Council approval, the City acquired the units to preserve their long-term affordability and subsequently resold them to income-qualified households with affordability restrictions set at 100% AMI.
• 2230 Gellert Boulevard, Unit 3105 (3 bedrooms, 2 bathrooms): Affordability restriction increased from 80% to 100% AMI. The City purchased the unit for $722,234 and resold it for $634,826.
• 2230 Gellert Boulevard, Unit 3209 (2 bedrooms, 2 bathrooms: Affordability restriction increased from 80% to 100% AMI. The City purchased the unit for $676,781 and resold it for $496,137.
Both resales generated strong interest, receiving up to a total of seven (7) applications from pre-qualified applicants. The City was able to successfully close escrow with an eligible buyer for each sale, ensuring the units remained part of the City’s affordable housing inventory. Proceeds received from the resales have been replenished back into City housing funds to support future purchase and affordable housing preservation activities.
Marketing and Sale Process
The City will select a listing agent from its prequalified list to assist in the process of marketing and sale of the BMR unit. The marketing plan will include making the home available for open houses and showings by appointment, listing the unit on the Multiple Listing Service, and announcing its availability in the Mayor’s newsletter, on City social media channels, and on the City’s website at:
www.ssfca.gov/Departments/Economic-and-Community-Development/Divisions/Housing-Division/For-Sale-Affordable-Housing <http://www.ssfca.gov/Departments/Economic-and-Community-Development/Divisions/Housing-Division/For-Sale-Affordable-Housing>
The property will accept applications for no fewer than 21 days, with applications due to the listing agent during that period. After the application window closes, qualified buyers will be entered into a lottery as per the BMR program standard process and Chapter 8.100 <https://ecode360.com/46372838>: Local Preferences and Requirements of the South San Francisco Municipal Code, with preferences given to those who live/previously lived or work in the City of South San Francisco. City staff and the BMR program consultant review applications and verify documents to determine eligibility.
ENVIRONMENTAL REVIEW
The sale of this BMR unit is evaluated to qualify for the general exemption in CEQA Guidelines Section 15061(b)(3), which exempts projects where it can be seen with certainty that there is no potential for significant environmental effects.
FISCAL IMPACT
On June 10, 2026, City staff received approval to use Commercial Linkage Fees (Fund 823) for the purchase and preservation of the Property. The proceeds from the resale will partially reimburse Fund 823 for the purchase. There is no impact to the General Fund from this action.
RELATIONSHIP TO CITY COUNCIL PRIORITIES ACTION PLAN
Approval of this action will contribute to the City Council Priorities Action Plan Major Focus Area of Housing and Supportive Services. The recommended actions are a key strategy for encouraging a balanced housing supply.
CONCLUSION
Staff recommends that the City Council adopt the associated resolution authorizing the sale of a City-owned Below Market Rate (BMR) housing unit at 2210 Gellert Boulevard, Unit 5107 (APN 104-470-070) to a qualified buyer earning up to 120% of the area median income in accordance with the City’s BMR restrictions, priced within the moderate-income range at the time marketing begins, and authorizing the City Manager or designee to execute a Grant Deed, Affordable Housing Resale Restriction Agreement, and any other documents necessary to effectuate the sale of the BMR unit.
ASSOCIATED DOCUMENTS
1. June 10, 2026 City Council Staff Report
2. Table of Income Limits
3. City of South San Francisco Affordable Housing Price Calculator
4. Residential CMA Report