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Report regarding a resolution approving Budget Amendment Number 26.019 and authorizing the City’s acquisition of a Below Market Rate (BMR) unit at 2230 Gellert Boulevard, Unit 3303 (APN 104-540-230). (Elia Moreno, Management Analyst I)
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RECOMMENDATION
Recommendation
Staff recommends City Council approve Budget Amendment Number 26.019 and authorize the City’s acquisition of a Below Market Rate (BMR) housing unit located at 2230 Gellert Boulevard, Unit 3303 (APN 104-540-230), utilizing the City’s Commercial Linkage Fee Fund (Fund 823).
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BACKGROUND
The City’s Inclusionary Housing Ordinance (Municipal Code Chapter 20.380) establishes Below Market Rate (BMR) housing units within both ownership and rental developments. This ordinance serves to increase the amount of housing affordable to low and moderate-income households in South San Francisco.
BMR ownership units are subject to a Resale Restriction Agreement, which is executed by the buyer at the time of purchase and is recorded against the property title. This agreement limits the resale price of the unit to ensure ongoing affordability, restricts the household income of future buyers, and grants the City the right of first refusal of the option to purchase the property in the event of default, foreclosure, or sale.
DISCUSSION
On August 8, 2025, the City received a Notice of Default and Election to Sell Under Property Association Lien for the BMR unit located at 2230 Gellert Boulevard, Unit 3303, in South San Francisco. The property owner and the City entered into a Resale Restriction and Right of First Refusal Agreement at the time of the initial sale of the unit in 2007. This is not the first time this owner has been in default for this property.
The property owner has received multiple notices of default due to delinquent loan payments or homeowner association (HOA) dues. In August 2014, the City received a Notice of Default informing staff of the owner’s default on loan payments and HOA dues, as well as pending foreclosure proceedings. Attempts to contact the owner were unsuccessful. The lien was eventually cured by the owner, and foreclosure proceedings were suspended.
In May 2016, the City received another Notice of Default. Attempts to reach the owner via phone, email, and certified mail were again unsuccessful. The lien was once more cured, and the account reinstated to good standing. The City was again notified a third time of foreclosure proceedings by letter on June 25, 2019. Additionally, a title report indicated a State Tax Lien recorded against the property on September 10, 2009. The Resale Restriction Agreement specifies that any lien recorded against the property other than a bona fide first mortgage or junior loan by the City constitutes a default.
Presently, City staff have reviewed various options to assist in preserving the unit in the City’s affordable housing program. To take action to intervene to prevent the market rate sale of the unit, staff recommends executing the City’s right to purchase and taking title of the unit. Staff is requesting that the City Council authorize the use of Commercial Linkage Fee Funds (Fund 823) to purchase the unit. Once purchased, the property will be placed back on the market with Council having the authority to market to the affordability level of their choice. The City’s estimated cost for acquisition is approximately $787,600.
The City sent a letter to the property owner on August 29, 2025, notifying them of a default and that liens must be cured within ten days. Staff will assess next steps if the owner once again cures the default. If a cure is not completed, executing the City’s purchasing right of this unit and preserving its status as the BMR program assists in preserving affordable housing within the City. The loss of BMR units decreases the amount of affordable housing opportunities for low- and moderate-income residents.
FISCAL IMPACT
The Commercial Linkage Fee Fund (Fund 823) has sufficient funds for this transaction with an available cash balance of $15.1 million. This Fund will be used to pay all costs related to the preservation and resale of the subject property, which includes acquisition of the property and HOA fees. The proceeds from the resale will be replenished into Fund 823.
CONCLUSION
Staff recommends that the City Council approve Budget Amendment Number 26.019 and authorize the City’s acquisition of a Below Market Rate (BMR) housing unit located at 2230 Gellert Boulevard, Unit 3303 (APN 104-540-230), utilizing the City’s Commercial Linkage Fee Fund (Fund 823).