Feature

Housing Foundation Helps Landlords Fill Vacancies

by Greg Miller

A unique program has been developed by the San Francisco Housing Foundation (SFHF) that benefits both landlords and tenants in San Francisco by offering assistance with security deposits. The SFHF, established in 2001 by legislation sponsored by then-Supervisor Leland Yee, is a nonprofit organization providing services to qualifying San Francisco rental property owners. In a collaborative effort with the Housing Prenatal Program (HPP) and the AIDS Housing Alliance/SF (AHA/SF), the foundation's security deposit assistance program is an example of how landlord- and tenant-service organizations can work together for the greater social benefit of our city. The security deposit assistance program is a win-win situation for both tenants and landlords. Not only are tenants provided with housing, but landlords are able to fill vacancies in this soft rental market.

As was reported in the June issue of this magazine, the residential rental vacancy rate in San Francisco is at an astronomical 9.8 percent. The well-known dot-com collapse of a few years ago has caused a serious drop in tenants. Many of them, in exiting the rental housing market, have not only terminated their tenancies, but have left San Francisco all together. In addition, not enough new jobs are being created to stimulate our local economy. The city is not attracting newcomers to replace or fill vacancies that have resulted from the dot-com collapse. As a result, you now find that Las Vegas and Phoenix—with their career opportunities and lower cost of living—are more favorable destinations to anyone who, at one time, would have considered coming to San Francisco.

Despite this situation, there is a rental market in San Francisco comprised of residents who have the resources to pay current market rents. However, high security deposits have kept potential tenants from mutually beneficial tenancy relationships with landlords. To assist San Francisco landlords in renting to this market, the SFHF has developed the Security Deposit Assistance Program, enabling owners to fill vacancies with clients served by HPP and the AHA/SF. HPP provides services to families in locating and securing housing, and the AIDS Housing Alliance/SF offers similar services to people with HIV/AIDS. These agencies work to obtain available rent-assistance resources for their clients as well as assistance to cover the required security deposits. Funding resources, however, can come up short, leaving clients unable to rent and a vacancy unfilled.

California state law allows up to twice the rent for security deposits on
unfurnished rental units and up to three times the rent for furnished rentals. Owners, of course, want enough of a deposit to cover any potential damage, repairs or back rent that may be revealed at the end of a tenancy. In San Francisco's rental market, this could mean that a new resident would likely need to come up with over $3,000 for the first month's rent and security deposit just to start a tenancy. Considering the additional expenses related to relocation and moving, this presents a serious obstacle to a pool of potential residents who could afford and provide the monthly rent but not the initial costs required at move-in time. In the current soft rental market, an advantageous approach for San Francisco rental property owners is to consider all opportunities that are available to rent vacant units. The SFHF's program assists owners with overcoming this obstacle, helping them to tap into this market to fill vacancies.

Under the security deposit assistance program, the SFHF will pledge a portion of the required security deposit on behalf of the tenant to the owner under the terms of a three-year contract made with both the owner and the tenant. The foundation's pledge will help HPP and AHA/SF clients in instances when either their own funds or what had been provided to them by other agencies or a combination of both, would come up short. The amount pledged towards the tenant's security deposit will remain on reserve with SFHF for use by the landlord under the terms of the contract, which is based on the California Civil Code's provisions for the use of security deposits. Although no actual payment is made to the owner, tenants are encouraged to make arrangements to pay the pledged amount of the security deposit within the three-year time frame of the contract. In the event that the security deposit funds would be needed, the foundation's pledged amount would only apply should the available funds on hand become depleted.

The new security deposit assistance program is another example of SFHF's commitment to serving San Francisco's landlord community. Look for a fundraising event in the near future to support the foundation's programs.

The opinions expressed in this article are those of the author and do not necessarily reflect the viewpoint of the SFAA or the San Francisco Apartment Magazine. Greg Miller is the administrator of the San Francisco Housing Foundation. He can be reached at 415-255-2288 or at greg@sfaa.org. Copyright © 2004 by the San Francisco Apartment Magazine. All Rights Reserved.