City Attorney preserves 76 affordable housing units through arbitration victory

Decision protects affordable housing for dozens of low- to moderate-income residents

SAN FRANCISCO (October 5, 2023) — City Attorney David Chiu announced today that the City has preserved 76 affordable housing units at Rincon Towers through an arbitration victory secured by the City Attorney’s Office. The decision ensures that the units will continue to be affordable to low- and middle-income residents through at least 2050.

City Attorney David Chiu speaks at a press conference in August 2022

“Preserving affordable housing is one of the most important things we can do to prevent homelessness,” said City Attorney Chiu. “I am thrilled our team secured this win that will ensure 76 San Francisco families continue to have a place to live.”

“The preservation of these 76 affordable homes illustrates the importance of not just building new housing, but of maintaining the affordability of our existing housing stock,” said Mayor’s Office of Housing and Community Development Director Eric Shaw. “I am grateful to my team and the City Attorney for their commitment to protecting these units and the families who call them home now and for years to come.”

In 1985, the former San Francisco Redevelopment Agency executed an agreement with the original developers of Rincon Towers, requiring the owners “to rent or sell” 76 units of onsite affordable housing.

In 2010, Rincon Towers was acquired by real estate investors CP III Rincon Towers, LLC. When California’s redevelopment agencies were dissolved in 2012, the City and County of San Francisco became responsible for the former San Francisco Redevelopment Agency’s affordable housing portfolio. Following the sunsetting of the Rincon Point-South Beach Area Redevelopment Plan on January 5, 2021, CP III Rincon Towers, LLC tried to skirt their commitments under the development agreement, arguing that their affordable housing obligations expired with the area redevelopment plan. The owners maintained they had a right to rent the units at market rate, putting 76 low- and moderate-income units in jeopardy.

However, the City insisted that the affordable housing obligations were still in force. Under an arbitration clause in the 1985 agreement, the dispute was heard by retired California Court of Appeal Justice Nickolas J. Dibiaso. The City presented evidence from Redevelopment Agency archives showing that the Agency and the original developers shared an intention to develop long-term affordable housing that would outlast the redevelopment era.

The City successfully argued that the agreement to provide the affordable housing was still intact. The Arbitrator decided in the City’s favor and found that the owners have an obligation to continue renting out each of the 76 affordable units or sell the units as permanent below market rate condominiums.

Over 2022 and 2023, San Francisco Deputy City Attorneys Wade Chow, Heidi Gewertz, and Peter Keith, and City Attorney’s Office employees Morris Allen, Eric Luttrell, and Gloria Torres worked on this matter to preserve this housing for middle- and low-income families.

The final arbitration decision can be found here.