PHASE 2

Acquisition & Preservation

Preserving the affordable rentals we already have

Much of Sonoma Valley's lower-cost rental housing consists of older apartment buildings quietly owned by the same families for decades. When these owners retire, their buildings often end up with outside investors who renovate them and raise rents, displacing the families who depended on them. Across the United States, roughly 75 percent of all affordable rental housing exists in buildings like these, without any government subsidy, simply because they are older and have not yet been upgraded to command higher rents. In hot markets like ours, those buildings are being lost one by one.

We step in before that happens. Sonoma Valley Commons identifies small apartment buildings whose owners may be open to selling to a mission-driven buyer rather than the highest bidder. We purchase the building, lock in affordability permanently through a deed restriction, renovate it if needed, and manage it for the long term. This approach costs 25 to 45 percent less than building new affordable homes from scratch, and it protects residents who are already housed rather than waiting years for new construction.

Across Sonoma alone, property data identifies 51 buildings in our target range: four to nine units, built before 1980, with ownership that has been stable for 20 or more years. The median ownership tenure for these properties is 28 years. These are exactly the buildings most at risk, and the ones where we can have the most immediate impact.

What we look for

  • Four to nine-unit apartment buildings built before 1980

  • Owned by individuals who have held the property for 20 or more years

  • Sellers who care about their tenants' futures, not only the sale price

  • Current rents already within reach of households earning 80 percent or less of area median income

Inspired by neighbors doing it now

Our Town St. Helena acquired a 12-unit building in nearby St. Helena in 2025, protecting 41 residents including hospitality and winery workers. The seller accepted $1.2 million below market value in exchange for a charitable deduction, and the deal closed using a 55-year loan from the Bay Area Housing Finance Authority that requires no payments during the affordability period. OTSH began with no development history and now has nearly 70 units in its pipeline. Just Homes converted a vacant fourplex in East Oakland into permanently affordable housing for formerly unhoused families in under 90 days, with no hard debt required. MEDA in San Francisco has built a portfolio of 34 small buildings in the Mission District using the same strategy over the past decade.

How a deal works: the charitable sale

Many longtime owners care genuinely about their tenants and are open to selling to a mission-driven buyer. The tool that makes this work financially for the seller is a structure called a charitable or bargain sale.

Here is how it works: the seller obtains a certified appraisal of the property. Sonoma Valley Commons and the seller then negotiate a sale price below that appraised value. The difference between the appraised value and the sale price is treated as a charitable contribution, generating a tax deduction that the seller can use for up to six years. In most cases, the deduction cannot exceed 50 percent of the seller's adjusted gross income in any one year, but any unused portion carries forward.

The result is that a seller who accepts a modestly lower price can come out with an after-tax outcome that rivals or exceeds what they would have received from a higher-priced sale to a private buyer, while knowing their tenants are protected. Our Town St. Helena, whose Monte Vista Avenue acquisition inspired this approach, has published a straightforward breakdown showing that a $150,000 price discount can translate into a tax benefit of equal value, making the net financial outcome for the seller nearly identical to a full-price sale.

After purchase, we use a deed restriction to lock in affordability permanently, so the building stays affordable regardless of who owns it in the future.

We finance acquisitions through a three-layer approach. Philanthropic gifts from individuals and local foundations supply the down payment. Mission-driven lenders provide patient loans that require no payments during the affordability period, dramatically reducing the monthly cost of ownership. A community bank mortgage covers the remainder. Per-unit costs run $150,000 to $250,000, compared to $500,000 to $700,000 to build new.

Target Timeline

First acquisition in 2026. Second property targeted by end of 2028.

Projected Impact

8 to 18 homes preserved in the first three years, at roughly a third of the cost of building new. A portfolio of about 30 units would generate enough recurring income to significantly reduce our dependence on annual grants.