Committee forwards trio of Balboa Reservoir approvals to finance Building E and infrastructure with amendments

The Budget and Finance Committee on Sept. 3 voted to forward to the full Board three related resolutions to enable financing and site work for Balboa Reservoir Building E and associated infrastructure.

Director Dan Adams of the Mayor’s Office of Housing and Community Development (MOHCD) said the actions will support the first phase of 100% affordable housing and related infrastructure at the 17.6-acre Balboa Reservoir site, which is a multi-parcel master-planned redevelopment across from City College. Building E is proposed as 128 affordable units (56 one-bedroom, 42 two-bedroom and 30 three-bedroom units) with incomes at 40%–80% area median income. Adams said the larger master plan leverages more than $300 million in state and private subsidy and that the infrastructure and Building E financing is time-sensitive because of state funding deadlines.

The three resolutions considered together would: (1) authorize multifamily housing revenue notes for Building E in an aggregate principal amount not to exceed approximately $84.1 million (filed as Item 8); (2) approve an amended and restated loan agreement with BHC Balboa Builders LLC for infrastructure financing of about $56.4 million (Item 9); and (3) authorize a ground lease and a MOHCD gap loan to Balboa Lee Avenue LP for Building E, with the committee accepting MOHCD’s amendment to reduce the MOHCD loan request from $36 million to $28 million (Item 10 as amended). MOHCD staff said a $20 million state infill infrastructure grant (IIG) and other state awards are part of the financing package; construction is expected to start in early 2026 with a planned finish about two years later for Building E.

The Budget and Legislative Analyst noted that the infrastructure is required under the project’s development agreement but that MOHCD is advancing the infrastructure loan to avoid losing state funding; the analyst recommended MOHCD update underwriting guidelines to cover infrastructure loans and requested reportbacks at Building E completion and if any part of the infrastructure loan is forgiven. Supervisors discussed the city’s growing role financing public infrastructure for large housing projects and asked for continued dialogue about the nexus between housing production and infrastructure costs. The committee approved the amended items and forwarded all three resolutions to the full board with a positive recommendation (3-0).