Committee clears $76 million tax-exempt financing for Sunnydale Block 7; forwards to full board

The Government Audit and Oversight Committee of the San Francisco Board of Supervisors voted unanimously June 27 to send a resolution to the full Board recommending authorization of up to $76 million in tax-exempt and taxable bond financing for Sunnydale Hope SF Block 7.

The resolution would authorize the city to execute and deliver a multifamily housing revenue note in one or more series with an aggregate principal amount not to exceed $76,000,000 to finance construction of an 89-unit rental housing project at 65 Santo Street, known as Sunnydale Hope SF Block 7. The committee forwarded the item as a positive committee report for consideration by the full Board on July 1, 2025.

Why it matters: The Sunnydale redevelopment is part of the Hope SF initiative, a long-running, multi-phase effort led by the Mayor’s Office of Housing and Community Development to replace aging public housing with mixed-income communities. Approving the financing would permit construction of the next affordable phase at Sunnydale and continue the city’s replacement-housing commitment for former public housing residents.

City and project officials said the Block 7 development will be sponsored by Mercy Housing California and Related California. Jason Liu, policy director for community development for the Hope SF initiative at the Mayor’s Office of Housing and Community Development, told the committee Hope SF represents a “more than 20-year human and real estate capital commitment” by the city and framed the Block 7 financing as the next step in that work.

Ryan Van Slyen, identified in the presentation as a senior project manager at the Mayor’s Office of Community Development, said the resolution would authorize issuance of the bonds and approve related loan agreements, a regulatory agreement and declaration of restrictive covenants, and other documents needed to implement a back-to-back loan structure. Van Slyen said construction is expected to begin in a few weeks and finish by March 2027.

Project details presented to the committee state the development will include 89 units, of which 67 are set aside as replacement units for former public housing residents earning 50% of the San Francisco area median income; the remaining units will be lottery-restricted to households earning up to 70% of area median income. The residential mix presented included nine four-bedroom units, 23 three-bedroom units, 43 two-bedroom units and 13 one-bedroom units. Total development cost was presented as roughly $107,000,000.

Van Slyen said the city loan will be leveraged with a state housing commitment (identified in the presentation as the state Housing and Community Development ASEC program), private construction and permanent financing and housing tax credits obtained by the project sponsors. Mercy Housing’s Elizabeth Kuwata was present and available to answer questions.

No public comment was offered during the item. Chair Jackie Fielder moved to forward the item to the full Board with a positive recommendation; the roll call recorded votes from Vice Chair Sauter (aye), Supervisor Sherrill (aye) and Chair Fielder (aye). The motion passed, 3-0.

Background and next steps: If the Board approves the committee’s recommendation, city officials would complete the execution of the note, funding loan agreement, borrower loan agreement and the regulatory agreement and complete any related ministerial actions needed to close construction financing. The resolution also rescinds a prior resolution referenced in the materials (identified in the presentation as Resolution No. 162-25). The full set of financing documents and final loan terms will be brought forward for Board consideration as required by the resolution.