Commission approves seller’s request to pay $6.8M in‑lieu fee instead of on‑site inclusionary units at 1546–1564 Market

The Planning Commission voted 5–2 to approve a downtown project authorization allowing the owner of the 12‑story building at 1546–1564 Market Street to satisfy its inclusionary housing obligation by paying the in‑lieu fee rather than providing on‑site below‑market-rate (BMR) units.

Planning staff presented the request as an amendment to the project’s elected method of compliance with the city’s inclusionary housing program. Rebecca Salgado said the existing building, constructed in 2022, includes 109 dwelling units and 13 affordable units under the original approvals. The sponsor, Ryan Hong, told the commission the building is occupied but that the on‑site BMR units remained vacant and that refinancing and lender concerns made paying the in‑lieu fee the more feasible option. He asked the commission to accept a payment of approximately $6,788,000 in lieu of on‑site units.

Staff explained that because the project was originally entitled under earlier rules, the fee calculation follows the prior methodology and that interest is applied from the date of the first certificate of occupancy to the date of the requested change, producing the higher in‑lieu total. Planning’s recommendation supported approval with conditions; the mayor’s office of housing staff was available remotely to address related questions.

During deliberations commissioners split over the relative public-policy merits of on‑site affordability versus off‑site fee revenue that can be leveraged for deeper affordability. Commissioners Imperial and Moore voted against the change; the motion carried 5–2. The department will collect the fee for affordable‑housing programs and the matter advances per the Planning Code process described in the staff report.