Board authorizes OCII ground leases for Transbay Block 2 East, clearing path for 184-unit affordable housing project

Sitting as a committee of the whole, the Board of Supervisors on April 23 approved ground-lease actions to allow development of Transbay Block 2 East (200 Folsom Street), a planned 17-story, 184-unit affordable family housing development.

Supervisor Dorsey opened the hearing, describing the project as a second affordable development on Block 2; 2 West (senior housing) has already closed financing and begun construction. "Block 2 is one of the few remaining development sites in Zone 1 and critical to meeting the overall affordability requirements," said Kim Obstfeld, senior development specialist with the Office of Community Investment and Infrastructure (OCII), who led the staff presentation.

OCII told the board that Transbay Block 2 East will be 100% affordable with units restricted at 40% to 80% of area median income and that 40 units will be set aside for households experiencing homelessness supported by local operating subsidies. The project includes public open space, streetscape improvements, space for a childcare facility (intended for about 45 children, infants to age 5) and ground-floor community-serving retail.

Key financing and valuation figures presented by OCII: the unrestricted residential parcel appraisal value was estimated at approximately $8.3 million; the restricted-use present value of lease payments for the residential parcel was listed as approximately $292,000; for the commercial parcel OCII cited an unrestricted value of about $364,000 and a restricted value of $19.48 (numbers as provided by OCII in the staff report). OCII told the board the ground-lease rents and terms are consistent with OCII and the Mayor's Office of Housing and Community Development underwriting standards and that project financing is secured from a combination of OCII loans, low-income housing tax credit equity, and Affordable Housing and Sustainable Communities program funds.

After the public hearing and the staff presentation, the board considered the resolution authorizing OCII to execute the residential and commercial ground leases. The clerk recorded the roll-call vote in which the resolution passed with nine ayes (Supervisor Stephanie absent) and the staff noted the OCII Commission had previously approved the loans and leases.

Discussion vs. decision: The hearing functioned as a required public hearing under redevelopment law (Health & Safety Code sec. 33433) to consider the disposition; the formal decision was the board's approval of the ground-lease resolution for the project so OCII may execute the leases.

Implementation steps: OCII and Mercy Housing (developer/operator) plan to close financing and begin construction in late May. The staff presentation listed remaining major financing sources and the project's financial close timetable.

Ending: With board approval the project advances toward a late-May finance closing and construction start; OCII and Mercy Housing will return to complete any outstanding closing conditions and execute ground leases.