Commission approves Transbay Block 7 schematic revision and $25.56 million permanent loan to Mercy Housing

The Commission on Community Investment and Infrastructure on Aug. 18 approved a revised schematic design for Transbay Block 7 that increases the affordable unit count and authorized a permanent gap loan of $25,560,000 to Mercy Housing California to support construction.

OCII staff and Mercy Housing said rising material and foundation costs prompted a change from wood‑frame to a light‑gauge prefabricated steel structural system, which permits building up to the site’s eight‑story height cap and adds roughly 35 affordable units across the two podium buildings. The revised program includes approximately 120 affordable family units — comprising one‑, two‑ and three‑bedroom units — plus a manager’s unit, a childcare center (about 4,500 sq. ft.), community room, bike storage and on‑site services.

The loan request is for $25,560,000 in permanent gap financing, including previously approved predevelopment funding. Staff said the requested funds will come from Transbay developer fees and jobs‑housing linkage funds and that the loan’s interest rate is set at 3% with staff recommending the Executive Director retain discretion to reduce it to 0% if project feasibility requires it.

Mercy and OCII highlighted strong small‑business and SBE/MBE/WBE participation in procurement and said the development team is preparing to apply for tax credits and tax‑exempt bonds this fall. Mercy’s local director told commissioners that Mercy’s experience delivering family housing with limited parking in transit‑rich neighborhoods has produced high demand; staff cited 5,350 applications earlier for Block 6 and early lease activity for that project.

Parking and family needs drew sustained questioning from commissioners. OCII and Mercy said that reducing dedicated parking preserved funding to build more affordable units, that Transbay is transit‑rich and that developers have committed three car‑share spaces for Block 6/7 residents. Mercy said it is negotiating car‑share discounts and other resident services and cited precedent from other family developments with low parking ratios.

The commission approved the schematic revision and the loan on roll call votes recorded as 3 ayes, 1 absent.

Next steps: staff will return in the fall to request ground‑lease approval and to bring subphase authorizations for bidding and construction; construction is anticipated to begin the following spring with completion targeted for fall 2017 and move‑ins after that.