Developer withdraws application at 1201 Sutter; BMR lottery winners decry uncertainty

The applicant for 1201 Sutter formally withdrew its planning application before the San Francisco Planning Commission on Dec. 9, a move that commissioners said will require the sponsor to provide on‑site below‑market‑rate (BMR) units if and when it re‑files. The withdrawal followed a controversial request earlier this fall from the sponsor to change its inclusionary housing compliance from on‑site units to an in‑lieu fee after the city ran a BMR lottery.

Lottery winners and public commenters said they were blindsided, described inconsistent communications from the sponsor and said the change — proposed after a lottery had already been held — risked taking housing away from people who had been promised an on‑site opportunity. One caller said the sponsor’s conduct "appears deceptive" and accused developers of "bait and switch" tactics; another said she had not received adequate notice of changes and feared she would lose her chance to be housed.

City and legal context: Planning staff and the mayor’s Office of Housing and Community Development (MOHCD) told the commission that under the planning code sponsors have options to comply with inclusionary obligations (on‑site units, off‑site units, or a fee) and that the code contains limited post‑approval timelines — a gap Supervisor Ronan’s pending ordinance aims to fix with additional milestones. Carly Grove of the Planning Department said the code currently permits sponsors to seek changes, but that proposed legislation would add more structured deadlines and findings.

Commissioners responded sharply. Several said asking to switch compliance approaches after a lottery "is a bad look" and urged sponsors to be transparent and timely; Commissioner Diamond and others urged staff to closely scrutinize any future change requests. Deputy City Attorney Austin Yang said the code limits the department’s ability to pre‑emptively deny an alternative but pointed to recent code updates that establish more milestones and possible grounds for denial in the future.

Public impact: Several callers who said they won spots in the BMR lottery described months of trying to get updates from the sponsor and said the perceived retreat from on‑site housing felt like a betrayal. One caller said management “ghosted” lottery winners and that the firm had not supplied the promised 30‑day updates.

Outcome: Because the sponsor withdrew the application, no formal action was taken on the alleged switch to a fee. Commissioners said they would nevertheless hear the matter informally so the public could ask questions and so staff could press the sponsor for clarity. Staff advised that, absent a refiled application, the withdrawal means the sponsor is expected to provide on‑site BMR units if it returns with a new application.