Committee approves exclusive negotiations with Mercy Housing for Grove Street affordable housing site

The committee voted to forward an exclusive negotiating agreement (ENA) with Mercy Housing California and a development team led by The Kelsey to the full Board. The ENA covers surplus city parcels at 155–165 Grove Street and 240 Venice Avenue and lays out milestones to negotiate a future ground lease.

Department of Real Estate staff said the properties total about 9,000 square feet; existing buildings are vacant and have been identified as non-historic and seismically unsafe. The recommended proposal calls for a six-story building with a basement and 102 affordable rental units, no vehicle parking, and bike storage. The unit mix described includes 90 studios, five one-bedroom units, five two-bedroom units and two live-work units; affordability layers would include units at 100% AMI, 80% AMI, 50% AMI and deeper set-asides for people with disabilities: 21 units reserved for disabled tenants (including 10 at 50% AMI and 11 at 13% AMI as presented).

Staff said the ENA assumes no initial city funding and anticipates use of a standard long-term ground lease; the ENA sets an initial proposed ground-lease annual payment of $15,000, subject to Board approval at the ground-lease stage. The ENA term is 45 months, during which the developer must meet outreach, design, entitlement and fundraising milestones; staff said the current timeline anticipates a late-2023 groundbreaking if the project advances.

Supervisors praised the proposal’s accessibility commitments and moved the ENA to the full Board with a positive recommendation.