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Committee backs purchase and long‑term ground lease for Sunnydale Parcel Q, advancing HOPE SF rebuild
Summary
The committee recommended approval of a purchase and 99‑year ground lease for Parcel Q in the Sunnydale HOPE SF redevelopment; the 55‑unit project will reserve the majority of units for current Sunnydale residents and relies on sponsor credit for acquisition financing.
The Budget and Finance Committee advanced for full Board approval a purchase and sale and subsequent 99‑year ground lease for Parcel Q, the first parcel in the Sunnydale Hope SF public housing redevelopment.
Sarah Amaral (Mayor’s Office of Housing and Community Development) said the sponsor (Mercy Housing California/Related California) acquired the parcel and will credit a $3.0 million acquisition loan at closing. Parcel Q is slated for a five‑story, 55‑unit building with studios and one‑ to three‑bedroom units; 75 percent of units will be set aside for existing Sunnydale residents using project‑based vouchers and other subsidies. MOHCD said no residents will be displaced by this parcel because the site is a vacant lot.
MOHCD and Real Estate described the ground lease payments (base rent and residual tied to appraised value) and noted a third‑party appraisal review that raised methodology concerns; MOHCD and Real Estate staff said the property will remain permanently affordable under the ground lease. The Budget Legislative Analyst’s office acknowledged the appraisal review rejection and considered the matter a policy question because an appraisal review had not been completed at the time of the sponsor’s purchase, but recommended moving the matter forward given the public‑benefit affordable housing goals.
Committee members supported advancing the inducement and ground lease to the full Board with a positive recommendation; the Board will later consider bond allocation and final issuance approvals if CAL‑PID allocations are awarded.
