Committee pauses 950 Market/180 Jones off-site affordable-housing deal pending fiscal verification

The Land Use and Transportation Committee on Feb. 6 took up a high-profile package of items related to the 950 Market Street development and a proposed off-site affordable housing project at 180 Jones Street. The sponsor, Supervisor Jane Kim, presented the negotiated community benefits and amendments but the committee withheld final action and continued the matter for one week to allow city staff and the developer to reconcile competing fiscal analyses.

Supervisor Kim said the deal would dedicate land at 180 Jones (currently a parking lot in the Tenderloin) to create at least 60 step-up affordable units for single-room-occupancy tenants. She said the negotiated package included a developer obligation that would have been about $15.4 million under the city—s standard formula, an additional $2.7 million gift from the developer, and $300,000 in seed funding for a Compton—s District TLGB cultural program—changes the sponsor said together would fill most of the financing gap for the off-site project.

Kate Hartley of the Mayor—s Office of Housing and Community Development (MOHCD) told the committee staff ran a pro forma for 68 units of affordable housing for formerly homeless veterans and assumed typical tax-credit leverage. She said two developments created a small gap of roughly $860,000 at one point; later changes to the jobs-housing linkage fee and a drop in the low-income housing tax credit market expanded the filling shortfall so MOHCD estimated an overall funding gap near $2.4 million. Hartley said the developer added roughly $700,000 in gift funds, which reduced an earlier shortfall, but LIHTC market changes increased the overall projected gap.

Planning staff and several supervisors pressed for independent verification of the financial table in the planning memo (dated Dec. 9), the graywater (non-potable) system cost estimate cited at roughly $1.75 million, and the market value assumptions used for transferable development rights (TDRs). Planning Department staff said the Planning Commission had recommended additional fiscal analysis and that some numbers were based on estimates not independently verified; MOHCD said it had seen a summary of developer projections and a Dec. 15 developer submission with alternative underwriting assumptions.

Developer Group I and its representatives said the team had originally proposed 31 on-site inclusionary units but negotiated the off-site approach with the community to deliver more deeply affordable units in the Tenderloin, and that delays and changing market assumptions affected their pro forma. Community groups including the Central City SRO Collaborative and Tenderloin advocates spoke in favor of the negotiated off-site approach, saying it would produce deeper affordability and other neighborhood benefits.

On the committee floor, Supervisor Mark Farrell and Supervisor Aaron Peskin expressed concern about the city—s reliance on unverified estimates and about apparent developer benefit under the amended ordinance; multiple supervisors requested a single, verified fiscal table the city can stand behind. Supervisor Kim read a package of amendments into the record that would (as described): delete the off-site option (one alternative), change the affordable-housing commitment figure from $18,800,000 to $18,100,000, set the conveyance of 180 Jones to MOHCD for a nominal $10, express board intent to reserve 50 percent of future units at 40 percent AMI with a preference for current SRO residents, and create a Compton—s District TLGB stabilization fund. Some amounts were stated inconsistently in the hearing record; the committee asked staff to reconcile final amendment language.

After extended questioning, the committee agreed to continue Items 4 and 5 for one week so planning staff, MOHCD and the developer could review developer underwriting, verify the graywater cost estimate and TDR valuation, and provide a reconciled table of project economics that the city can endorse. Supervisor Peskin and Chair Farrell said they would support the deal after their fiscal concerns are resolved; the continuance was adopted without objection.