Committee Sends $45M Option for Transbay Block 4 to Full Board; Developer Agrees to 45% Affordable Units

The Land Use and Transportation Committee advanced an option agreement that would allow F4 Transbay Partner LLC to acquire an option on Transbay Block 4 for a purchase price of $45,000,000. Sally Orth, deputy director of the Office of Community Investment and Infrastructure (OCII), told supervisors the developer will deposit $500,000 at approval (with an additional $100,000 option available) and has agreed to provide 45% of the project's housing as affordable units without an OCII subsidy. OCII staff recommended approval after a fair market value analysis required by California Health and Safety Code section 33433.

OCII presented hypothetical development scenarios used in the valuation because no final project or DDA has been submitted. Staff estimated roughly 480 units could be developed on Block 4 under massing parameters. Using these scenarios, staff reported an adjusted land value of about $18,600,000 under a rental-only model and roughly $41,500,000 under a mixed rental-and-condo model, concluding that the $45,000,000 option price meets the state fair-market-value requirement. Orth said Parcel F, a nearby TJPA-owned parcel, is under a separate purchase-and-sale agreement for $160,000,000 and that approvals for Block 4 help facilitate Parcel F's transaction and transit-center funding.

Supervisor Aaron Peskin asked about a contractual $3,000,000 discount if the temporary transit terminal is not vacated by June 30, 2018; Mark Zavani, interim executive director of the Transbay Joint Powers Authority, said the transit center is scheduled to open in December 2017 and TJPA expects to vacate the temporary terminal well before the June 2018 discount trigger. Supervisor Scott Wiener questioned OCII’s repeated statement that there is "no public subsidy" for the 45% affordability, arguing OCII is effectively accepting a reduced purchase price to secure higher inclusionary levels; OCII staff acknowledged that affordability requirements reduce land value and that the sale proceeds will flow to the TJPA.

During public comment Ian Lewis (Hotel & Restaurant Workers research director) raised labor-quality concerns and said project sponsors indicated intent to negotiate a card-check neutrality agreement; Cameron Faulkner (developer representative) confirmed the purchase-and-sale agreement includes compliance with the TJPA labor-policy terms and that the team expects to include a hotel component on Parcel F. Supervisor Scott Wiener moved to forward the option agreement as a committee report to the Board of Supervisors; the motion passed without objection and will appear on tomorrow's board agenda for final action.