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Committee advances 99-year ground lease and $28 million rehab for O'Farrell Towers senior housing
Summary
The Land Use and Transportation Committee voted without objection to forward a resolution authorizing an amended 99-year ground lease for O'Farrell Towers at 477 O'Farrell Street, enabling a $28 million rehabilitation of 101 senior units using seller financing and tax credits with no additional city capital subsidy.
The Land Use and Transportation Committee on [date not specified] voted to forward to the full Board of Supervisors a resolution authorizing an amended and restated ground lease for 477 O'Farrell Street (O'Farrell Towers), a 12-story, 101-unit senior building.
Supervisor Jane Kim, sponsor of the legislation, said the amendment would extend the lease term — an initial 65 years with an option to extend another 34 years for a total of 99 years — to preserve the building as permanently affordable housing for low- and very-low-income seniors. "This is a building that, is an important part of our housing portfolio," Kim said.
Kevin Ketchum of the Mayor's Office of Housing and Community Development outlined the financing strategy that staff said makes the rehabilitation feasible without additional city capital subsidy: seller carry-back financing, tax-exempt construction bonds, and 4% tax credits paired with a first mortgage. Ketchum said the total rehabilitation cost for the 101 units is $28,000,000 and that the refinancing will enable repayment of approximately $3,200,000 in accrued ground lease payments owed to the city. "This rehab will resolve these issues and provide cash out proceeds to address other portfolio needs," Ketchum said.
According to the staff presentation, the project will address long-standing exterior failures (noted as GFRC panel deterioration) and water intrusion, upgrade building systems including HVAC and lighting, conduct individual unit upgrades, and add building-wide green design retrofits. Sponsors said the financing structure will provide cash-out proceeds to Tenderloin Neighborhood Development Corporation (TNDC) to address other portfolio needs while holding a portion of residual receipts for specific projects determined through underwriting and loan documents.
During public comment, supporters including student Charlotte Pitt praised the rehabilitation for updating the building to current environmental standards and for preserving existing housing rather than prompting new development elsewhere. Supervisor Kim moved to forward the resolution with a positive recommendation to the full board; the motion passed without objection.
Next steps: the committee's positive recommendation sends the resolution to the full Board of Supervisors for consideration.
