A planned residential tower that will house San Francisco's International High School in Hayes Valley is getting both a density bonus and permission not to include on-site affordable units in new proposed legislation from Supervisor Dean Preston.
It marks a possible change of play for SF's Board of Supervisors, which for over a decade has held developers' feet to the fire whenever possible to pressure them to build more below-market units in their projects. And it's an acknowledgement that maybe the same rules can continue to apply in an economic environment where housing is becoming increasingly expensive to build.
The project at 98 Franklin Street, originally a 345-unit tower standing 365 feet tall, is set to be allowed to rise to 400 feet and include 40 more market-rate units, for a total of 385, under a deal agreed to by Preston. In exchange, as the Chronicle reports, the developer Related California has agreed to purchase the site of the shuttered McDonald's on Van Ness for the city's use as an affordable development site, and they will kick in $1 million toward another stalled affordable project in the neighborhood known as Parcel K — also currently known as PROXY, and home to Biergarten.
Preston tells the paper that he "feels good" about the deal, especially because it will activate three different sites for housing, which the city dearly needs.
"They spent a lot of time talking with us — being pretty transparent about the finance and cost on 98 Franklin and the reason it would not be moving forward as is," Preston explained to the Chronicle.
Under current city rules, Related would have been on the hook for what's called an "in lieu fee," essentially paying for affordable housing that it was not electing to build within the footprint of the 98 Franklin tower. And in earlier years, developers of big projects have agreed to include percentages of below-market units that were previously unheard of, in order to secure board sign-off.
One noted example was the massive 5M development in SoMa, where the developer agreed in 2015 to include 40% affordable units, though it's not clear how many units in the final accounting are really serving SF's working families or middle class as intended, at income-limit levels well below SF's median.
And as the city is under pressure from the state to create a workable plan to build 82,000 new housing units in the next decade, the board can no longer afford to be as picky about what gets built and how. It's notable that Preston, who is no fan of market-rate development or developers, is seeing the light about what developers have been saying for over a year about projects no longer "penciling" due to 50% hikes in construction costs.
98 Franklin has been in the works for over a decade, after the French-American International School bought the parking-lot site in 2012 with plans to develop it into a new high-school campus for 400 students with condos on top. As the Chronicle explains, the school, which currently shares a campus with the Chinese-American International School across the street, tapped Related California to build the tower, but the project has faced multiple delays.
On Tuesday, the Board of Supervisors will take up legislation that will allow for the outlines of Preston's agreement with Related, and allow the tower to get under construction. Related cites both slumping rents and rising construction-materials costs for needing a new deal structure.
Also, the deal is pretty similar to one struck with the developer Crescent Heights last year, giving approval for a market-rate tower at 10 South Van Ness in exhange for gifting the city the property at 1979 Mission Street, a.k.a. the former "Monster in the Mission" site. The city officially took control of the property in February and intends to develop a 100%-affordable project.
As Jeff Cretan, a spokesperson for the mayor's office, tells the Chronicle, "This is something we are going to see again and again. We’ve got a lot of projects that don’t work economically right now."