The 1960-built Department of Motor Vehicles office and its parking lot at the tip of the Panhandle in San Francisco will be redeveloped as affordable housing, Governor Gavin Newsom announced Thursday.

It's been eyed as a development site for years, and now it shall come to pass. As the Chronicle first reported, Newsom announced this morning that the state would partner with two developers, Related California and the non-profit Tenderloin Neighborhood Development Corporation, to redevelop the 2.5-acre property at 1377 Fell Street into housing.

"We will continue to use all our tools to create more affordable housing throughout California — including by converting underutilized state property into homes,” Newsom said in a statement. “I’m particularly proud of this site for bringing affordable housing to the heart of San Francisco in a diverse and thriving neighborhood.”

It seems like this could cause some disruption with DMV appointments in the coming years, given how busy this DMV location typically is. But the plan, according to the governor's office, is to demolish the DMV building and reopen a modernized DMV facility in the base of the new residential complex in June 2029.

Rendering of the proposed buildings, via CA DMV

The complex will consist of several buildings, the tallest of which will be eight stories. And there will be 372 units, made affordable to those making 30% to 80% of area median income. The housing is expected to be complete by August 2030.

This project has been in the works for some time, and SFist first reported on the Board of Supervisors discussing this as an affordable development site in November 2022. At the time Supervisor Dean Preston said the idea should be a "no-brainer" for the state — though the state had been discussing simply demolishing the DMV building and replacing it with another one-story structure. Preston worked with Assemblymember Phil Ting to pressure the state into creating a larger development opportunity.*

The state put out a request for proposals for the project a year ago, in September 2023. And now it seems that conceptual plans have been drawn up, and a deal has been signed.

As the Chronicle notes, an earlier request for proposals for 1377 Fell Street had gone out back in 2008, and Build Inc. had been selected to redevelop the property, but that project never came to be due to the recession.

Department of Housing and Community Development director Gustavo Velasquez put out a statement saying that he hopes this project will "inform similar out-of-the-box thinking for communities statewide on how we can maximize use of public land for the benefit of the people."

There's no word on when this DMV office may close, or where a temporary, interim facility might pop up to serve SF's driver's license and Real ID needs.

Previously: DMV Lot On Fell Street Floated As Affordable Housing Development Site

*This has been corrected to show that the state's prior development plans did not include housing, and that Supervisor Preston's 2022 resolution played a role in making the project happen.