Project Tenderloin shows serious loopholes in SF planning rules

The Board of Supes postponed until Tuesday / 5 a vote on the bizarre project at 450 O’Farrell, but the issues that were raised during the first board hearing on the deal go way beyond this. development.

The background: A local Christian Science church in Tenderloin and Forge Development wants to demolish the existing church building and replace it with a new church and 316 units of “group housing” mostly at market prices.

These will likely be dorms for technicians in the short term. Indeed, during the hearing Tuesday / 28 town planners have admitted that collective housing is almost by definition fairly short-term rentals.

This project is apparently no different from town planning only on half of its size.

The city already approved a project for this site in 2018 which included a reconstructed church and 176 apartments, including permanent family-sized housing.

But that, the Forge representative said at the hearing, was no longer financially feasible.

Essentially, he said, the cost of construction in San Francisco and the demands of investment capital markets precluded any traditional market-priced housing in the neighborhood.

A three-bedroom apartment, he said, would have to be rented for $ 7,500 per month to make the project feasible. And investors doubted that a Tenderloin project would attract people with that much money.

So the only option was to turn this into dorms, which were renting an average of $ 3,500 per month, for what could be a shared room with limited cooking facilities.

Under questioning by Sups. Aaron Peskin and Matt Haney, the planners admitted that they had not seen any financial data from the developer that would support this position. Essentially, the planners just took Forge’s word.

This, of course, happens all the time and leads to bad decisions. Developers can say whatever they want about their financial needs, and since the city has no mechanism to demand that the numbers be made public, the planner is sticking to it.

The San Francisco Sunshine Ordinance deals with this, but only in terms of the city’s grants to private developers:

The City will not grant any cash grants, tax breaks, land or services to a private entity unless that private entity agrees in writing to provide the City with financial projections (including profit and loss figures) and annual audited financial statements for the project. thereafter, for the project on which the grant is based and all such projections and financial statements must be public records which must be disclosed.

The limits of this definition have never been tested.

So, we don’t know, for example, if the previous, community-supported project was “doable” at a rate of profit that most companies would accept, but not at a rate of profit that the developer and the financial markets. considered sufficiently high.

But there is a much larger problem here. Yimby activists have long argued that if the city simply approved more housing, prices would drop. This only works if there is a truly functioning market in the San Francisco housing world – and this project makes it clear that there isn’t.

No Nimby objected, blocked or delayed the initial draft. The Tenderloin community supported him. The planning committee approved it unanimously. The developer had the green light to build 176 housing units – and under the rules at the time, only 13% had to be affordable.

Who killed this project? Wall Street. There was not enough profit.

You can, it seems, allow whatever new densities you want, overzone neighborhoods, streamline regulations… and yet the city will not get housing that meets our needs if the private sector leads the process.

Instead, we have this deal. And the more you think about it, the stranger everything gets.

Remember: Forge and the church have had a project approved for three years. They could have innovated a long time ago. Instead, they returned to the Planning Commission in June and asked to change the deal from 176 housing units to 316 dormitories.

At this meeting, Commissioners Kathrin Moore and Theresa Imperial asked the key question: who is this accommodation for? And Sue Diamond asked what “group housing” is anyway and if the sups should fix something that is ill-defined and potentially a huge loophole for developers.

The committee voted 4-2 to approve the changes, with Moore and Imperial against.

Yes this project have been proposed today, rules for the net would have required 25 percent of the units to be affordable. But when it was initially approved, those rules were different: only 13% of the units were to be offered at a below-market rate. We’re talking about a big difference: under current policy, 79 units would be affordable. Under the old policy, there are only 41, or about half.

The planners decided it was “grandfather” because one version of the project was approved under the old rules, and it was “essentially” the same.

Haney, like many of us, was deeply intrigued by this: how can a new project that is twice the size of the old one, with a completely different type and mix of housing, be “substantial” the same? than the old one? “I can’t believe it,” Haney said.

Carly Grove, representing the Department of Planning, said the Environmental Review Division found no reason to believe the impacts of the new version would be any different. It therefore did not require any new analysis and can therefore continue according to the old rules.

Haney pointed out that the Planning Commission had set certain conditions on its approval, including that the developer would look for ways to include larger units that might be acceptable for families with more than two people. Did it happen?

“We had a few initial conversations with the architect,” Grove said. “But we haven’t seen any revisions to date.”

And yet: planning wants it to go ahead.

So what is “group accommodation” anyway?

In the 1980s, artists managed to move into many old empty industrial spaces, creative and lively lofts that didn’t exactly follow building codes. Thus, the planning department followed a process that led to changes in the code allowing for working housing that did not have all the requirements of traditional housing units.

It was very nice for the artists who had lofts. It was also a huge loophole for developers, who roared through Soma, demolishing industrial buildings and creating new “live-work” housing, at very high prices.

We may see the same thing here.

Peskin asked Grove to explain the difference between accommodation and group accommodation. It comes down, she said, to a decision made 16 years ago by former zoning administrator Larry Badiner. Under this ruling, a “group accommodation” unit can have a kitchen with a sink and small refrigerator, microwave, and up to two stove burners. If there is a traditional oven, it becomes a “dwelling unit”.

“This is what drives us all crazy,” Peskin said.

Grove said there has never been a collective housing project of this size. She acknowledged that the decision to allow it as group accommodation was a close call. “They’ve doubled the number of units and that’s still a substantial complaint,” Peskin said. “I am taken aback by this determination. And I’m puzzled that they come back and say it doesn’t go away. Have you independently determined whether their pro forma statements are correct?

Grove: “We didn’t.”

Supper. Myrna Melgar, former member of the Planning Commission, asked the developer to explain why the number and type of units had to be changed so drastically. “Subscribers could not find a subscription,” he said. “It was not fundable.”

He told her the project would tackle the “missing link” in local housing. But rents would start at around $ 2,600 per month, for what equates to a short-term dorm; This means that by federal standards that no more than a third of your income should be rented out, the cheapest units would require a family income of $ 94,000.

The median income in the net is well, well below that number.

Haney asked for a one week extension on Tuesday and told me the parties are still negotiating. Supes are always looking for a way to strike a deal on projects like this. But the developer refused to do anything other than token concessions. I don’t see what an agreement would be.

The Church has warned the city that it has the right to build an appropriate place of worship, and the current building is not up to modern standards. Haney asked Grove about it, and she confirmed: The Church already has a project approved, which could be launched in just a few months. But the developed decided that the project is not sufficiently lucrative.

The Yimbys usually invade Town Hall whenever there is a chance to build more housing, of any type, even if it doesn’t make sense to the town. In fact, they went into banshee mode when Sup. Dean Preston suggested that according to the city’s planning code, a project at 1846 Grove Street should have two units instead of four. It is a difference of two units.

But there isn’t much Yimby action on this project, which involves 316 units. One of the main opponents of the project is Randy Shaw, director of the Tenderloin Housing Clinic and a close ally of local groups in Yimby.

I don’t pretend to understand Yimby’s politics. And while the Chron reports that Haney is moving towards the pro-market housing position, he’s clearly not happy with the project.

It’s gonna be a big test for the board.

About Ian Crawford

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