“16th and Mission Developer Pitches Unconventional Plan to Expand Affordable Housing”

SF Business Times, March 4, 2015

For months, anti-gentrification activists in the Mission District have rallied against the proposed 16th and Mission Streets apartments just as developers face citywide pressure to build more affordable units as part of market-rate projects.

The proposal by Maximus Real Estate Partners to build 330 apartments near the 16th Street BART station has fed into a debate about just how much affordable housing developers should be required to build.

So Maximus Real Estate Partners is trying to get creative with an unconventional plan to build more units for low-income and middle-class Mission residents than it previously proposed.

The developer unveiled Wednesday that its new affordable housing plan for 1979 Mission St. includes:

  • 290 market-rate apartments built on site

  • 41 "middle-class" for-sale units built on site, priced at $280,000 to $350,000 and sold to households that make between $61,000 and $145,650

  • 49 below-market-rate rentals built off site at an undetermined property in the Mission, priced as affordable for people earning 30 percent to 55 percent of the city's median income

That means 24 percent of the project's total units will be below-market-rate rentals or for-sale units priced for middle-class residents. Maximus had previously pledged to build 12 percent of the total units as affordable rentals – the legal minimum – so this about doubles its commitment.

"We believe this plan provides a way for people at all income levels to live at 1979 Mission," Seth Mallen, principal for 1979 Mission, said in a release.

The proposal mostly falls in line with the fact that the mayor's office wants developers to find more unorthodox ways to craft plans for housing that would serve more than just the wealthy.

Whether its affordable housing commitment will pass muster with Mission neighbors — and with Supervisor David Campos, who is crafting a moratorium on market-rate development in the neighborhood — remains to be seen. Maximus will host a public forum about the project at 6:30 p.m. Wednesday at 3721 18th St.

Maximus' other community benefits include retail space for local businesses and artists, as well as a Walgreens on site. It says it will also increase the 16th Street BART plaza by 40 percent "for all to use" and increase the size of neighboring Marshall Elementary School by half.

An opposition group called the Plaza 16 Coalition — which has dubbed the project "the monster in the Mission" — has already planned a Wednesday night rally and press conference in response. Andy Blue, a group spokesman, said he would wait to hear the developer's proposal before commenting. He said it would focus primarily on the affordable housing commitment.

Though the project has been controversial from the start in the Mission, other housing advocates and city planners have said that the BART site is ripe for high-density, transit-oriented development. Supporters say the project is exactly the kind of workforce housing at a key transit site that the city needs if it's going to catch up with the chronic under-building that has helped lead to skyrocketing housing costs.

Affordable housing spotlight

The project is the largest in decades in the Mission, a neighborhood with many bracing for potential evictions and concerned over the displacement of Latino residents over the last decade.

The anti-development outcry comes at a time when the city isn't coming close to building or entitling enough low-income or moderate-income units to meet population needs, according to Planning Department data. With public money to build those units in short supply, the spotlight is on how much private developers will step up.

Maximus is trying to make some tricky math work in a way that would please neighbors, the city and investors.

Under current law, developers have three options:

  1. To build 20 percent of the units as affordable if they build them off site;

  2. To build 12 percent of the project as affordable housing if they build those units on site;

  3. Pay a hefty fee.

Maximus' proposal doesn't quite fit into any of those categories, though it could hammer out a special agreement with the city because it's providing more housing at lower income levels.

The on-site for-sale units that target middle class buyers — which would be sold at a higher price than current law allows for affordable for-sale units — would help the developer pay for the off-site rentals. Joe Arellano, a Maximus spokesman, said the developer would use $12.3 million from the sales money to pay for the affordable rentals.

Maximus seems to be banking on affordable housing regulations getting more flexible in order to get more units built for both lower- and middle-income residents.

A group of developers, affordable housing activists and city officials convened by the mayor pitched several ideas last year that could turn into new laws this year.

One concept is the "dial," which would allow developers to increase and decrease the number of units and affordability levels to get more units built for very low income residents and middle-class residents.

Getting to 33 percent

City officials have said it's critical to bend inclusionary policies for the city to reach voter-approved Prop. K goal to produce one-third of housing units as affordable.

"This is going to come up again and again as far as the debate between progressives and moderates: How do we satisfy 33 percent?" said Tim Colen, executive director of the Housing Action Coalition. "It's very difficult without more funding, more height and a dial – otherwise you can't get to 33 percent. Maximus is saying, 'We're putting in the dial.' "

Kate Hartley, deputy director at the Mayor's Office of Housing, declined to comment on the 16th and Mission project's merits, but said "the city, with other stakeholders, is working to provide greater flexibility for the inclusionary program with the goal of increasing affordable housing production. This kind of project, if it was presented to the city, would be analyzed closely to see if it met those goals."

Maximus has not identified a specific site for the off-site rentals. Three large sites in the Mission are already funded by the city, so building there would not represent a net gain in the neighborhood's affordable housing stock.

Peter Cohen — co-director of the Council of Community Housing Organizations, an affordable housing advocacy group — said that while the group won't have a stance on this specific project, the number of affordable and middle-class units still seems to come up short.

"The cross-subsidy of selling the on-site units to finance the off-site is creative (which is indeed without precedent) but the total affordable units outcome doesn't seem very substantial," he said. "It's hard to expect an enthusiastic response from the Mission community."

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