Deal could move S.F. residential tower forward
A stalled residential high-rise near the intersection of Van Ness Avenue and Market Street could move forward after a deal in which the developer would be allowed extra height and density in exchange for purchasing a nearby parcel and dedicating it to San Francisco for affordable housing.
Under the agreement between Supervisor Dean Preston and developer Related California, the height of an approved tower at 98 Franklin St. would increase from 365 feet to 400 feet, which would allow the developer to increase the number of units by 40 — from 345 to 385.
As a trade-off, Related has lined up a deal to purchase the former McDonald’s fast food site at 600 Van Ness, which will be given to the Mayor’s Office of Housing and Community Development. That site
is approved for 168 units. Because the Van Ness site can accommodate significantly more affordable units than would be required onsite, Related would not have to pay about $6.5 million in fees, according to the proposed agreement.
Preston planned to introduce legislation on Tuesday at the Board of Supervisors that would outline the agreement. The lower floors of the tower will be occupied by a new, 90,000-square-foot high school campus of the private FrenchAmerican International School, which bought the Franklin Street parking lot in 2012 and tapped Related to develop the mixed-use tower.
The arrangement comes as residential builders are scrounging for ways to make projects financially feasible in a post-pandemic landscape in which construction costs have continued to rise while rents have declined. In recent months, the developer of 655 Fourth St. has proposed to increase that project from 960 to 1,148 apartments. At One Oak St. — a block from the 98 Franklin site — a builder recently won planning permission to increase the tower from 304 to 460 units.
While the land dedication will allow Related to avoid some fees, the developer has agreed to pay an additional $1 million to help jump-start another affordable project in Hayes Valley that has been languishing, the 54unit Parcel K.
“I feel very good about this package,” said Preston. “It will activate three sites that would otherwise be dormant.”
Preston, who is often at odds with market-rate developers, said he was initially skeptical about Related’s claims that 98 Franklin is no longer feasible. But eventually he was convinced.
“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,” he said.
The blueprint of the Franklin Street accord is similar to an agreement reached between developer Crescent Heights and the owners of the so-called “Monster In The Mission” site at the 16th Street BART station. In that case, Crescent Heights was allowed a taller tower at 10 South Van Ness in exchange for buying 1979 Mission St. and handing it over to the city for low-income housing.
Jeff Cretan, a spokesperson for Mayor London Breed, said, “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,” Cretan said. “If we want to see housing actually get built we are going to have to make some changes.”
Matthew Witte of Related California said construction costs have gone up 50% since his company completed 1550 Mission St., a 550-unit tower and city office building finished early in the pandemic. At the same time, rents have dropped. Given those realities Preston’s legislation “significantly helps the feasibility” of the Franklin Street building.
“This is an important first step in moving 98 Franklin forward and brings us closer to constructing a mixed-use building that will bring a new high school and much-needed affordable housing to the Van Ness corridor,” said Witte. “As a major developer and property owner in San Francisco, we believe in the future of the city — or we wouldn’t be doing this.”
Melinda Bihn, head of the French American International School, said she hoped the deal would finally allow the private school to deliver classrooms for 400 high school students.
“After numerous delays and challenges, we’re hopeful today’s action will enable us to move forward with our new state-of-the-art high school and to continue to be a part of the community,” she said.
The fact that 600 Van Ness was stalled and available to be purchased for affordable housing also is a testament to the lack of capital available for marketrate buildings. Last week The Chronicle reported on a site in the Mission that had been previously coveted by condo builders but that a nonprofit was able to grab for low-income senior development.
“In this down market, with many private developments stalled or abandoned, the city should aggressively pursue site acquisitions for affordable housing,” said Preston.
As part of its housing element slated to be adopted next year, San Francisco must plan for 82,000 units, 57% of which must be affordable to low- and moderate-income households.