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As SF market-rate housing developers sit idle, nonprofits race to create affordable housing

With the economy teetering on the edge of recession and dozens of market-rate housing projects stalled, nonprofit builders in San Francisco are licking their chops for what could be a rare opportunity to seize a few sites for future affordable residential development.

And the strategy is already bearing fruit in the Mission District.

A one-acre fenced parcel at Cesar Chavez and Valencia streets, once a parking lot for Mission District’s flagship Sears Roebuck & Co. department store, is now poised to become one of the largest new affordable housing developments in the city. San Francisco.

Sequoia Living, which develops and owns seniors’ complexes for both low-income seniors and more affluent seniors, paid $13.5 million to acquire the parking lot behind 3435 Cesar Chavez St., which was redeveloped into living/working lofts after Sears closed its store in 1975.

Sequoia plans to develop 130 seniors’ housing on the northern half of the site and partner with nonprofits to build another 130 affordable housing units on the southern portion, according to David Latina, who is leading the company’s development. .

Latina said Sequoia had spent years looking at both the former Sears land as well as the Salvation Army property across the street at the northwest corner of Valencia and Caesar Chávez. For most of this period, however, both properties were coveted by for-profit builders who could afford more than an affordable group.

The old Sears lot was under contract with at least two market rate developers before the deals turned south during the pandemic, which provided an opening for Sequoia.

“When the gas went out in the condo market, I called our broker and said, ‘Let’s talk to them and see if we can shake things up,'” Latina said. , expect affordable accommodation which is great for us.”

A one-acre parking lot for future housing can be seen in the Mission district of San Francisco.

Bronte Wittpenn / The Chronicle

Supervisor Hillary Ronen said the location — across from California Pacific Medical Center’s Mission-Bernal campus, near many shops, restaurants and public transportation — was ideal for seniors.

“It’s one of the most popular types of housing we could build in the neighborhood,” Ronen said.

San Francisco is home to 164,000 adults age 62 and older, or about 23% of the population. A 2022 Affordable Housing Needs Assessment Report for Aging and Persons with Disabilities found that more than 29,000 elderly tenant households experience rent burden, and approximately 16,000 of these households experience heavy rent burden. rent. The 2022 point-in-time count of homeless people found about 620 adults over the age of 60 and 1,600 people with disabilities homeless each night in San Francisco.

Two senior housing projects have opened in the Mission District in the past decade – one with 44 units at 3001 24th St. and another with 94 units at 1294 Shotwell.

“These two don’t even begin to fill the need,” Ronen said. “We don’t have enough affordable housing for seniors, especially as the number of seniors is exploding.”

Commercial real estate broker Gary Cohen, who represented Sequoia, made a specialty of finding sites for affordable developers. He said he expects to see a flurry of bids from developers at market rates who can no longer get financing to build what they had hoped to build – but that so far it has been slow.

“The question is whether the sellers accepted the price reduction that would make sense for a nonprofit,” he said. “People have to adjust their expectations – and I don’t know if we’re there yet.”

Sequoia was in a unique position to purchase the land because it has a foundation that was able to set aside money without going through the city for funding. The foundation is made up of community residents’ contributions at the group’s market rate, which is popular and tends to attract wealthy families. It is common for these residents to leave a portion of their possessions to low-income communities in Sequoia. Sequoia has market-rate communities on Cathedral Hill as well as the Portola Valley, Walnut Creek, and Greenbrae in Marin County.

“It’s like Peter helping pay Paul,” Latina said. “They feel good that their money is going to an organization that not only takes care of them, but takes care of other people who can’t afford a market rate senior living community.”

Units in the Mission district will target seniors with incomes below 50% of the region’s median income — about $48,500 a year — and Sequoia hopes to source vouchers that will make it affordable for even less well-off seniors. remunerated. It will take about a year to get the social housing tax credits needed to fund the project, Latina said.

Mission Housing executive director Sam Moss said his nonprofit had looked at the site in the past, but that Sequoia’s acquisition of the site – and its intention to put senior housing there in low income – was the perfect outcome.

“Sequoia is going to do great things there,” he said. “Affordable housing inherently has the potential to be counter-cyclical, but it depends on the money available.”

Scott Falcone, an affordable housing consultant who has advised Sequoia, said he has clients considering potential acquisitions in the Outer Sunset as well as Union Square. The Union Square property is an existing hotel that would be redeveloped into apartments.

“These properties aren’t exactly out of the box,” he said. “We are the only ones who can make it work. The price is falling and it is likely to fall further.

Ronen said she was especially pleased that the Mayor’s Office of Housing and Community Development didn’t have to fund the acquisition of the land, which usually happens.

“It’s like Christmas is coming early,” she said.

JK Dineen is a writer for the San Francisco Chronicle. Email: [email protected] Twitter: @sfjkdineen

Rodney N.

The author Rodney N.