San Francisco: Repurposing Maritime Parcels as Affordable Housing

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San Francisco: Repurposing Maritime Parcels as Affordable Housing

 

The 1989 San Francisco earthquake severely damaged the Embarcadero Freeway, leading to its complete removal 2 years later. Rather than rebuilding the freeway, the Port of San Francisco spent the intervening decades revitalizing the 7.5-mile stretch of the boulevard, now called the Embarcadero. This effort has not been without challenges, leaving the port to devise and enact innovative redevelopment strategies. One such strategy repurposed Seawall Lot 322-1 (SWL 322-1), a port parcel held in trust under the State of California, as an affordable housing site. The port collaborated with the Mayor’s Office of Housing and Community Development (MOHCD) to transform the port property and an adjacent MOHCD property into a mixed-use, transit-oriented development in the Northeast Waterfront Landmark District.

The project site consists of two affordable housing developments with shared exterior spaces and amenities. Broadway Cove, the port-owned lot, is a mixed-income development housing 125 families, and 735 Davis, owned by MOHCD, is a 53-unit affordable housing project for seniors. The two agencies partnered with affordable housing developer BRIDGE Housing and The John Stewart Company (JSCO) to develop both properties, which opened in 2021 as a multigenerational living community with amenities and supportive services. Broadway Cove and 735 Davis received the Award of Excellence from the National Association of Local Housing Finance Agencies and the 2022 Vanguard Award for New Construction from the National Affordable Housing Management Association.

Legislative Actions

The transformation of SWL 322-1, a surface parking lot, into affordable housing required state and local action. The state of California passed legislation in 2007 to authorize diverse housing and urban uses for specific seawall lots that were either vacant or being used as surface parking lots. When SWL 322-1 was targeted for redevelopment, the port lobbied to pass state assembly bill 2649 in 2012, which modified the 2007 legislation to include the lot in the list of central waterfront sites that could be leased for redevelopment. This bill led the San Francisco Board of Supervisors to adopt an ordinance authorizing MOHCD to enter into below-market leases with developers to create affordable housing on the SWL 322-1 site.

In 2014, MOHCD and the port signed a memorandum of understanding to explore the feasibility of developing housing on the lot. MOHCD issued a request for proposals and selected BRIDGE Housing and JSCO as codevelopers. Smitha Seshadri, executive vice president of development at BRIDGE Housing, explained that, from the developer’s perspective, the legislation was "a game changer because otherwise for developers it takes years and years, and we don't have that type of funding to provide staff and jump through the hurdles with the government and figure out all the bureaucracy."

Mixed-Income Affordable Housing

The T-shaped project site is on a superblock just steps from the Embarcadero. Covering the western half of the block along Front Street, Broadway Cove offers 125 units for families and individuals earning between 30 and 120 percent of the area median income (AMI). The development has 16 studios, 37 one-bedroom units, 48 two-bedroom units, and 24 three-bedroom units. Seshadri observes that the development’s mixed-income structure is unique for San Francisco, where affordable housing projects typically set an income limit for residents of 60 percent of AMI to meet the average income requirements of the state’s low-income housing tax credit (LIHTC) program.

Situated in the middle of the block’s eastern half, 735 Davis is about half the size of Broadway Cove and offers 53 affordable housing units for seniors earning between 20 percent and 70 percent of AMI. The development consists of 23 studios, 29 one-bedroom units, and 1 two-bedroom unit. Most of the units receive direct support from city programs that support seniors facing barriers to affordable housing. Under the Senior Operating Subsidy program, MOHCD subsidizes half the rent for 13 units, with residents paying the remainder. As part of the mayor’s Homelessness Recovery Plan, designed to mitigate the rise in homelessness rates caused by the COVID-19 pandemic, the city’s Local Operating Subsidy Program fully subsidizes 15 units that are reserved for residents who previously experienced homelessness. The subsidy also includes a contract with Lutheran Social Services (LSS) of Northern California to provide seniors with one-on-one case management.

Community-Oriented Amenities

The site’s green spaces and ground-floor uses align with the goal of fostering a multigenerational community that is well integrated into the Telegraph Hill neighborhood. Residents of 735 Davis have access to a landscaped rooftop deck with views of the San Francisco Bay, and Broadway Cove’s outdoor spaces include a second-floor terrace and a playground on the ground level. Each property has its own community room where residents participate in shared activities. At 735 Davis, LSS offers a weekly coffee hour and biweekly movie nights. At Broadway Cove, resident activities include tai chi, coffee hours, and technology classes.

The properties share approximately 10,500 square feet of commercial space, which required state legislative action approving auxiliary site uses. One such use is the 55-slot, mixed-income YMCA childcare center located under the Broadway Cove units — a facility that the developers knew from previous experience would be necessary to meet the needs of low-income families. Because many residents of Broadway Cove and 735 Davis were likely to be households headed by single mothers, the developers ensured that their project addressed the challenges of affording daycare and helping children with their homework. Other ancillary uses serving residents and the neighborhood include a café below 735 Davis and a restaurant below Broadway Cove.

The transit-oriented development includes shared amenities such as bicycle parking and a mid-block paseo. The paseo, a landscaped walkway connecting the buildings, is publicly accessible and links residents to other public amenities, including a park, bus service, and the San Francisco ferry.

Financing

The two developments had separate financing packages for a combined development cost of approximately $134.2 million (tables 1 and 2). The use of publicly owned land was a key financial strategy for both properties. Ricky Tijani, waterfront development project manager for the Port of San Francisco, explained that the initial appraisal for SWL 322-1 was approximately $20 million; however, under the terms of the lease agreement the developers paid an upfront cost of $15 million and only $20,000 in annual rent to ensure that the units would remain affordable. The city also pursued additional legislation to extend the initial 57-year lease term for state property to 75 years to ensure more flexibility and long-term affordability. Under California’s tax credit requirements, the developers needed a minimum lease term of 55 years to receive LIHTC funds, which totaled more than $50 million for both properties.

Bringing Mixed-Income Affordable Housing to Upscale Telegraph Hill

Seshadri states that the developments are a success story for "repositioning underutilized land resources" with a project offering multiple public benefits. The city’s decision to locate affordable housing in the upscale Telegraph Hill neighborhood gives more families access to quality resources regardless of income level. Tijani shares this sentiment, saying, "That's a wonderful opportunity to provide — to give people the benefit of being at this location — because the waterfront is a premium location." The revitalization effort not only helped San Francisco meet its housing planning goals but also set a precedent for other city agencies to repurpose their surplus land for housing under the city’s Public Lands for Housing program.