San Francisco takes advantage of a redevelopment exemption
In San Francisco’s Mission Bay neighborhood construction is underway on new affordable homes in an attempt by the city to deal with a major housing shortage.
And a city agency is funding construction using a tool that hasn't been available to other California governments for years: redevelopment bonds.
The city’s Office of Community Investment and Infrastructure – which took over as the successor to the redevelopment agency in the city – has major projects underway in three areas of the city that will add new housing, retail and office space.
The projects are part of a transformation of the Mission Bay neighborhood where the city has also approved a new arena for the Golden State Warriors, Uber’s new 423,000-square-foot headquarters and new University of California, San Francisco medical buildings in the redevelopment zone.
The successor agency – which is carrying debt service of $109.8 million from previous tax allocation bonds and $6 million from a revenue bond – is considering new bond issuances during the 2018-2019 fiscal year, according to a budget approved in May by the appointed commissioners that oversee the agency.
The plan – which must still be approved by the city’s mayor and Board of Supervisors – calls for $144.1 million in new bonds for affordable housing and infrastructure.
Using bond funding allows OCII to accelerate the pace to development, according to agency spokesman Max Barnes.
San Francisco is unique among cities and counties in its successor agency’s authority to incur new debt, according to H.D. Palmer, spokesman for the California Department of Finance.
In February 2012, the more than 400 city and county redevelopment agencies in the state were eliminated under a bill sought by Gov. Jerry Brown.
Their share of property taxes, which went to redevelopment agencies to help finance economic development and housing projects, was to revert to schools and school districts, thereby reducing the state's school funding burden. The law tasked successor agencies with completing projects, paying off bonds that had already been obligated, and winding down their business while incurring no new debt.
But a 2015 bill sponsored by then state Sen. Mark Leno – who as of Thursday was leading in election returns in the race to be the city’s new mayor -- allowed San Francisco a “unique one-off circumstance,” Palmer said.
The legislation gave San Francisco the authority to issue bonds to complete affordable housing projects it had already started working on. Without that ability, city officials said they had insufficient funds to do so.
Authorizing new debt would allow San Francisco $500 million in new funding and the ability to complete those projects much more quickly, officials said at the time.
The city has three active redevelopment areas: 303 acres in Mission Bay along the waterfront; Hunters Point Shipyard and Candlestick Point, a combined 780-acre area on the site of a former naval shipyard and the city's old baseball and football stadium; and 40 acres downtown where a new transportation center is expected to open this summer.
The agency’s focus is one of the city’s most pressing issues: the lack of affordable housing. The late Mayor Ed Lee set a goal of creating 10,000 new affordable units by 2020.
The Office of Community Investment and Infrastructure expects to create 7,674 new, affordable homes in the three redevelopment areas. Of that, 2,493 units have been built so far, according to the agency.
Mission Bay has been developing at a rapid pace, officials say, with the 18,000-seat Chase Center Arena, the UCSF medical buildings and Uber headquarters the most prominent of several privately-funded projects underway. A 250-room hotel, parks, a new school, library and public safety facilities are also planned for the area.
The successor agency is working with non-profit developers to build 1,806 units of affordable housing – about 30% of the 6,406 units approved in the area master plan. The agency has completed 350 units so far and most recently broke ground in March for a 119-unit apartment building for homeless veterans and low-income families, the agency says.
“This is an incredible time for San Francisco as Mission Bay continues to be a driving force in creating high functioning, well-designed affordable housing,” Nadia Sesay, executive director of the agency, said at the groundbreaking. “With these new homes our veterans and families will continue to thrive in our city.”
Under the budget plan, the agency would issue bonds in the amounts of $41.9 million and $27.5 million for affordable housing loans in Mission Bay. Another $35 million bond would reimburse developers for infrastructure costs.
In the downtown area, a separate city agency is completing work on the Transbay Transit Center, which will link several Bay Area public transit systems.
The successor agency plans to create 3.200 new housing units, of which 1.400 will be affordable, as part of a transit-oriented, pedestrian-friendly neighborhood plan. The agency, which is doing street and infrastructure improvements, will also be responsible for a 5.4-acre rooftop park being built over the new transit center.
The largest and most ambitious of the redevelopment areas is the Hunters Point Shipyard – Candlestick Point project which calls for building 12,100 housing units, 26 acres of parks and open space, 4 million square-feet of office and biotech space and a 635,000 square-foot retail center.
City officials have described it as the largest redevelopment effort in the city since the 1906 earthquake. The $8 billion project would transform the former base and baseball stadium area into a community of 25,000 residents.
One of the bond proposals is for $23.6 million for affordable housing loans in the Hunters – Candlestick area.
The agency is carrying a debt portfolio of $950 million and will not pay off its bonds until 2046, according to Barnes.
Even as the successor agency continues with its new projects, it has begun to wind down some of its previous activities. At the end of June, it will transfer over to the city the Yerba Buena Gardens – a two-block public park south of downtown which was part of a redevelopment project to build cultural facilities, open space, hotels and housing.