SF LGBTQ senior housing awaits funding

  • by Matthew S. Bajko, Assistant Editor
  • Wednesday May 29, 2024
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A rendering depicts the proposed development aimed at LGBTQ seniors located at 1939 Market Street. Image: TS Studio
A rendering depicts the proposed development aimed at LGBTQ seniors located at 1939 Market Street. Image: TS Studio

A year ago, San Francisco planning officials approved a 187-unit affordable housing project aimed at LGBTQ seniors. It has yet to break ground, however, as the project sponsor is seeking state funding to help pay for its construction.

The delay has pushed back by at least two years the expected opening of the building to be located at a prominent intersection along the upper Market Street corridor a block away from the city's LGBTQ community center. The earliest it would now welcome residents is sometime in 2028.

But that timeframe is contingent on the state awarding funds to the project this summer. It would be another year before work on the building could commence, and the buildout would take three years to complete.

"We very much look forward to welcoming the first residents of 1939 Market Street to their new home!" Roslyn Sternberg, a communications manager for Mercy Housing California, told the Bay Area Reporter this month.

The affordable housing developer is working with Openhouse, a nonprofit provider of LGBTQ senior services in San Francisco, on the development of its third building of below-market-rate apartments meant to house predominantly LGBTQ seniors. The agencies had earlier partnered on the 119-units of LGBTQ-welcoming affordable senior housing split between the buildings at 55 and 95 Laguna Street.

The campus also includes Openhouse's offices at 65 Laguna and a community center it built out at 75 Laguna. It is a short walk from the location of the new 15-story residential building that will include ground floor commercial space.

The city acquired the triangular 7,840 square foot lot bordered by Market Street and Duboce Avenue in 2020 for $12 million from the Sheet Metal Workers Local 104. The union plans to vacate the property nearer to when construction of the new building will begin.

With an estimated construction cost of $117,673,842, the new tower will have 106 rent-restricted studios and 79 rent-restricted one-bedrooms for seniors. A one-bedroom unit plus a two-bedroom unit will be set aside for on-site managers.

Paulett Taggart Architects and YA Studio were hired as the project architects, with assistance from TS studio on the landscaping. The plans call for community gardens on seven levels of the building, with a terrace adjacent to a second-floor community room at the back of the building fronting Duboce with views of Twin Peaks.

The Mayor's Office of Housing and Community Development, after selecting Mercy and Openhouse to oversee the project, had awarded $4 million for predevelopment costs such as design work. The project is estimated to have a total price tag of $159,669,745 once all costs and the developer's fee is added in.

It was hoped that construction on the building could begin as soon as 2023, allowing it to open in 2026, as the B.A.R. had reported three years ago. Mercy had sought to be selected last December for state financing, which could have allowed it to begin construction later this year. But its financing application was not selected for the highly competitive program.

"Part of what makes a site competitive is how much money it requests from the state. To remain competitive, developments are left to identify incremental alternate financing to lower their state request," Matthew Graves, a senior project manager at the mayoral office, had noted to the B.A.R. last October.

In March, Mercy applied for funding from the Affordable Housing and Sustainable Communities Program overseen by the California Strategic Growth Council and the state's Department of Housing and Community Development. The program will be allocating $675 million in funds toward various projects across the state aimed at reducing greenhouse gas emissions, such as affordable housing for disadvantaged communities and low-income communities.

For affordable housing projects, the maximum loan amount is calculated based upon the unit's level of income restriction, the number of restricted units it has, unit sizes, and location in addition to the base amount for loan calculation, according to the state agency. It noted to applicants that the initial base loan amount would be $250,000 per restricted unit, though there was a maximum amount of $35 million for affordable housing developments.

"AHSC applications are still being reviewed. Awards are expected to be announced by August," Alicia Murillo, a communications specialist for the state housing department, told the B.A.R. May 24.

Sternberg didn't disclose how much funding Mercy was seeking via the state program. She told the B.A.R. that if Mercy is selected for AHSC funding, it will then apply for tax credits through the California Debt Limit Allocation Committee and the California Tax Credit Allocation Committee.

"If we are awarded funding by August 2024, we will apply for tax credits in 2024. Receiving those credits would put us on track to start construction in summer of 2025," noted Sternberg in an emailed reply.

Because it met the legislated requirements for affordable housing projects under California's Senate Bill 35, authored by gay state Senator Scott Wiener (D-San Francisco), Mercy's housing project didn't need to be approved by the city's planning commission and received sign-off from planning department staff last May 31.

A rendering shows a garden area at the proposed development aimed at LGBTQ seniors located at 1939 Market Street. Image: TS Studio  

Requests are competitive
Last fall, the mayor's housing office allocated a per unit amount of $280,000 to Mercy in gap funding for the project's construction costs. The $52,360,000 allocation is contingent on it receiving state financing.

"Affordable housing financing programs throughout the state have become extremely competitive because the requests for money outweighs the amount of money available," noted Graves with the mayoral office. "The increasing number of applicants for financing continues to outstrip available state funding, ever increasing the competition for limited funds and straining projects' competitive metrics. This oftentimes requires an otherwise viable site to apply for funding multiple times. All affordable sites in the state are facing this issue, not just 1939 Market."

When the new building does open to tenants, 40 units will be set aside for formerly homeless seniors subsidized by the city's Local Operating Subsidy Program. Another 75 units are to serve extremely low-income seniors via the city's Senior Operating Subsidy. Nine units will be set aside for the city's Plus Housing program for homeless seniors who make 50% of the area median income, with the remaining 70 units for seniors with incomes at 50% to 60% AMI.

As with the previous two buildings overseen by Mercy and Openhouse, a lottery will be held to select the residents for who qualify for the units not specified for the city programs. Both straight and LGBTQ seniors will be able to enter it as long as they meet the income restrictions, though the aim is to see a majority of units go toward LGBTQ seniors.

Mercy will oversee construction of the housing units and provide property management for the building. Openhouse will provide services and programming to the tenants, and it could end up utilizing the space set aside for commercial purposes.

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