The 117-unit development at 2675 Folsom St. near 23rd Street. Design by David Baker Architects.

Activists and the developer of a 117-unit mixed-use project at 2675 Folsom Street have come to an agreement under which the activists opposed to the development will drop their appeal and the project will be able to go forward. As part of the agreement, the developer of the project will make more than 5,000 square feet of arts space available to a nonprofit nearly for free for the next 55 years and will purchase eight units of existing housing to hand over to a housing nonprofit.

Supervisor Hillary Ronen acted as the mediator between the Calle 24 Latino Cultural Corridor group, which had appealed the project, and Axis Development. Under the deal, counting both 23 on-site and eight off-site units, an equivalent of 27 percent of the project’s units will be below-market-rate, compared with 20 percent in the original proposal.

The deal is the second brokered by Ronen between Calle 24 and a developer in the Latino Cultural District, with the other at 1515 South Van Ness Avenue yielding a million-dollar donation and a temporary homeless shelter.

“I think we’ll keep pushing any other developers that come here,” Arguello said. “We’re setting a different kind of standard, not just for the Latino Cultural District, but for the whole neighborhood.”

“When developers are willing to work with the community good projects can be built quickly,” Ronen said in a statement. “My door is always open to any developer or community member who wants to be part of the solution and will help us build affordable housing.”

The eight off-site units will not be built at a later date, unlike off-site units provided by many other developers. Instead, Axis will purchase eight units of existing housing and bring them into the city’s small sites program, which preserves buildings with relatively few units that currently house rent-controlled, low-income tenants at risk of displacement. The buildings Axis agrees to buy will then be transferred to a Mission-based nonprofit to maintain and manage as affordable housing units.

The deal also includes an agreement that Axis will lease 5,200 square feet of ground-floor space to an arts nonprofit for just $1 per year for the next 55 years.

Axis also agreed to use only union labor in the construction of the project, and offer 4,000 square feet of free outdoor community art gallery space on a publicly accessible walkway between Folsom and Treat streets.

Both arts spaces are to be managed by a Mission-based nonprofit, though one has not yet been named.

A mural along the side of the building that currently stands on the site, a restaurant fixture warehouse, was painted by children attending Jamestown Community Center and Cesar Chavez Elementary School. That mural will be removed, but under the agreement, it will need to be taken down intact enough to be reconstructed elsewhere. Axis must develop a new mural with the original designers in a publicly accessible location, as well as collaborate with Calle 24 on another mural on the wall of the building that faces Parque Niños Unidos.

Members of the Axis Development Group could not be reached for comment by press time, but made a statement released through Ronen’s office.

“We are thrilled to have reached an agreement with Calle 24 and look forward to bringing new homes to the Mission. We appreciate Supervisor Ronen for taking a leading role in making this outcome happen. The Latino Cultural District is deeply important to the Mission and we are proud that our project will add much-needed housing, good jobs, and substantial art and culture space for local artists,” wrote Muhammad A. Nadhiri, Managing Partner at Axis Development Group, in the statement.

An appeal of the project on environmental grounds, brought by Calle 24, has been scheduled to be heard at the Board of Supervisors several times and tabled in order for the parties to reach an agreement. Its next hearing would have been Tuesday afternoon.

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