With land offer for affordable housing on the table, no buyer steps up

2918 Mission Street. Photo by Lola M. Chavez

The idea for property owner Robert Tillman to strike a deal with the city was first floated publicly at a community meeting in 2016. He was pitching 55-unit development on his property at 2918 Mission St., currently home to a laundromat, and neighbors didn’t take kindly to it.

Amidst the angry exchanges in the meeting, there was one that might actually lead to more affordable housing being built:

“The best thing to do is to sell the property to the city,” Calle 24 Latino Cultural Corridor President Erick Arguello told Tillman at the meeting.

Tillman didn’t hesitate. “Where do I sign?”

As it turns out, however, selling one’s property to the city is not so easy. After the community  meeting Tillman followed through, sending emails to the Mayor’s housing liaison Jeff Buckley, to District 9 Supervisor Hillary Ronen, and to various neighborhood groups. He said he got no response from the supervisor, but has been in talks with the advocates.

Housing specialists say that selling property to the city is not as easy as one might think.

For one, some say owners like Tillman want more than what the city can offer.

To set his price, Tillman looked at what the city paid in 2015 for 490 South Van Ness Ave at 16th St.  The developer planned 72 units, had all of the permits ready to go and the city forked over $260,000 per unit, or $18.5 million. So Tillman estimates that in today’s market his 75 planned units are worth between $200 to $250,000 per unit.

Others say that is too high. First, unlike 490 South Van Ness, Tillman is close to, but not all the way to, completing the permitting process – a turn-key plus. Estimates of how much value that adds range from thousands of dollars to double the property value.

Moreover, the per-unit basis could be thrown off in this case, because while studios are appealing to market-rate developers, city planners have noted a shortfall of family-sized units. If the floor plan changes, the unit count comes down. Current plans at 2918 Mission call for 18 studios, 27 one-bedrooms, and 30 two-bedrooms

And, in retrospect, some say the city paid too much for 490 South Van Ness.

“The 490 South Van Ness property kind of sold for more than it was worth, but that’s kind of set a very high bar,” said J. Scott Weaver, a retired attorney who now volunteers his time filing appeals, assisting tenants, and acting as an intermediary for a variety of neighborhood nonprofits. He has worked as an unofficial liaison between neighborhood groups and Tillman.

Weaver noted that the turn-key attraction of the property did increase its value.

“In one sense it’s appealing, because you have [it all] entitled, so you can build so much faster. In the other sense it’s not appealing, because you pay more for it,” Weaver said.

Another factor is simply the market cycles, said Louis Cornejo, a realtor with Urban Group. The money that fuels development is managed by people with an eye on the market’s cycles.

“You have to keep in mind, at that point in time, buying properties was very competitive, it’s not like today. There was an abundance of capital out there,” Cornejo said.

That has changed and the market is now correcting, Cornejo added.

“The city doesn’t have a great deal of funding for affordable housing,” said Phil Lesser, President of the Mission Merchants Association. “If the city had a unique situation of a bundle of cash like it did with 490 South Van Ness, yes Bob would sell to them.”

While it’s unclear how much money is in the city’s coffers from inclusionary fees from other developments, funding from a major $350 million housing bond has long been spoken for.  

With the 2016 election upset, the federal department of Housing and Urban Development, and with it state and local housing departments, are facing cuts.

“When he first started asking …Obama was president and we weren’t facing a $6 billion hit for HUD,” said Mission Housing Development Corporation Executive Director Sam Moss, who had early talks with Tillman about the property. Plus, “It’s not like there’s a specific pot of money to apply for for what Bob’s suggesting.”

Realtors and others said Tillman might have more luck on the open market.

According to Cornejo, a comparable property with approvals for 24 units recently sold for $5.5 million on Cesar Chavez Street, which works out to about $229,000 a unit.

Still, Tillman has other ideas for keeping the land for affordable housing.

“If San Francisco does not have the up-front money to purchase the property, I am also willing to provide a long-term ground lease on the site,” he wrote in an email.

The Mayor’s housing liaison, with whom Tillman said he had met, did not respond to requests for comment, but it has appeal.

“Personally I think it’s an elegant solution, because the city doesn’t have to put millions and millions of dollars right away,” Weaver said.

For now, it remains to be seen how administrators will respond to Tillman’s offer — though it’s clear most everyone involved sees the site as a good one for sorely needed affordable housing.

“Personally, I think that the site would be ideal for teacher housing, particularly as it is next to a school,” Tillman wrote.

You may also like:

4 Comments

  1. John Thompson

    “”First, unlike 490 South Van Ness, Tillman is close to, but not all the way to, completing the permitting process – a turn-key plus. Estimates of how much value that adds range from thousands of dollars to double the property value.””

    This is the problem in a nutshell. Just completing the permit process potentially doubles the proerty value? That is fucking insane!!! Take the restrictions off the developers and housing wont cost so much to build.

    This is where the activists should be spending their time. If developers didn’t have to wait 5-10 years to build, housing would be WAY cheaper. 5-10 years of an empty lot is a lot of property tax and tax interest that must be recooped when they sell the finished product.
    THis is why only luxury housing is built. If the city allowed more density and quicker turnaround times to build, developers could make millions on below market rate housing.

  2. Sally Yu

    Eric Arguello and his dumb ideas mucking up kinda folks in the Mission again. Tillman wasting his time and energy trying to get city to buy his property. Why doesn’t he ask MEDA to take it off his hands? MEDA missing from some of the other properties attempting to be developed too more recently. They realized they have a problem on their hands.. they can no longer finance the projects they are attempting to develop. HUD is clamping down and now they are in for a lot of hurt as their promises for affordable housing are starting to vanish.

    If the city can’t afford this site who will wants to give it to the city on a platter and can’t make it happen, how do they intend to finance 100% affordable at 1979 Mission? Stupid people like Eric and MEDA are the reasons SF is so dysfunctional and the only people they hurt the most are the people living in the Mission.

  3. Matt Smith

    Forcing developments to build 2-3 bedrooms is a way of keeping gay men from owning. Only a tiny number of gay men have kids in SF.

  4. Rpbert Tillman

    I am the owner of the parking lot and laundromat at 2918 Mission St. For the past four years, I have worked to build at 75-unit rental project on this site. My project will be heard by San Francisco Planning Commission on Thursday, September 14, 2017.

    If you agree that San Francisco needs more housing and that this project should be built, I would greatly appreciate you sending a letter or email of support to:

    Linda Ajello-Hoagland
    Planner
    San Francisco Planning Department
    1650 Mission Street, Suite 400
    San Francisco, CA 94103
    415-575-6823
    linda.ajellohoagland@sfgov.org

    You can download from Dropbox complete project plans here. https://www.dropbox.com/s/xowpyi2pkrwh50v/170515%202918%20Mission%20-%20UDAT%20comment.pdf?dl=0

    You can review complete project due diligence files here. https://www.dropbox.com/sh/emfxnwy87u48745/AABPm0NmxlM2mGwXL0leuJDha?dl=0

    Key facts:

    1. The site measures 11,653 square feet, consisting of a 6,453 square-foot parking lot and a 5,200 square-foot single-story building used as a laundromat. I have owned the laundromat since 1998 and the property since 2005.

    2. The existing building has no historical value per the San Francisco Planning Department’s South Mission Historic Resource Survey Map. http://sf-planning.org/south-mission-historic-resource-survey-map

    3. The new building height will be 8 floors, containing 6,954 retail square feet on the first floor, and 75 rental units on the top seven floors (18 studios, 27 one-bedrooms, and 30 two-bedrooms).

    4. Seven of these rental units will be Very Low Income (50% Area Median Income) and one of these rental units will be Low Income (55% Area Median Income), thus fully complying with both the State Density Bonus Law https://leginfo.legislature.ca.gov/faces/codes_displaySection.xhtml?lawCode=GOV&sectionNum=65915
    and with the inclusionary legislation passed by the Francisco Board of Supervisors on July 18, 2017. https://sfgov.legistar.com/LegislationDetail.aspx?ID=2909828&GUID=BB4FBE55-FF04-442F-A446-832E61E18CB8

    5. The units average 360 square feet for studios, 613 square feet for one-bedrooms and 833 square feet for two-bedrooms. This smaller square footage per unit helps make both affordable and market rate rents “affordable by design”.

    6. The project design provides for no automobile parking, as requested by the neighboring Zaida T. Rodrigues Early Education School and strongly encouraged by the San Francisco Planning Department. Thus, there is no traffic increase on Osage Alley and, with the removal of the current parking lot, a traffic reduction on Mission Street. The project is one block from the 24th and Mission BART station, on major bus routes, and targeted toward renters who live and work in San Francisco. It has a 99 Walk Score and a 99 Bike Score. https://www.walkscore.com/score/2918-mission-st-san-francisco-ca-94110

    7. The project displaces no existing housing or Production, Distribution or Repair (PDR) space. It displaces no business except my own laundromat. There are numerous other laundromats nearby, including three competitors within 300 feet.

    8. I have reached out extensively to the Mission community, including meeting on many occasions with Mission activists, community groups and neighbors, posting my project plans and complete project files on Dropbox for anyone to download, and sending out multiple project updates to the almost 23,000 Nextdoor users in the Mission.

    9. I have numerous times both publicly and privately offered to sell the project at fair market value to San Francisco for use as 100% affordable housing. See: With land offer for affordable housing on the table, no buyer steps up https://missionlocal.org/2017/08/with-land-offer-for-affordable-housing-on-table-no-buyer-steps-up/

    10. San Francisco is experiencing the worst housing crisis in the United States. This project adds 75 units of new housing on a major transit corridor one block from a BART station without displacing anyone. If new housing cannot be built in San Francisco on such a site, then where can it be built?

    Thank you in advance for your letter of support to the Planning Department.

    Please contact me via email or telephone if you have questions.
    Sincerely,

    Robert R. Tillman
    415-332-9242 Telephone
    415-332-2639 FAX
    415-297-9242 Mobile
    rrti@pacbell.net

    P.S. Below is a sample letter of support:

    Dear Ms. Ajello-Hoagland,

    I live at _____________________ and am writing to support building the proposed 75-unit rental project at 2918 Mission St. San Francisco is experiencing the worst housing crisis in the United States. This project adds 75 units of new housing on a major transit corridor one block from a BART station without displacing anyone. If new housing cannot be built in San Francisco on such a site, then where can it be built? Please approve this project as proposed.

    Further, I urge San Francisco to purchase this project at fair market value for 100% affordable housing, as has been offered by its owner.

    Sincerely,

Comments are closed.

Full name required to post. For full details, read our Policy