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.