An $8 million proposal to relocate residents displaced by the Central Subway project moved forward on Monday.

Muni’s plan to extend underground Metro service from the SoMa District to Chinatown requires the demolition of a Stockton Street building housing 18 residents. Since the units will not be rebuilt at the same location, The City is required to replace the housing elsewhere before the project can move forward.

On Monday, the Board of Supervisors’ Land Use and Economic Development Committee recommended approval of the Chinatown Transit Station Special Use District that will enable the replacement housing. Final authorization is expected Tuesday.

As part of the project, the San Francisco Municipal Transportation Agency has granted an $8 million loan to the Chinatown Community Development Center to provide permanent housing for the displaced residents.

Under the terms of the deal, which was made in conjunction with the Mayor’s Office of Housing, the CCDC need not repay the loan, which will go toward construction of a development at Broadway and Sansome streets.

The CCDC, an influential community organization and supporter of the Central Subway project, has been the subject of conflict of interest inquiries concerning Mayor Ed Lee. Yet the loan proposal was first conceived under Mayor Gavin Newsom and approved by the SFMTA’s board of directors in 2010, before Lee was mayor.

wreisman@sfexaminer.com