City College of San Francisco has cut an $11.5 million deal with developers to replace an office building located just south of Market Street with a mixed-use development, putting a dent in the college’s fiscal woes.
After years of planning and a green light on the agreement from a private consultant, the CCSF Board of Trustees approved the ground lease for 33 Gough St. last Thursday with developers Equity Community Builders and Integral, an Atlanta-based firm.
The two-story building that currently sits on the 46,500-square-foot parcel was built in 1950 and is home to a CCSF business office and a workplace for the vice chancellor of finance and administration.
The developers are expected to build at least 5,000 square feet of retail on the bottom floor, as well as between 150 and 425 units of housing. At least 33 percent of the on-site units will be rented at below market rate and mixed with the market-rate units, according to the lease.
The multimillion dollar agreement comes as CCSF faces a more than $35 million fiscal cliff with state stability funding expiring next school year. For three years, the state allocated additional funding for the college to offset the decline in its enrollment, caused by the school’s accreditation crisis. CCSF remains open and fully accredited today.
“That puts pressure on the budget all over the place,” said CCSF spokesperson Jeff Hamilton. “This particular deal does in fact [help alleviate that pressure].”
Interim Chancellor Susan Lamb was expected to sign the first part of the agreement with the developers last Friday, which comes with a $500,000 payment. CCSF will receive another $5 million with the signing of the ground lease within two months and the final $6 million when the developers signs a construction loan.
The college stands to bring in upward of $400,000 a year in rent after construction under the 75-year lease.
CCSF’s Board of Trustees has not yet decided what to do with the revenue from the deal, according to board President Rafael Mandelman, but the college has indicated that the funding should be used to remedy its backlog of deferred maintenance.
“The transaction is a good opportunity for the college to help provide affordable housing to The City while also ensuring income, which will provide for ongoing deferred maintenance needs,” Hamilton said.
CCSF has between $350 million and $400 million in deferred maintenance, according to Hamilton.
The college could also use the funds on projects prioritized in the Facilities Master Plan, technology upgrades at its various campuses or on the redevelopment of the former Civic Center Campus at 750 Eddy St.
CCSF administrators abruptly shut down the more than century-old building that housed the Civic Center Campus last year over seismic concerns — unreinforced masonry, old piping and faulty electrical systems that amount to deferred maintenance.
A $9 billion state facilities bond on the ballot this November would put forth the money needed for those renovations, though CCSF is considering using private funds to reconstruct the entire building and create faculty and staff housing.
Together with the development deal, Hamilton said the college is crafting “a more robust funding stream.”