Complex funded by former Redevelopment Agency opens with below-market-rate units

Among the 30,000 units that Mayor Ed Lee promises to build in housing-hungry San Francisco by 2020 is one of the last projects funded by The City's Redevelopment Agency before the state dissolved it — a former Goodwill warehouse damaged during the 1989 Loma Prieta earthquake and vacant since then.

Located in the middle of the former South of Market Redevelopment Project Area, 474 Natoma St. has been lifted from its blighted past and now houses residents in all 60 of its below-market-rate units, at $711 to $1,569 monthly. In line with the youth and family special-use district zoning, 40 percent of the units are two to three bedrooms, a higher ratio than most developments offering more studios and one-bedroom apartments.

“Everybody scrambled to make sure that the project was fully funded and could continue,” said Olson Lee, director of the Mayor's Office of Housing. “The City really asserted the obligation to complete this project with the remaining redevelopment funding because at one point, that money was supposed to go away.”

Constructing the 60 units of permanently affordable housing was “incredibly expensive,” Mayor Lee noted at a ceremonial ribbon-cutting Tuesday. They cost $31 million, more than $500,000 per unit.

“We've got to do more units and we've got to get control of the man cost as well,” the mayor said.

So far this year, 2,543 units have opened, putting The City on its way to its 5,000-unit per-year goal, with at least a third being below market rate and affordable to low- and middle-income families.

Originally, 474 Natoma was intended to be a below-market-rate home-ownership building, but the recession changed its course.

One more project remains in the South of Market redevelopment area — the former Hugo Hotel around the corner on Sixth Street. The site, which for years had a hanging furniture art installation, got only partial redevelopment funds and the rest will be fronted by the Mayor's Office of Housing. It will be torn down in September and the new building — another 60-some units at below-market-rate rent — is expected 18 months after that.

“The irony of the state government having dissolved redevelopment is it actually built a tremendous amount of housing in the Sixth Street area,” said Peter Cohen, co-director of the San Francisco Council of Community Housing Organizations.

While the Redevelopment Agency dissolved in 2012, The City is permitted to build out and wind down the Transbay Transit Center, Mission Bay and Hunters Point Naval Shipyard redevelopment project areas over the next 20 to 30 years because the state recognized the development contracts at the time.

In the South of Market vicinity, the Mayor's Office of Housing is also funding below-market-rate projects at 1036 Mission St. and another property at Fifth and Howard streets.

Supervisor Jane Kim said she was pleased to see that many residents at 474 Natoma, which opened in February, had lived in the South of Market for a long time. Among them was Lolly Gilbert, 63, a part-time certified nursing assistant who used to live a block away in a single room.

“When I had a chance to move here,” she said, “It was an answered prayer.”

Correction: This story was updated July 30 to correct the address of the apartment complex, 474 Natoma St.

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