San Francisco advanced plans Wednesday to create special financing districts on Treasure Island as part of a major redevelopment of the manmade island, while also vowing to close a funding gap for planned affordable housing.
Some 8,000 new homes are slated for construction on Treasure Island and a portion of the nearby Yerba Buena Island, along with 300 acres of parks and open space, 551,000 square feet of retail and office space and up to 500 hotel rooms.
To help fund the massive redevelopment, The City intends to create an Infrastructure and Revitalization Financing District for Treasure Island and Yerba Buena Island to capture property taxes generated there for reinvestment in the area — as opposed to flowing back into The City’s general fund — that will reimburse the developer for the cost of certain public improvements.
The estimated amount that would be generated by the financing district is $1.2 billion over 43 years. The City would also create a Community Facilities District, which would assess a varying fee on properties, to pay for such things as park maintenance and protections from sea level rise.
The proposal was heard before the Board of Supervisors Budget and Finance Committee on Wednesday, and the full board is expected to vote on it next week.
The City is advancing the plans as development on the island has begun this year. The U.S. Navy first transferred parcels of the island last May to the Treasure Island Development Authority.
Treasure Island is a former U.S. Navy base, which closed in 1993. The Navy is remediating the contaminants and plans to transfer all of its land holdings.
“There are significant additional areas that will be transferred over the next 18 months, with the final transfers happening at the end of the 2020 and 2021,” said Bob Beck, director of the Treasure Island Development Authority.
“We have begun demolition on the island,” he added. “All of the obsolete structures on Yerba Buena have already been demolished, and the demolition of the Star Barracks, as they are referred to on the waterfront on Treasure Island, is underway.”
Of the 8,000 homes, The City plans to ensure 27 percent — or 2,173 — are offered at below market rate, meaning they are affordable to those earning up to 120 percent of the area median income.
Treasure Island Community Development, LLC, which includes Lennar Corporation, was selected to lead the project in 2003. In 2011, the board approved a financing plan for the development that included the creation of these two districts, and in 2014, the board approved the purchase of the land from the Navy for about $117 million.
During the hearing it was revealed that there was a funding gap for the creation of the affordable housing units. Beck said that TIDA is working with city departments like Mayor Ed Lee’s budget staff and the City Controller’s Office “to analyze some alternatives for closing that gap.”
Such efforts include “local resources, some of which would be generated by the project, as well continuing to try and seek support at the state level,” he said.
In 2011, The City had planned to build 1,684 affordable units with an estimated cost of $600 million, according to Nadia Sesay, director of the Office of Public Finance in the Controller’s Office.
But since then, construction costs have increased and there was a loss of federal and state subsidies creating a shortfall along with the fact that The City is now planning to deliver 2,173 affordable housing units. “These factors have increased the projected cost to deliver the affordable housing to $970 million and a preliminary gap of $380 million,” Sesay said in an email to the San Francisco Examiner.
She noted, “We have a strategy that will allow our first two parcels —available in 2018 — to move forward on schedule.”
If the Board of Supervisors approves the proposal next week, the board will hold an election on the formation of the financing district on Dec. 6.