City officials have raised questions about the high cost of construction in a planned rebuild of the Sunnydale HOPE SF Block 6 project. (Kevin N. Hume/S.F. Examiner)

Supes question $890K per unit cost for Sunnydale HOPE SF rebuild

Even in San Francisco, where building costs are sky high, a per unit cost of nearly $900,000 to rebuild public housing at Sunnydale is raising questions.

The 167-unit Sunnydale HOPE SF Block 6 project is on the verge of breaking ground, but approval of a $18.6 million city-loan was postponed by the Board of Supervisors Budget and Finance Committee Wednesday to unearth more details about the high per unit costs.

The postponement does not impact the project timeline, budget committee chair Supervisor Sandra Fewer confirmed with the Mayor’s Office of Housing and Community Development, which is tasked with returning next week to the committee to provide more details.

Construction is expected to start in November and units fully-leased by May 2022. The total project cost is drawn from various funding sources and totals $148.7 million, which includes $4.6 million from the 2016 voter-approved housing bond. The development team is Mercy Housing and Related California.

The per unit cost was flagged by Severin Campbell, a principal in budget analyst Harvey Rose’s office.

“We call out in our report that the per unit cost of this project is now about $890,000,” Campbell told the committee. “We consider this high.”

The report recommended the board ask the Mayor’s Office of Housing for a more detailed cost analysis.

Sara Amaral, senior project manager with the Mayor’s Office of Housing, said she would return with the details next week, but noted that in general there were several reasons why HOPE SF projects are more expensive than other housing projects elsewhere in The City.

“One of the reasons that it is so expensive in general, it’s a HOPE SF project, the topography of the sites are very difficult, they are sloped and have grading issues,” she said. “We also have relocation requirements within [the US Department of Housing and Urban Development] to move the residents onsite to these new housing [units] so that is an additional cost. And then we are also building parking, which is not necessarily something that we would see on any of our infill sites within the city.”

Fewer said that “I’d like to see some of those numbers on why the cost is so expensive.” She noted that the development of Parcel Q, the first Sunnydale HOPE SF project of 55-unit affordable housing units, had a per unit cost of $770,000 two years ago.

The Block 6 project was celebrated Sept. 25 by Mayor London Breed during a “groundbreaking” ceremony.

“Every San Franciscan deserves to live in quality housing, and we are committed to making that a reality through projects like this one at Sunnydale Block 6,” Breed said. “This new development will provide safe and modernized homes for 167 families in the Sunnydale neighborhood. As we work to build more housing in San Francisco, we must make sure that all our neighborhoods benefit from new construction and investment so that no one gets left behind.”

Of the total units, 125 will be set aside as replacement units for Sunnydale public housing households currently living onsite. The remaining 41 are for households earning up to 60 percent of the area median income and awarded through The City’s housing lottery. The unit mix includes 21 one-bedrooms, 95 two-bedrooms, 40 three-bedrooms and 11 four-bedroom apartments. All the units are for those earning up to 60 percent of the area median income, which for a family of four is $73,900 a year.

The HOPE SF program was created in 2005, when Gavin Newsom was mayor, as a solution to turn around troubled sites that suffered from federal underinvestment.

Under HOPE SF the San Francisco Housing Authority leases sites to development teams, relocates tenants into newly built units and adds more housing to the sites in a mix of market rate and affordable units.

The program comprises four public housing sites: Hunters View, Potrero Terrace and Potrero Annex, Sunnydale and Alice Griffith.

Sunnydale, in Visitacion Valley, is on a 50-acre site and has 775-units of housing for about 1,700 people.

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