Concerns over a $380 million funding gap for affordable housing in the planned massive redevelopment of Treasure Island prompted the Board of Supervisors on Tuesday to postpone a vote on the project.
Members of the board said they want to see a more specific financial plan to close the affordable housing funding gap before voting to approve special financing districts. Those districts would capture property taxes and assess a fee to help fund development of some 8,000 new homes on Treasure Island and a portion of the nearby Yerba Buena Island.
Supervisor Aaron Peskin, who recommended the postponement until Nov. 15, noted that when the development was first approved in 2006 the affordable housing promised was 30 percent. Later, it dropped down to 25 percent, but has since “crept up to” 27 percent, according to Peskin.
He said “that promise will not be met” if The City cannot close the funding gap. The plan is to offer 2,173 of the total units at below market rate, affordable to those earning up to 120 percent of the area median income. The average of the affordable housing units would be for those earning up to 50 percent of the area median income.
Bob Beck, director of the Treasure Island Development Authority, mentioned several ideas he is exploring along with The City’s departments to close the funding gap, such has having the state reconstitute the redevelopment agency or revenues from vehicle license fees.
“Throwing out general ideas about how we are going to do this isn’t enough,” Peskin said. “We need to really have a written-down series of strategies.”
The board unanimously approved of the postponement after Beck said the delay wouldn’t jeopardize the project.
“The developer is moving forward with projects on the island, and so there is some urgency to setting up the financing districts,” Beck said. “But as long as we continue to move the process forward, I don’t think there is a fatal flaw to moving it out.”
The gap was identified during the past year and is largely attributable to the increase in construction costs since 2011. Per-square-foot affordable housing costs have increased from $220 to $325, Beck said, for a total cost of $970 million, of which there is a $380 million funding gap.
Treasure Island is a former U.S. Navy base, which closed in 1993. As a condition of transferring the land to The City, the Navy is remediating the contaminants. Complete transfer is expected by 2021.
The special financing districts include an Infrastructure and Revitalization Financing District that would capture a total $1.2 billion in property taxes over 43 years to help fund the development. The project is being constructed by a team of developers, including Lennar Corp.
A Community Facilities District would also be established and assess a fee to pay for such things as park maintenance and protections from sea level rise.
San Francisco’s smaller developers, specifically those with projects of 25 units or less, will have another alternative to comply with The City’s affordable housing requirements by contributing to a public program that purchases buildings, under a new proposal introduced Tuesday by Mayor Ed Lee with the support of Supervisor David Campos.
Under the current rules, a residential developer must pay an Affordable Housing Fee or provide onsite or offsite below-market-rate units. The legislation would create the option for a developer to contribute required affordable housing fees to The City’s small sites acquisition program, which began in 2014, to purchase buildings where long-term residents are at risk of being displaced within a mile of the development site.
“We need to make sure that the development benefits actually stay in the neighborhood where the development is taking place,” Campos said.