A city-owned building and aging mall in South San Francisco could one day be the site of a first city designed, operated, and sub-market developed by the city.
The idea was presented this week by Councilor James Coleman and the council agreed to move the idea forward and directed staff to conduct further research on this option. The planned development would include retail space combined with up to 1,000 units of affordable housing for residents of different income groups.
“This gives us an opportunity to try something new,” said Coleman. “Because right now we are living in the most separated time in American history.”
The existing building at 33 Arroyo Drive, currently the city’s municipal service building, will no longer be needed after the completion of a new community center across the street. The council hopes that the owners of the shopping center will work with the city on the proposed housing project.
Unlike other affordable housing developments, the proposal is unique in that the city is both owner and operator. While other cities, including San Francisco, have done this, it would be a first for South San Francisco.
The endeavor could prove difficult for the city, said Nell Selander, deputy director of the department for economic and community development.
“We are really not set up to operate apartments,” said Selander. “At least not on a large scale, and that would be a major boost for this city.”
The city traditionally works with property developers, often non-profit organizations that build and manage the property on projects below market price. The city would have to hire more staff – possibly even create a new department for this task.
However, Mayor Mark Addiego said he would like to see the city go ahead with the project anyway.
“When we go to bed with nonprofit developers, we give up property tax,” said Addiego. “At some point that has an impact on the entire operation that she may not be able to support. You need your healthy tax money so that everything works. “
Coleman said a private developer would not be able to maximize the potential for affordable units on the site because they would be interested in profit.
Logistical challenges aside, the final feasibility of the project will likely depend on the voters by June next year. According to Article 34 of the California Constitution, voters must first approve any publicly funded home. Last month the council instructed staff to work out a voting measure to this end.
If an agreement cannot be reached with the owner of the shopping center, the city could build a smaller residential complex with a maximum of 400 units on its share of the property. The urban part of the property is 2.2 hectares, while the mall is on 4 hectares.
A non-city-run development could also be built, using traditional developers to either a market-driven, partially affordable or fully affordable housing project.
Councilor Buenaflor Nicolas was in favor of the urban idea, but also recommended that the city find an affordable housing company in case things didn’t work out.
“It’s a great plan, it’s in the transit corridor, it’s a really first class property,” she said.
Vice Mayor Mark Nagales expressed his approval of the city-led idea.
“Here is an opportunity to really make a difference by trying to do what we’ve always talked about and make sure we have affordable housing,” he said. “We could possibly have a project that does this.”
City officials will present their results on the proposal at a future city assembly.