South San Francisco OKs new 480-unit improvement amid labor issues | Native Information

The South San Francisco City Council this week reluctantly granted initial approvals to allow a 480-unit housing development despite concerns that the project will not use union labor.

The development will consist of two seven-story buildings slated for 100 Produce Ave. and 124 Airport Blvd. with a combined 743,700 square feet. Last month, councilmembers stopped short of granting the approvals, hoping the developer, Hanover Company, would agree to employ union carpenters. While an agreement was reached for the project to use electric water heaters, also among previous council concerns, union carpenters, a Hanover representative said, would not be hired due to added costs.

“This is not a perfect project by any means, this is not a good project, this is not a stellar project,” Council member Eddie Flores said. “I want other folks, other projects to learn from the mistakes from Hanover, and to do better.”

But with a 4-1 vote, councilmembers ultimately conceded the benefits would outweigh the cost as the site near downtown, currently 1980s-era light-industrial buildings surrounded by parking lots, would likely remain in its current state for the foreseeable future if the proposal was rejected.

Councilmember Mark Addiego said that while he was too concerned with the lack of union labor, the new development would generate upwards of $2.5 million annually, a massive jump from the estimated $200,000 tax revenue from current use. That, combined with $11.7 million the developer would pay in impact fees, would benefit the community in many ways, he said.

“It’s all of those things that I’m weighing tonight because I have that great fear that Hanover will tuck their tail and run back to Texas and [the property owner] will operate offices and warehouses from yesteryear for a very long time,” Addiego said.

The development is planned to contain 15% below market rate units, 60 units in total with 40 units affordable to people earning 80% of the area median income and 20 units affordable to people earning the area median income. Units suitable for a household of two in these categories would cost approximately $2,927 and $2,992 per month, respectively.

South San Francisco Chief Planner Tony Rozzi noted the challenges associated with the site, including the adjacent train tracks, major roads, freeway and on-ramp. Nell Selander, deputy director for the city’s Economic and Community Development Department, also pointed to “market realities associated with redeveloping an occupied and high-value site.”

“All of the easy sites are gone, they have been developed,” Rozzi said. “The sites that we have left that we are trying to provide housing on require creativity and flexibility, certainly on our part.”

The development will provide various “community benefits” in addition to the impact fees — among them upgrades to surrounding roads and improvement to a nearby pedestrian tunnel under the train tracks. Those, plus the electrification of water heaters, would cost another $7 million, Scott Youdall, a development partner at Hanover, said.

Youdall estimated the use of union carpenters would cost an additional $15 million to $20 million.

Mayor Mark Nagales queried whether Hanover could include less parking in the development and instead hire union workers, adding that the priority should be on housing “people not cars,” especially given the project’s location a half mile from the South San Francisco Caltrain station and 1 miles from a BART station. The first two floors of both buildings will be parking garages totaling 560 spaces, and according to the developer, removing parking would require an entire redesign.

“If you had listened from the beginning and reduced your parking spots further, you would actually have saved money and maybe we would have been able to hire local workers here,” said Nagales, who requested that future projects near transit place a reduced emphasis on providing parking.

“I’m upset, I’m angry, because this city has a reputation for building affordable housing, that’s what we’re known for up and down the county,” he said, addressing Hanover. “We also have a reputation of supporting our men and women of labor and I just feel like you put us in a corner, and I’m absolutely upset because of that.”

Council member James Coleman, who voted against the project, said that while housing was “very necessary,” it should not be built “at all costs.”

“I do want to move forward, but I don’t want to leave anybody behind, and so I’m in this tough situation,” he said.

The developer next will seek entitlement approvals from the city.