State Officials Looking into Supervisors’ Rejection of 467-Unit Project in San Francisco

Build, 469 Stevenson, Solomon Cordwell Buenz, San Francisco, The Miller Company, Marcus & Millichap
Courtesy of Solomon Cordwell Buenz

By Meghan Hall

The development community in San Francisco remains abuzz after the San Francisco Board of Supervisors rejected a proposal to develop 467 homes on a vacant lot owned by Nordstrom at the end of last month. The project, proposed by BUILD, was rejected after Supervisors expressed concern that the development’s environmental impact review was insufficient.

The project site is located at 469 Stevenson Street and would include 535,000 square feet of total floor area. 4,000 square feet of retail and three levels of below-grade parking were also laid out in the project plans. The 495 apartments included 192 studios, 149 one-bedrooms, 96 two-bedrooms and 50 three-bedrooms. 73 units will be designated as affordable, although 45 of the affordable units will be built off-site.

Designed by Solomon Cordwell Buenz with landscaping by The Miller Company, the project’s initial cost estimate was around $130 million, and construction was expected to take just over two years.

The rejection of the project’s environmental impact report occurred at a recent hearing, brought about by an appeal submitted by the Yerba Buena Neighborhood Consortium (YBNC). In the appeal, the YBNC contended that the environmental impact report falls short in a number of ways: First, that the shadow cast on Mint Plaza would increase, and second, that the development team and City have failed to consider seismic activity. In its appeal, the YBNC cites the Millennium Tower, which has been mired in efforts to stop its sinking. 

City staff contended the appeal in public documents, stating that that the guidelines for geotechnical and environmental evaluation require peer review and monitoring program, among other measures. Staff states that the “Appellant fails to demonstrate that the FEIR’s conclusions are not supported by substantial evidence.” 

Despite the Staff’s recommendation, however, The Board of Supervisors voted 8-3 to reverse the San Francisco Planning Commission’s certification of the project’s final environmental impact report. The decision was met with ire by some public officials.

“This arbitrary rejection of new housing by the Board of Supervisors violated state law and certainly exacerbates our housing crisis,” said Senator Scott Wiener. “Actions like this are exactly why we’re working so hard at the state level to reform California’s broken approach to housing.”

“[The project] met the criteria for approval and it would have created 100-plus new affordable homes,” tweeted San Francisco Mayor London Breed. “If you’re wondering how we got into our housing crisis, this is how.”

Breed called the supervisors’ concerns about gentrification and possible shadows “vague,” adding, “The mistaken anti-housing ideology of some Supervisors should not overrule the law and the standards that have been set for new housing projects. That’s no way to run a city.”

State attorneys are now looking into whether or not Supervisors breached either the Housing Accountability Act or CEQA in their decision. To redo the environmental impact report could take up to two years. 

In the meantime, however, San Francisco’s housing struggles will remain, even affordability. The apartment market has recovered some since the pandemic, but experts believe that future growth will remain a challenge, according to a recent report released by Marcus & Millichap. The City’s vacancy rate more than doubled, reaching 10.6 percent during 2020 and has since moderated, dropping to 7.5 percent by the end of the third quarter. Rents have declined one percent year over year, with the average effective rent sitting at $2,727 per month. During the first half of 2021, the return of white-collar office positions increased average effective rents by 17.5 percent—these numbers could continue to climb if economic recovery remains steady.

West Coast Commercial Real Estate News