State gives $36M for controversial affordable housing in SF’s Sunset

The state has given a controversial affordable housing project in San Francisco’s Sunset District its largest initial funding payout: $36 million.

The Department of Housing and Community Development awarded a grant for the 90-unit, seven-story complex at 2550 Irving Street, the San Francisco Chronicle reported.

The project, developed by San Francisco-based Tenderloin Neighborhood Development, is projected to cost at least $1.17 million per unit. It aims to break ground late this year.

The low-income housing development has been bitterly fought by a neighborhood group, which initially said the nonprofit developer failed to sufficiently engage the community and address concern over its size and scale.

The state grant came days after a four-hour hearing at the city’s Board of Appeals, where attorneys for the Mid-Sunset Neighborhood Association argued that, in approving a demolition permit needed for the project, city and state regulators ignored evidence of onsite toxins. 

Plans call for demolishing a one-story San Francisco Police Credit Union building. It would be placed by a 90-unit, all-affordable complex, of which half would include two- and three-bedroom apartments, according to the project website.

Attorney Enoch Wong, who represents the neighbors, said the California Department of Toxic Substances Control failed to investigate toxins from a dry cleaner located decades ago on the north side of the development site. He cited an absence of testing in the demolition plans.

“We are asking them to collect soil samples at certain, specific locations during the demolition process,” Wong said. “It’s critical to do it during demolition. If you wait, you are going to destroy the evidence. Just collect the soil. Ship it out and test it.”

The all-affordable housing project was given a green light in December 2021, after a judge ruled against the neighbors’ request for a temporary injunction to halt the development.

The latest skirmish comes a week after the state approved San Francisco’s housing element, which requires the city to build 82,000 units over the next eight years, of which 46,000 units must be affordable to low- and moderate-income households.

The state-mandated housing plan focuses on westside neighborhoods such as the Sunset District, which in recent decades have produced no affordable homes.

While the Board of Appeals continued the neighbors’ appeal, Mayor London Breed blasted the delay on social media. 

“This obstructionism is unacceptable,” Breed said on Twitter. “This project must move forward and we need to reform our laws so we can build the homes we badly need.”

The mayor this month announced a Housing for All Plan to meet the state-imposed housing goals. Her executive order rezones parts of the city, lowers fees, slashes red tape and other obstacles to development.

The mayor says that state housing officials — who have launched a probe into the city’s glacial housing approval process — are more inclined to finance San Francisco projects if the city acts swiftly to rezone swaths of the city and remove barriers to building homes.