South San Francisco’s plans for 800 housing units close to breaking ground, but funding remains a challenge

“This is essentially a new neighborhood,” Community Development Director Nell Selander said during the meeting April 16. “Not only does it include the new housing development but also quite a bit of infrastructure.”

But since the project was approved back in 2019, it still hasn’t broken ground, and the city hopes to amend an agreement that could potentially allow developers to do so in the next year and a half.

Some of the delay was due to preparation work on the site itself.

“One of the big contingencies in this project was removing the site from the 100-year floodplain which really [didn’t allow] for any residential development there,” Selander said. “It took a couple years … now the property really can be developed easily for housing.”

However, other financing challenges — including a lack of grant funding and economic challenges that have made lending conditions difficult in the last couple years — have caused further delays. BRIDGE Housing, the original developer for the affordable housing portion of the project, withdrew its participation, meaning the current developer, L37, will need to secure another partner.

“A lot of progress has been made, but you still don't see any housing coming out of the ground, and the economic conditions really present substantial barriers to the project,” Selander said.

To help speed up the project, the Planning Commission agreed with staff recommendations to amend the development agreement that would allow the city to redirect development impact fees toward the affordable housing part of the project if other funding sources fall through, waives additional impact fees for the affordable housing component and extends the development agreement deadline to the end of 2032. It was originally set to expire at the end of 2029.

“We’ve been trying since approvals to get this thing funded,” L37 Managing Partner Eric Tao said during the commission meeting. “We’ve been scrambling to find new investments but meanwhile … we’ve been advancing the project, spending money to get the designs done to figure out how we can make this more affordable, cost-wise.”

Commissioners supported the amendments, which will ultimately go before the City Council at the end of April.

“This has been a long time coming,” Commissioner John Baker said during the meeting. “But I am pleased to see we are making some progress here."