Martin Building Eyes Workforce Housing on SF’s Nob Hill

Martin Building wants to build a 22-story apartment building to include affordable workforce housing on San Francisco’s Lower Nob Hill.

The locally based design-and-build developer, led by Patrick McNerney, has filed plans to build the 303-unit highrise at 1101-1123 Sutter Street, the San Francisco Chronicle reported. It would also restore a historic auto repair shop and parking garage.

The key was financing — in particular, a state program that funds “workforce housing” for up to 120 percent of area median income. Affordable housing construction subsidies are capped at 80 percent of AMI.

Martin Building also won a key waiver to a water recycling ordinance that applies to large buildings.

The California Housing Finance Agency mixed-income program offers “competitive” financing for new construction multifamily housing for households earning between 30 percent and 120 percent of AMI, according to the Chronicle.

In San Francisco, that housing could serve two-person households who make between $36,000 and $144,000 a year. The Martin Building project will include 101 affordable workforce units, a third of the apartment tower, for households earning about $60,000 for a couple of $75,000 for a family of four. The remainder would be market rate.

The Sutter Street project was the only applicant from San Francisco to get funded among 13 approved by the housing financing agency, out of 25 funding requests.

The state program is providing Martin Building with $54 million in tax credits and loans, a quarter of the cost of the $220 million project. A loan from the Department of Housing and Urban Development will finance the balance.

McNerney said he had entitled the project for 221 units across 14 stories, then “went out searching for alternative funding sources.” He found the state mixed-income program, which he realized could work with state density incentives to add six stories and 80 units of affordable housing.

“It’s this obscure program — when you get desperate, you start looking around and turn over every stone you can,” McNerney told the Chronicle.

Plans call for 303 apartments atop ground-floor shops and restaurants and a 4,000-square-foot childcare center, according to Martin Building’s website. The project, designed by locally based David Baker Architects, would have a courtyard, fitness center, “dog oasis,” and rooftop deck with hot tub.

The project will also move forward after the Board of Supervisors Land Use and Transportation Committee approved a water ordinance exemption to allow some mixed-income developments to accept the state tax-exempt bond financing and tax credits.

Such financing and credits are generally used for 100-percent affordable projects built by nonprofits, rather than mixed-income projects built by for-profit firms such as Martin Building.

Martin Building, founded by McNerney in 1989, has redeveloped more than 30 buildings in San Francisco, according to its website. Notable developments include Mint Plaza, the first voluntary Downtown street-to-plaza conversion.

— Dana Bartholomew