S.F. Power Plant Set to Become New 'Neighborhood' with 2,600 Homes, 1.6 Million Feet of Commercial Space

Source: sfchronicle.com

Developer Enrique Landa plans to convert the former Potrero Power Station project site in San Francisco into a property that will house a combination of residential, commercial and office buildings as well as a hotel and water transit dock.Developer Enrique Landa plans to convert the former Potrero Power Station project site in San Francisco into a property that will house a combination of residential, commercial and office buildings as well as a hotel and water transit dock. Jessica Christian/The Chronicle

Developer Enrique Landa has insisted that the success of large-scale redevelopment projects, such as the one he is overseeing on San Francisco’s southern waterfront, hinges upon their “momentum.”

Perhaps it’s a self-fulfilling prophecy, but Landa has stuck by his conviction in guiding the adaptive reuse of a once-mighty, 29-acre industrial site that housed a power plant and sugar factory at the edge of Potrero Hill and the bay into a new neighborhood. So far, he hasn’t missed a single deadline — even as the market crashed around him in the wake of the pandemic. 

Landa and his team at Associate Capital went from securing entitlements for the so-called Power Station project in April 2020 to laying its infrastructure in just two years. And, on Thursday, they were to break ground on the first of several residential buildings approved to rise on the site.

The planned building’s future address is 1212 Maryland St., but for now, it’s a plot of dirt known as Block 7b. Once completed, it will rise 85 feet and provide a mix of studios and one-bedroom apartments. The building’s first residents are expected to move in during the third quarter of 2025 — the John Stewart Co. will manage it. 

Construction workers drive tractors on the site of the Potrero Power Station project site in San Francisco, where vertical construction will begin on a middle-income housing project.

Construction workers drive tractors on the site of the Potrero Power Station project site in San Francisco, where vertical construction will begin on a middle-income housing project. Jessica Christian/The Chronicle

The Power Station site is entitled for a total of 2,601 homes, 1.6 million square feet of commercial space, a 250-room waterfront hotel and close to 100,000 square feet of retail uses.

Vertical construction is a major milestone, not only for the Power Station project, but also for the city. San Francisco has seen construction slow, or stop outright, at other large projects that have promised to deliver much-needed housing, but are struggling to navigate the financial challenges of the pandemic. 

The first vertical construction at the Power Station will result in 105 units of workforce housing, meaning that they will target residents making an average of 80% of the Area Median Income, or AMI. These are “your staff at the San Francisco Unified School District, they’re your entry-level teachers — they’re the people we want in the community,” said Landa.

Workforce or “missing middle” housing has been historically hard to finance. Landa said that the Power Station building will be the first project to use the CalHFA Bond Recycling Program as the primary source of debt financing.

“It’s been used to fill gaps, but it’s never been used to finance a whole building,” said Landa.

Traditional financing for affordable housing relies on low-income housing tax credits, which subsidize the acquisition, construction and rehabilitation of rental housing for low-income and moderate-income tenants, but are limited to projects serving incomes of 60% AMI or lower. 

The bonds recycling program “preserves and recycles prior years’ tax exempt bonds that would otherwise expire,” said Landa. “We’re not taking taxpayers away from any new project. It’s literally taking surplus capacity that’s on the sidelines and using it to build new housing, which is what’s exciting about this.”

The building will be named after former San Francisco Supervisor Sophie Maxwell, who spent years working to close down the power plant on the site that Landa is redeveloping.

“We’re going from a working power plant in 2011 to breaking ground on affordable housing in 12 years and it being someone’s home in 15 years,” said Landa.

Despite that momentum, there have been challenges and pivots.

In response to the changing post-COVID-19 market, the project’s construction timeline was revised in late 2021 to deliver more than 700 residential units in the first phase, compared with 315 units as originally planned. This was done to ensure the project remains feasible.  

The project’s commercial component was originally envisioned as office space, but with the city’s office vacancy steadily on the rise since March 2020, Landa’s team has shifted to lab space. 

The first housing to rise on the site was supposed to be market-rate, but securing financing for market-rate housing in the current environment is also “tricky,” said Landa, adding that the neighborhood’s supervisor, Shamann Walton, challenged him to find a way to make workforce housing pencil out. 

Earlier this year, Landa’s team also received support from San Francisco Mayor London Breed, who along with Walton proposed legislation that created an Enhanced Infrastructure Financing District (EIFD) at the Power Station project. This targeted form of public financing allowed Landa’s team to bridge a roughly $200 million financing gap to complete the project’s infrastructure work, whose price tag is roughly $400 million.

“We need to keep removing barriers to housing in any way we can,” a spokesperson for Breed said this week. “This project is a great sign for San Francisco’s economic vitality and a win for environmental justice, turning an old power plant into a new neighborhood filled with housing, commercial space, and more.” 

Landa’s team has spent part of the year removing remnants of the Power Station site’s past uses. Portions of the sugar factory that once operated there will be recycled and reused as part of the project’s foundation. 

The site has two power plants — the 1899 “Station A,” which Landa’s team has started to structurally reinforce, and the 130-foot, steel Unit 3 power plant next to the site’s iconic turbine at the waterfront, which the team has started taking apart. In the future, Unit 3 will be converted into a boutique hotel. 

The team has also built a seawall along the project site and installed the pilings to support a dock that is planned as part of a future ferry service from the Power Station to different locations along the waterfront, including the Ferry Building. 

While some other major development projects underway in San Francisco have managed to advance — like Treasure Island and Mission Rock, where some new housing has been delivered — projects to the north and south of the Power Station have halted construction in recent years.

To the north at Pier 70, developer Brookfield Properties has plans to redevelop the 28-acre waterfront parcel there that will feature office, lab, and maker space; 1,200 to 2,150 housing units; retail and arts facilities; and a 9-acre park. Its renovations to a former shipbuilding facility at the site included hoisting the building 10 feet off of its foundation in anticipation of sea level rise.

But Brookfield halted construction on the larger project last year, citing market conditions and potential modifications to the development plan in order to move it forward. The developer then partnered with life sciences developer King Street Properties in an effort to shift the construction of at least one commercial building at the site to lab space. 

To the south of the Power Station, the massive redevelopment effort to transform the Bayview-Hunters Point Shipyard and Candlestick Point into thousands of homes and new commercial space has been largely on hold since 2018, when a group of whistleblowers accused the contractor tasked with cleaning the shipyard — a Superfund site— of fraud.

Source: sfchronicle.com

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Drawing on his decade of experience in finance, investment management, and holistic financial planning, and as a Chartered Financial Analyst ( CFA ® ) charterholder, he leverages his financial acumen and analytical focus to help his clients navigate the sophisticated San Francisco market.
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