May 26, 2010
Parkmerced: Planning On The Future But Presently In Default
While the proposed plan to redevelop Parkmerced moves forward through San Francisco’s Planning Department, it appears as though the past (or rather present) has caught up with the owners of the complex who shall soon announce that their (not so) current loan on the property is in default.
Expect the announcement to allude to "strategery."
∙ Planning For 5,700 New Homes In San Francisco’s Parkmerced [SocketSite]
∙ One Meeting; Two Presentations; 16,200 New Homes As Proposed [SocketSite]
∙ Parkmerced in default [SFGate]
First Published: May 26, 2010 9:00 AM
Comments from "Plugged In" Readers
Shades of Stuyvesant Town...
Posted by: Po Hill Jeff at May 26, 2010 10:18 AM
Yet another big commercial borrower walking away. The people that think residential borrowers who walk away are immoral vs. commercial borrowers who walk away are "just exercising contractual rights" are so cute.
Posted by: Anon E. Mouse at May 26, 2010 10:43 AM
income must be greater than payments on debt. seems a lot of RE investors forgot that rule, both small and large.
Posted by: ex SF-er at May 26, 2010 11:02 AM
In the December, 2007 comment thread, Nonce wrote:
If Stellar/Rockpoint doesn't redevelop the area, someone else will. And maybe that someone else won't care about building a sustainable community.
Now we can rewrite this as "now that Stellar/Rockpoint won't be redeveloping the area, some vulture fund-like REIT that won't care about building a sustainable community will." Don't know whether Anon E. Mouse is correct in assuming that this is a strategic default, but apartment owners aren't doing all that well in general now. From bloomberg, on the 24th:
Defaults on apartment-building mortgages held by U.S. banks climbed to a record 4.6 percent in the first quarter, almost twice the year-earlier level, as more borrowers failed to repay debt approved near the market peak…the global recession cut demand for U.S. apartments, office space, retail shops, hotels and warehouses during the past two years as jobs disappeared and consumers cut spending. Defaults on apartment-building mortgages surpassed the previous record, set in 1993, for the past three consecutive quarters.
It'll be interesting to see if Stellar/Rockpoint actually gets foreclosed on or if they get to renegotiate their debt. If I had to bet, I'd take the latter.
Posted by: Brahma (incensed renter) at May 26, 2010 11:13 AM
The project should be revised to include sustainable preservation of the garden units. A re-route of transit outside of the community along 19th Ave. and real consideration for what has occured in terms of "flipping" the units and pricing out families in the increased rents, and impossibility of existing families to remain due to the price increases. This is essential housing, not a developer "give-away". It is critical to remember that the majority of housing being built in SF is "for-profit" units over 500k which nobody can afford. We need planning Commissioners in SF who are aware of the current issues and needs of the communities. Not paid-bureacrats who negotiate developer agreements, and MOU's with SFSU-CSU and Parkmerced Investors LLP. The project should be shelved until a real owner with a preservation minded alternative "green" development comes forward.
Posted by: Aaron Goodman at May 26, 2010 11:27 AM
"It is critical to remember that the majority of housing being built in SF is "for-profit" units over 500k which nobody can afford"
Is this like the "nobody wants to live in NYC, its to crowded" sort of logic?
I am not sure preservation and exacations go along with affordable
Posted by: zig at May 26, 2010 9:37 PM
Is this like the "nobody wants to live in NYC, its to crowded" sort of logic?
Not quite. I think the previous commenter was implying that the "for profit" units currently being built are not affordable for the vast majority of San Franciscans to buy. And just like in NYC, a lot of San Franciscans are renters.
Take a look at the First-Time Buyer Housing Affordability Index chart from the California Association of Realtors—only 37 percent of San Franciscans could afford to purchase an entry-level home in Q1 of 2010.
Posted by: Brahma (incensed renter) at May 27, 2010 9:52 AM
only 37 percent of San Franciscans could afford to purchase an entry-level home in Q1 of 2010
Is 37 percent being able to afford entry level a small percentage, given the rent/own dynamic, and given the small percentage of properties actually exchanged, or for sale?
Posted by: anon at May 27, 2010 10:15 AM
Sure it's a small percentage -- and that is only to buy an entry-level home. It is not as if those 37% are all in the market to buy.
Posted by: A.T. at May 27, 2010 10:37 AM
no they are not all in the market to buy, but you need the stepping stones, basic ability to have options (rent vs. buy) to save up eventually to buy the home you want. the need to save, and the OPTION or ability to rent vs. buying allows people to save and work towards home ownership. When we just have mortgage pies-in-the-sky its another bubble all over again.....we need rental housing built for the masses, affordable and at the scale of Parkmerced, Stuy town, Parkfairfax, Park La Brea, well designed, modern, and in adjacent areas to transportation, equitable density. If it means re-engineering the suburbs, with light rail extensions and double density in the sprawl cul-de-sacs we have built in california we should begin investigating the alternatives and how we should re-engineer the wastefull sprawl we created in the middle of california... not punish the low-mid income neighborhoods, through such redevelopment and displacement of existing residents. (see the Bay View Hunters Point project) another prime example in how lennar threatened the city of SF if forced to build rental housing.
Posted by: aaron goodman at May 27, 2010 9:31 PM
Sure "save" the townhouses. I have some personal inside knowledge of the complex and the townhouses are well past their useful life in this area. They are mostly completely rotted away. Not much actual wood left in them. The towers are not earthquake safe at all, and require extensive retrofits. They all sustained damage in 89. Considering the reviews of these complexes by their residents a complete rebuild/redevelopment would be a good idea.
Posted by: Sid at May 28, 2010 9:34 AM
"Park La Brea"
Had a friend who lived at Park La Brea -- it sucks. Park La Brea is far overpriced for "the masses" for one thing. A crappy, small, poorly-designed 1BR unit required an income of around $68K per the management office. If you don't have that, you need a co-signer who makes at least $90K. And that was back in 2004 when rents were lower. Census data for SF in 2004 says median income was just a bit over $60K. Most people who make $68K want to live somewhere either cheaper to save money or better for the money they're paying. And you can easily find better places in better and more convenient neighborhoods for the price.
Also, do you really want to live on a still-functioning oil field?
Park La Brea is a lot like Park Merced in one way -- it's basically where people new to LA who don't know anything and need a place to stay quickly, just like Park Merced for SF. It has a ton of parking, and most of the complex is surface parking lots, like Park Merced as well. They do a ton of marketing and make sure they show up first in search engines too.
Posted by: Former Tehrangeles Dweller at May 28, 2010 10:37 AM
OH, and Park La Brea screwed up the grid and traffic patterns because it's walled off.
Posted by: Former Tehrangeles Dweller at May 28, 2010 10:40 AM
Apparently Fortress has taken over Park Merced, although they're still leaving the incompetent management in place:
I'm guessing the "special servicer" was actually a receiver.
Posted by: sfrenegade at October 18, 2010 12:56 PM
Sharks being eaten by larger sharks, there is no discussion that this is peoples HOME, its also eligible for the national register, and preservation/sustainability/adaptive-re-use/transit direct routing and not ignoring the SF General Plan should be the discussion. Fortress is also per the comments on SFGATE involved in a legal case currently mortgage fraud... No doubt this is an INTENTIONAL dump/switch between behemoths....
save parkmerced, save the community, open-space, and stop the SFSU-CSU masterplan which is the second largest effort in the purchase of over 1,000 rent controlled units with ZERO fair-share impact fees assessed to the CSU campus...
Posted by: Aaron Goodman at October 18, 2010 7:00 PM