September 11, 2012
More Than Five Stories Behind The Delayed Development Of 180 Jones
The parking lot at the corner of Jones and Turk (aka 180 Jones Street) was purchased in 2004. In 2005, the owner filed for permits to build a 5-story building at 180 Jones Street, a building height which the Planning Department deemed to be too short for the site.
In 2008, the owner re-filed for permission to build an 8-story, market-rate building with 37 residential units over 2,700 square feet of retail and 8 below-grade parking spaces which the Planning Commission approved in 2009.
In the words of the owner who is now seeking a three-year extension from the Planning Commission to commence construction on the building or lose his entitlements to build:
For the past 3 years, I have worked with a number of realtors to find a buyer to take over the project without any success. Nevertheless, I consider myself blessed because I heard of another small time developer who filed for bankruptcy because he was forced to change his project just like in my case.
[The Planning Commission’s] granting on the extension of this entitlement will allow me the extra time needed to find a financially capable buyer who can take over the project. Thank you for your consideration.
The Planning Department recommends the Planning Commission grant the developer’s request "given the present economic downturn," considering "the proposed design will be compatible with the architectural character and scale of the Uptown‐Tenderloin National Register Historic District," and recognizing the project "is desirable for, and compatible with, the surrounding neighborhood."
First Published: September 11, 2012 4:00 PM
Comments from "Plugged In" Readers
'Uptown‐Tenderloin National Register Historic District"
^^^Is that a joke?^^^
I had to GOOGLE this to discover that it was not.
If it is in San Francisco, and over 20 years old, it can easily be classified as "historic" I guess.
Posted by: Astonished at September 11, 2012 4:41 PM
In other words, I bought the land for a ridiculously high price and am hoping to find someone willing to pay even more for it.
It would be better to revoke his entitlements and let him go bankrupt or force him to sell the property at the going market rate. That way we can go ahead and get the building started sooner.
Posted by: anon at September 11, 2012 4:48 PM
I don't think "revoke his entitlements" and "get the building started sooner" go together. Better to do some sort of Occupy Upper Tendernob and get the bank to renegotiate the note then build and sell. Isn't that what the Occupy movement is for?
Posted by: sparky*b at September 11, 2012 5:16 PM
I think that it would take less than three years for someone to get a new project through planning, but an unlimited amount of time for someone to make their paper loss real, when it's the only thing that they have.
Posted by: anon at September 11, 2012 6:14 PM
How much did the developer pay for the site in '04?
Posted by: soccermom at September 12, 2012 9:11 AM
Hindsight is twenty-twenty; it's easy to say after the fact that the developer "overpaid".
Last week, "anon" blasted me for daring to challenge the conventional wisdom that all lack of sufficient development is due to San Francisco's approval process:
…you heard somewhere that one developer somewhere in the city couldn't get financing, so clearly that must be the reason that more building isn't happening (rather than the process being exceptionally cumbersome). It's all because of lack of financing lol…Hey, anon? It's projects (plural) like this one that I was referring to.
Posted by: anon at September 5, 2012 5:04 PM
And clearly it's not just one developer somewhere, there's multiple projects in San Francisco proper that didn't get off the ground due to lack of financing and are still at a standstill.
Posted by: Brahma (incensed renter) at September 12, 2012 10:45 AM
I don't think this property proves your point at all, in fact just the opposite. The developer came with a plan for a 5 story building, which is a lot less expensive to build than a 8 story building. It was too short, according to the planning department. He had to go pay to get it redesigned into something he could not afford to build. SO, this is about the approval process.
Posted by: sparky*b at September 12, 2012 11:03 AM
@Brahma - seriously? Did you even read the post? I see that sparky got to it before me, but yeah, this is EXACTLY the type thing that is caused by the approval process.
Posted by: anon at September 12, 2012 11:22 AM
Sparky, depends on the assumptions you make in the context of limited information available, doesn't it? I'm assuming that he wanted to build the building.
I don't doubt that a 5 story building is a lot less expensive to build than a 8 story building. But I'm assuming that he actually wanted to build a building, and couldn't get financing for the 8 story.
Given the land acquisition will wind up being a fixed cost, an 8 story building ought to bring in more revenue and profit than a 5 story one, no? If that's the case, shouldn't that been an easy thing to show on the pro forma that the developer brought to the bank when requesting the increased financing for the taller building?'
Or are we assuming that the increased revenue wouldn't cover the marginal increase in cost due to additional three stories?
Posted by: Brahma (incensed renter) at September 12, 2012 11:35 AM
I am assuming he wanted to build the building he proposed to build and was not allowed.
I bet he would have needed to have an extra $1M in the bank to get the loan for the bigger build.
Posted by: sparky*b at September 12, 2012 11:57 AM
I don't doubt that a 5 story building is a lot less expensive to build than a 8 story building.
A building can be wood framed in San Francisco up to five stories, which was proposed in this case and a lot less expensive to build versus steel or concrete construction, which an 8-story building would require.
Posted by: SocketSite at September 12, 2012 12:10 PM
It's also simply possible that he's not comfortable taking out a larger loan. He DOESN'T say that he couldn't find financing to build. He says that he's been looking for a buyer to take it on for 3 years, which implies to me that he's likely just asking too much.
Posted by: anon at September 12, 2012 12:31 PM
This 5 vs. 8 story thing could be solved if we just built the way that they do in the developing world. Can't afford to build 8 stories? Then just build 5 and let the rebar hang out of the top story until you rent out the built floors and gather the funds to complete the remaining 3 stories.
Posted by: The Milkshake of Despair at September 12, 2012 1:25 PM
MoD, hilarious. Not doable with an elevator in the plans...
Posted by: lol at September 12, 2012 1:32 PM
Aw gee lol, think creatively. Just install one of those floor hoisted telescoping piston hydraulic elevators instead. Leave the hole in the roof open and you've also got elevator access to the roof garden. Just put one of those Walmart picnic canopies over the hole to keep the rain out. Problem solved :-)
Posted by: The Milkshake of Despair at September 12, 2012 5:12 PM
IMHO, the back and forth on the project height definitely contributed to the length of process and will contribute to the cost and end profit.
But, really, it is the reluctance of a bank to lend in this neighborhood that is the real story behind the shaky outcome.
Just try a simple thought experiment: This same building along the edge of Pacific Heights. No Problem! lenders falling over themselves to fund it. Now back to 180 Jones,,,,, uh..
Risk averse is a mild way of describing the current funding climate.
Posted by: jose at September 14, 2012 11:29 AM