The project proposed a 365-foot building with 345 dwelling units, including 20 percent as affordable housing according to the City’s inclusionary housing requirement.

The project height will be increased to 400 feet, allowing for 385 dwelling units—an increase of 40 units. The method for meeting the City’s inclusionary housing requirement will change from constructing on-site units to dedicating land for a 100% affordable housing project. Also, all but $1000000 of the Market and Octavia and Van Ness and Market affordable housing fees will be waived.

The proposed agreement would waive approximately $5.0 million in affordable housing fees.

Due to rising construction costs, falling rents, and reduced financing availability for affordable housing, these changes aim to ensure the financial feasibility of the project. They allow for the waiver of two affordable housing fees and intend to dedicate $1 million to development of Parcel K for affordable housing.

The development agreement requires the developer to dedicate property to the City for affordable housing and pay $1 million to the Affordable Housing Fund before the issuance of the first construction document. The agreement is to be approved by the Board of Supervisors, modifying land use approvals for a period of five years.

Administrative Code Chapter 56 allows for these agreements to manage the risk for developers while securing public benefits. The agreement includes findings under the California Environmental Quality Act and adherence to the General Plan and Planning Code Section 101.1(b) for public convenience and welfare.