Shovels Hit Ground On $120M Ventana Residences Following Funding Pivot
A new project now under construction is drastically accelerating the pipeline of affordable housing units in San Francisco's Excelsior neighborhood.
A joint venture of Presidio Bay Ventures and American Realty Advisors ceremoniously broke ground in January on the Ventana Residences project at 99 Ocean Ave. after shifting gears for funding sources. The project, which will supply the area with 193 rental housing units, 48 of them below-market-rate, is poised to triple the number of affordable units created in the neighborhood over the next decade, according to a press release.
Located in an opportunity zone less than a mile from the Balboa Park BART station, the project had been initially earmarked for financing through that initiative. However, delays with entitlement approvals and permits combined with the coronavirus pandemic's onset ultimately foiled the plan. Not wanting setbacks in the timeline, PBV Managing Director Cyrus Sanandaji said the firm decided to leverage its strong relationship with labor groups for funding channels, noting that the project was able to avoid both construction delays and having to rely on public financing.
“Opportunity zone financing is an attractive solution when used for what the legislation intended, to develop housing and commercial projects and invest in new businesses located in historically underserved areas,” Sanandaji said in an email. “Though we were unable to deploy OZ capital for the 99 Ocean project, we have developed an in-depth knowledge of the legislation and look forward to potentially utilizing this avenue to finance future projects.”
Instead of the opportunity zone route, the joint venture secured $80M in construction debt financing from TDA Investment Group and the AFL-CIO Housing Investment Trust. The $40M balance is equity financing from ARA and PBV. The AFL-CIO launched the HIT initiative last fall and is making a $1B investment to create jobs and rental housing in the Bay Area over the next five years as a way to alleviate economic turmoil triggered by the pandemic. Ventana Residences is one of the first projects to receive the HIT funding.
"The fight for social and economic justice continues today, now as we face skyrocketing unemployment, the COVID-19 health emergency, and rampant social division,” AFL-CIO President Richard Trumka said in a press release. "Putting Labor's capital to work to create jobs and build affordable housing is an important step toward tangible solutions to these ongoing challenges for the Bay Area, and for the country."
In addition to the 25% designated on-site affordable housing, the project's plans include using 100% union labor, creating more than 500 prevailing wage jobs, an on-site child care facility and a public-facing art program. The project will be the largest in S.F. to be built under the city’s HOME-SF program, according to the release. The program incentivizes developers to build affordable and family-sized units by offering density bonuses and zoning modifications. Ventana will provide a mix of studio and one-, two- and three-bedroom units.
“This is a wonderful project and a wonderful addition to our community,” District 11 Supervisor Ahsha Safai said in the release. “This project will bring much needed onsite affordable housing and affordable childcare to the neighborhood. I’m also proud that it will be 100% union built so that working families in need of employment can get to work. I can’t wait to see all that this project will offer the community when it’s completed.”
Building amenities include a fitness area, coworking spaces and a two-level roof deck. The project's sustainability measures of employing rooftop solar panels and all-electric appliances are on par with the city’s recent move to ban natural gas in new construction.
“American is excited about the opportunity to partner with Presidio Bay on the development of Ventana Residences,” ARA Senior Investment Manager Albert Pura said in the release. “It’s a chance to work with a best-in-class developer to bring much needed housing to an under-served submarket of San Francisco, while providing new high-quality, obtainable housing to groups that have largely been ignored in the recent development cycle.”
Construction completion is estimated for early 2023.