Forge Development Partners and Bridge Investment Group recently broke ground on TL 361, a workforce housing project located in San Francisco’s Tenderloin neighborhood. According to the development team, It is the first newly constructed privately funded workforce housing development in the city.
Freddie Mac Multifamily provided critical financing for the $100 million development, with an unfunded forward commitment that includes a Preservation of Affordable Rents Covenant (PARC) agreement providing permanent financing. The project is also being supported by construction financing from East West Bank and Washington Federal Bank.
Two seven-story standalone buildings near the intersection of Turk and Leavonworth streets will contain 240 micro-units of about 250 square feet each with private bathrooms and cooking facilities. The site is currently occupied by surface parking lots. The units will be built above groundfloor retail with the building also providing an on-site community center and a rooftop deck.
The development team will be delivering new housing stock that is affordable to the workforce in the urban core of San Francisco, with a minimum of 51% of units to be rented to those earning a maximum of 80% of the area median income (AMI).
The project is coming to a city starved for affordable housing. “This first project will demonstrate the applicability of our model to provide high-tech, high-touch, and highly desirable housing solutions in downtown settings that are accessible to the people who work in the urban core,” said Richard Hannum, founder of Forge.
The partners are also hopeful that concept is scalable and can be replicated into a business model that makes sense for everyone. “We are very pleased that the double bottom-line model we have developed to fund and build affordable workforce housing like TL 361 in the urban environment is both viable and profitable in this era of social responsibility, driving both competitive market returns and social and economic mobility,” said Dan Stanger, vice chairman of Bridge Investment Group and co-chief investment officer for the firm’s Workforce & Affordable Housing Strategy.
Getting Freddie Mac on board was a key to bringing the project to life. “Our loan will help keep rents affordable for 240 residents in the highest-cost market in the United States. Workforce housing is in short supply across the country—a problem Bridge Investment Group and Forge Development Partners are taking head on with TL 361,” said Freddie Mac vice president Lauren Garren.
As required under the Mayor’s Office of Housing and the inclusionary housing ordinance, 12% of the 240 micro-units will be set aside for renters who earn roughly $32,000 per year. To reach the required 51% of affordable units, Forge and Bridge will privately impose rent restrictions on 39% of the units, making them affordable for renters with incomes as low as $75,000 per year. The remaining 49% of units will be offered at market rate, starting at prices affordable for renters making approximately $82,000 per year, still below the AMI.
