OCII approves short extension for 706 Mission developer to pay agency affordable‑housing fee

The Office of Community Investment and Infrastructure commission voted Dec. 6 to authorize a limited extension for the payment of an OCII agency affordable‑housing fee tied to the 706 Mission Street project, approving staff’s recommendation to extend the final two installments until April 3, 2023.

Deputy General Counsel Aaron Foxworthy summarized the purchase and sale agreement obligations and told commissioners the agency fee obligation was ultimately calculated at about $4,450,000, payable in three installments. He said the first installment (~$891,000) was paid in 2017, the second (~$1.8 million) was triggered by the developer’s first residential temporary certificate of occupancy in November 2020, and the third installment (~$1.8 million) came due one year after that milestone.

Developer representative Jerry Walsh told the commission the owner is pursuing a recapitalization that the team expects to close by March 31, 2023, and asked for a short extension to April 3 to allow the financing to settle. "We've been working with a lender and other sources, and we're confident based upon the status of negotiations that we'll be able to consummate the recapitalization within that time frame," Walsh said.

Commissioners pressed the developer for details. Commissioner Ludlam questioned whether recapitalization was sufficiently certain and noted the fee has been delayed under prior discretionary extensions; she asked how much equity versus debt would be involved and whether failing to extend would materially change prospects for refinancing. "Without any information, I don't have any confidence that you'll succeed in four months," Ludlam said.

Foxworthy and Walsh said the recapitalization would provide equity to pay the fee rather than relying on future condominium sales; Walsh said approximately 14 units had sold and roughly 132 remained for sale. General Counsel Morales said if the developer fails to pay after the extended deadline the agency would follow the purchase and sale agreement default process — notice of default, opportunity to cure, and then issuance of an event of default if unpaid.

When the commission voted, the result was 3 ayes (Commissioners Brackett, Scott, Vice Chair Rosales), 1 no (Commissioner Ludlam) and 1 abstention (Chair Bustos). The motion carried and staff will monitor the developer's progress and report back as necessary.

The extension applies only to the OCII agency fee installments specified in the PSA; Foxworthy said staff was not recommending extension of other fees or transfer‑fee obligations tied to unit sales.