Board continues contested BMR tenure appeals to July 20 to allow negotiations

The Board of Appeals continued two related appeals concerning a 54‑unit project at 1145 Polk / 1201 Sutter Street after extended testimony and commissioner questioning about fairness to lottery applicants and the planning code’s options for tenure changes.

Appellants told the board they view a Dec. 7, 2020 rental lottery and an NSR recorded against the property as commitments to low-income rental housing; more than 2,500 applicants were ranked for the eight BMR units. Appellants said the sponsor’s subsequent pause of lease-up and later request to convert tenure amounted to a bait-and-switch that disproportionately disadvantages lower-income renters and undermines community trust.

The determination holder and sponsor argued that pandemic-related construction delays, severe cost overruns and lender constraints made rental financing unworkable; their request for a zoning-administrator letter of determination (LOD) is a code‑authorized pathway for tenure change when units have not been occupied or issued a certificate of final completion. The holder said it had offered concessions — half of the eight BMR units at a 55% AMI purchase price (to be offered first to lottery-ranked households) and the other half at 90% AMI — and committed $65,000 to Homeownership SF for buyer counseling and down-payment assistance.

Zoning Administrator Corey Teague explained the technical dilemma: the lottery had been run (rankings created) but no occupants were certified and no CFC had been issued, leaving the project in an awkward mid-point the code did not explicitly address. Teague said the LOD attempted a middle-ground technical solution to balance the lottery’s existence and the practical financing constraints facing the sponsor.

Commissioners asked detailed questions about chronology, whether the sponsor informed applicants the project had changed course, whether a lender formally required conversion, whether units were reconfigured (studios to one-bedroom) to affect affordability, and possible alternatives (e.g., retaining on-site rentals while allowing ownership elsewhere). MOHCD clarified lottery mechanics: the ranked list is project-specific and ranked applicants may apply to other lotteries; no applicants had been certified for occupancy so no final 'winners' had been selected.

After deliberation about the correct balance between technical code compliance and reliance-based fairness to lottery applicants, the board agreed to give the parties time to negotiate a settlement consistent with code. The board continued the appeals to July 20, 2022 and instructed parties to consult with the zoning administrator to ensure any agreement would be legally feasible. The continuance was adopted 4–0.

The continuance leaves in place the ZA’s LOD for now and provides time for the sponsor, appellants and agencies to explore potential agreements — for example, amendments to the affordability split, timing safeguards for lottery applicants, or other enforceable commitments that conform with planning code and financing realities.