Committee forwards $8.5 million loan increase to restart 78 Haight affordable housing project; childcare infeasibility questioned

The Budget and Finance Committee on Feb. 14 voted to forward to the Board of Supervisors a resolution amending the permanent loan for 78 Haight Street to increase the city's gap loan by up to $8.5 million, bringing the city's total loan to a not‑to‑exceed amount of roughly $35.3 million to restart a 63‑unit, 100% affordable housing development.

Anne Romero, MOHCD senior project manager, said the project — which includes 32 units for transitional‑age youth and 31 studio units for adult households — was delayed by unforeseen structural conditions at the adjacent Mount Trinity Baptist Church. The increased costs include stabilization of the neighboring property, construction‑cost escalation, remobilization and higher capitalized operating reserves needed for project cash flow. Romero said MOHCD supports the request so the project can meet tax‑credit deadlines and restart construction.

Nick Menard of the Budget and Legislative Analyst's office told the committee the $10.5 million project cost increase is funded by the proposed $8.5 million city loan increase plus $1.1 million in developer equity taken from the developer fee; the increase would be covered by housing trust fund monies and general obligation bond proceeds. BLA recommended approval while noting TNDC must pursue additional federal funding sources and vouchers to offset the city subsidy and developer fee impacts.

Supervisor Malgar pressed MOHCD and TNDC about the project's childcare element, asking why an on‑site childcare is no longer feasible. Sheila Nicholas, MOHCD director of policy, and TNDC representatives explained that state licensing for child‑care spaces for very young children requires immediate access to fenced outdoor space and age‑appropriate equipment; the nearest park (Patricia's Green) was described as too far and not meeting fencing/safety and age‑appropriate equipment requirements, and crossing a major street would disqualify its use for the intended population. Reviewers also said adding second stairwell egress to use the roof as outdoor space would require a costly redesign that would reduce housing units. TNDC said it will explore smaller family child‑care (FCC) units and reconfiguring ground‑floor commercial space but that those options require additional design and loan conditions.

Chris Cummings of Tenderloin Neighborhood Development Corporation urged the committee to approve additional funding to repair Mount Trinity and restart the project, saying philanthropic partners are being pursued to help cover costs.

The committee forwarded the loan amendment to the full Board with a positive recommendation. Supervisors asked MOHCD and TNDC to provide further details on licensing constraints, alternatives explored and the timeline for church repairs before the Board vote.