Hearing exposes delays, uncertainty over $Millions in 706 Mission developer payments and who decides how the money is spent

A separate committee hearing on March 1 examined how payments from the 706 Mission Street purchase‑and‑sale agreement (the Millennium Partners project) were collected, interpreted and allocated to community benefits.

Supervisor Aaron Peskin, who requested the hearing, said community stakeholders have sought clarity for years about what fees were due, which have been collected and how funds have been spent. "I've been on email threads with various department heads... dating back a half a decade trying to get clear answers," Peskin said.

Deputy City Attorney Heidi Gerwitz reviewed the 2013 agreement and described multiple fee categories: affordable‑housing fees, annual SOMA open‑space payments (with at least 50% earmarked for Yerba Buena Gardens), a cultural endowment tied to the Mexican Museum shell, and transfer payments for public benefits in South of Market. She said permitted uses were defined in the agreement and that some fees were designated exclusively for SOMA open spaces.

Ken Bukowski (Deputy City Administrator, Real Estate) explained timing and mechanics: several payments are triggered by temporary certificates of occupancy (TCOs) and close of escrow for individual residential units. Real estate reported having received roughly $440,782 tied to SOMA open‑space annual payments (covering fiscal years) and about $404,000 in transfer‑payment receipts tied to condo sales; those funds will be transferred to the mayor's housing office or Recreation & Parks through the budget process.

The committee discussed a one‑time $1,800,000 open‑space payment that the developer paid to OCII and which has now been transferred to the city's real estate division and then through the budget to Recreation & Parks for the Gene Friend (Jean Freund) Recreation Center capital project. Rec & Park said the money was added to the project budget and that permitted uses include capital and operations in SOMA open spaces. Several community callers said they were not consulted and urged a public process, arguing the funds should enhance — not substitute for — baseline maintenance and services.

Aaron Foxworthy (OCII deputy general counsel) told the committee an additional 8% affordable‑housing 'agency fee' — approximately $4.3 million in total — remains owed to OCII and is payable in installments tied to permit issuance and TCO milestones. OCII has received just under $900,000 to date and used some of those funds for a completed 146‑unit affordable housing development at 626 Mission Bay Boulevard North. Foxworthy said OCII was evaluating a developer request that force‑majeure conditions tied to the pandemic delay payment schedules.

Deputy City Attorney John Givner advised the Board that it has appropriation authority and could pass an ordinance to set parameters about how departments spend funds within the PSA's permitted uses, but that the Board cannot require the city to contract with a specific community organization.

Public commenters and community groups urged creation of a governance mechanism or community review panel to provide oversight and transparent reporting for these developer payments and to ensure funds serve neighborhood needs in Western SOMA, including youth and senior services, anti‑displacement measures and open‑space improvements.

Supervisor Peskin said he will work with community groups and city attorneys to draft language that better honors the PSA's intent and signaled the committee would file the hearing record; the motion to file passed on a unanimous vote.