With a 99-year ground lease from the City of San Francisco for which Mercy Housing will pay a total of $99 as proposed, the projected cost of building the affordable housing development to rise on the southwest corner of Sixth and Howard is $47,333,630, which includes $4,600,000 in consideration for the land.
With $1,110,264 allocated to the cost of constructing the restaurant/retail space on the ground floor of the building which will replace the old Hugo Hotel, the estimated cost of developing the residential units on the eight floors above will be $46,223,366, or roughly $592 per square foot.
And with a total of 67 residential units in the development, including one unit for a manager, that’s an average cost of $689,901 for each of the apartments which will rent for between $291 and $1,214 per month to households with very low incomes of less than 50 percent of the area median and possibly as low as 12 percent.
Responding to a note from the California Tax Credit Allocation Committee staff about the eyebrow-raising cost per unit for the development, Mercy notes that the high cost per unit is “attributed to soil conditions, City Planning requirements, and unit size.”
The permit to demolish the Hugo Hotel to make way for the project to commence should soon be approved and the development is expected to finished and ready for occupancy by the middle of 2016.