950-974 Market Street Design

Group I’s plans for a modern Mid-Market hotel, residential and retail complex to rise up to 200-feet in height at the corner of Market and Turk have been downsized, and the development’s proposed 75,000-square-foot Center for Arts & Education to rise at Turk and Taylor has been altogether cut.

950 Arts Center Rendering

From the Chronicle’s report:

The decision came as an unpleasant surprise to City Hall staffers who had been working with Group I for more than two years to craft a deal that would have allowed the developer to exceed current height restrictions by 80 feet. In exchange, Group I would have built performance spaces for Tenderloin theater and dance groups, as well as subsidized office space for arts groups. The proposal, designed by Denmark’s Bjarke Ingels, called for 300 housing units and a 250-room hotel.

Negotiations were hampered from the start because the city, the arts organizations and Group I could never agree on how development costs would be divided. The arts groups, as well as officials in Mayor Ed Lee’s administration, were pushing for the developer to bankroll construction of the shell of the performing arts spaces. Group I always insisted that the arts nonprofits pay 50 percent of construction costs — an investment that would have run more than $15 million.

Group I will now move forward with a redesigned 120-foot project, the height for which the parcels are zoned, but with far fewer rooms and residential units than originally proposed and rendered above.

48 thoughts on “Modern Mid-Market Development Downsized, Art Center Cut”
  1. Another fine example of how less gets built in this city. The entitled folks asking for handouts from developers are greedy, greedy, greedy!

        1. I mostly agree with your point but I think there is a meaningful difference between return on capital and wages for labor

          1. I’m posting my comment here since I’m late to  thead, hoping someone can clarify. Why not simply split the difference and reduce the proposed heights from 200 to 160, then donate $15 for an arts space half the size? What am I missing?

  2. We get what we deserve!

    I was driving up Turk yesterday and noticed that the to-be-opened ‘Tenderloin Museum’ is under wraps. On the billboard construction fence, the museum touts its exploration of the Tenderloin’s PORN history. I don’t care what people do in their own homes or even in a private business as long as everyone is consenting, but a celebration of a neighborhood’s role in the evolution of pornography? C’mon. New York cleans up Time Square and we celebrate our heritage of repressed behavior?

    We’ll get this golden egg goose killed if we keep trying…

  3. In general I agree, SFrentier – however, these arts organizations simply don’t have $15 million to throw at construction costs. Most of these groups are non-profits, with budgets in the hundreds of thousands of dollars. On the face of it, it seems egregious to expect them to get a shell art space “for free”, instead of for 50% cost… but if your group can’t spend even $1000 without bursting its budget, even 95% cost coverage by the developer would be insufficient.

    (Fair disclosure, I’m on the board of 2 arts organizations in S.F., one with a budget of ~$800K, and one with a budget of $1.1M. So, I do know whereof I speak. But neither was involved with this project or would have benefitted from this space, so I have no specific vested interest in the issue.)

    1. Definitely understand both points, however there are always fund raising options for something as impressive as this space could have been. No small task to raise that kind of money, but it seems to me that an offer to bankroll $15 million of that total is more than generous. If attempts were not made in earnest to raise the cash, this is a wasted opportunity.

      1. The best option would have been for the City and developer to use the high-profile nature of the site to find a single philanthropic donor – an Eric Schmitz or Mark Zuckerberg – to finance the whole thing.

        Because – again, not to sound pitiful or like I’m making excuses – but for arts organizations of this size, a “major donor” is someone who gives $1,000 or $2,000. Even their board member donation levels are at that level. So even if 10 arts organizations are involved in this project (and I have no idea the specific numer), you’re asking them to each raise an *additional* $150K from a donor base that rarely gives more than 3 figures per donor.

        To be clear, I agree – its a marquee project (literally, LOL) and seems ideal for a special fundraising campaign. But logistically and realistically, its a herculean task for these groups to go out and ask a handful of $1,000-level donors to increase their funding by 10x.

      2. Correction, I was off by an order of magnitude – if there are 10 organizations involved, hypothetically, that’s *$1.5 million* per organization, not $150,000. So you’re essentially asking each one of them to do a special project to raise roughly 2x their total annual budget. From a donor base that tends to give in the hundreds to, at best, the low thousands.

        1. Sure, I understand the math. And your point is absolutely valid – no small task to raise that cash. As you said, it would probably need to be the “Zuckerburg Center for the Arts”, or similar. I just feel like that was a distinct possibility and that leaves this a wasted opportunity if that wasn’t explored.

    2. I’m with you 100% sierrajeff, as I am also involved in the arts. It’s more a matter that this space is a mismatch for smaller organizations, and whoever coordinated this pretty much screwed the pooch! It either should have been scaled way down, so a group of smaller orgs can participate at an appropriate level, or it would have been designed with a larger/higher profile organization in mind, like a museum with a decent size endowment. What erks me is that the developer made decent efforts here, yet the concept failed. It’s just pathetic when a private developer offers something and this city is not able to utilize it.

  4. For such a prominent site, I’d rather wait for the city and a developer to get their act together to put up something nice/dense than for a downsized, half ass thing to go up in the face of the city asking for too much.

    On the other hand, $15M for a project of this scope is a lot less than the city asks for of other projects, and yet other projects get done. Without all the facts, it would seem it’s a combination of the city being greedy (per usual) and a developer not in a position to cowtow (which in this city, surprisingly a lot of developers pander and still come out highly profitable).

    Just as disappointed in the development group as I am in the city. But we’ll hit another correction before this thing gets going and then it will be scrapped or delayed and I bet we end up with something different altogether, perhaps better, on the other side.

    1. If it penciled out for the development group to cover the cost, I’m sure they would have. I can’t see any real justification for blaming the developers…

    2. It seems to me that the $30m+ the city was asking for was just in exchange for an exemption to the the height restrictions of an additional 80ft (BIG offered $15m). There was no mention of BMR/affordable housing contribution which would presumably be included anyways.

      1. Seems like someone should be able to back-of-the-envelope the net value to the developer of an additional 80′ (or what, 6 or 7 stories?).

        1. Value of 80′ * (BS factor) + 3Time Factor < Value of zoned height * 1 Time Factor


          BS Factor = The opportunity for various interest groups to weigh in.
          Time Factor = Time required to finish the project.

          Financing has a cost, waiting around has a cost. Building what you can is probably better than waiting for what you might be able to get in an uncertain amount of time.

  5. The decision came as an unpleasant surprise to City Hall staffers who had been working with Group I for more than two years

    The irony.

    Anyway, next time said staffers face a similar proposal, I suggest they offer a one-month resolution to get the full $30M subsidy and I bet the developer will grab it with a smile on his face.

  6. I smell somewhat of a rat on the developer side. A decent financial analyst could have given them an early indication if the extra height would pencil out the cost of arts center, under a range of assumptions. It shouldn’t have taken 2 years to figure that out. They also would have to have been willfully ignorant if they really thought the arts groups could come up with $15M. And why did they go through the hassle of setting up their own non-profit, which went nowhere?

    Sure, the city and the arts groups may have asked for too much, but that could have been nipped in the bud early on. Given all the money sloshing around this town it doesn’t seem unrealistic to ask some Master of the Tech Universe to pony up the $15M to get his/her name on the building.

    1. No, rat, just common sense. They were willing to pay 50% of the costs, and this is what penciled out, and this is what they consistently were willing to pay for 2 years. The city and the nonprofits pushed for 100% of the costs in return for the height bonus. It didn’t make sense to the developer, so they said no.

      And, yes, you did hit on the point I made earlier, the non-profits should have engaged in a major capital campaign to raise the other 50% of the construction costs. Then, the project would be moving forward as originally envisioned and everyone would be happy. Even in cities like Indianapolis, which have far less “money sloshing around,” various non-profits have managed to raise millions for capital campaign funds. It is hard work and it takes time, but it certainly can be down–and it HAS been done by many non-profits in San Francisco (ACT, the LGBT Center, GLIDE, St. Anthony’s, Delancey Street, etc.). Instead, these particular non-profits hoped their fairy godmother would come through and take care of them, and so they lost an opportunity to get a new performing arts center.

      1. To be fair, one reason people hate the techies is the sense that they aren’t giving back to the community as much as other groups. I know in the case of my arts organizations, it was closed door after closed door to get any kind donation or grant from tech companies – even when we did a special campaign to redo our website (again, for groups of this size, a $20K website redesign is a big expense!). I would have thought a Facebook or Google would have fronted the whole project – whip out a redesign in-house – but they wouldn’t even talk to us. In fact the only thing Google gives money for is math, science and tech. (Which are all important; but they aren’t the end-sum of life.)

        1. Hitting up techies for money is like hitting up a lottery winner for money. You didn’t care for them their whole life until a lot of money came their way. Hitting them up for money when they arn’t profitable is like Asking your unemployed friends for money. Also seed money they get from early investors arn’t to be used for “charity” or “goodwill”. People you should be asking money from are from the angel investors. They made their money already.

          1. There is a similar Chinese saying, “it’s like asking a bald man for a comb, or asking a beggar for a meal.” I just love how my mom responded to all my questions with these sayings.

            So this project (mid-Market) gets substantially reduced. Incidentally, this area and Civic Center has the highest office vacancy rates in SF currently.

        2. I think there has been a large shift in the arts, even since I moved to the city a bit over a decade ago.

          This is mostly due to Burning Man. Techies put a ton of money into the organizations that support Burning Man style arts which is great, but it means that the more traditional small theater productions aren’t benefiting from the largesse.

        3. I am sorry you had that experience. Not knowing you or the details, my sense is you hit the wrong people in some entrenched bureaucracy. There are obviously a number of early Facebook and Google employees who live in the City and care about it. They keep a low profile, though. It’s not an excuse, but if you manage to connect with one of them, they can help with things like this.

  7. I am sure they don’t have $15 million lying around, most non-profits do not have that much money readily available. However, most non-profits who want to build a new state of the art performance center put the time and effort into holding a major capital campaign to raise the funds to build it. It is a bit much to expect one party to fund the entire cost of a new facility. With the developer willing to pay 50% of the costs, it would have made sense for the non-profits to have engaged in a capital campaign to raise the rest of the money. Also, if they didn’t have the money to contribute anything toward the construction of a shell, then how did they expect to fund the theater space build out or the operating costs of the new facility? A non-profit has to think seriously about fiscal matters. (And, full-disclosure, I am also on the board of a non-profit).

    Instead, the city and the non-profits demanded that the developer pay for everything (and I am sure it would probably end up being even more, as the non-profits came to realize they didn’t have the funds for the build-out or operating costs), and so the developer ran the numbers and realized that the value received from being allowed to exceed the height restrictions was less than what they would have to expend by paying $30 million to front the entire cost of the performing arts center, plus the construction cost of the rest of the development, plus all the other multi-million dollar fees (or in lieu of amenities) the city would require them to fund. So, the developer made the sensible decision to forgo the height bonus and just build according to the zoning.

  8. Why do we need an Arts Center there? — Why not collaborate with any number of amazing major organizations (Civic Center, colleges (hello Cal Arts, Academy, others). Does everything need to be so separate? Share space and resources. Don’t underbuild (again) — in this critical spot. Keep the bonus floors.

  9. One need not look any further than the Mexican Museum going up as part of the 706 Mission St development, a development that at one point was approved for something like 51 floors and now due to rich neighbors in a building also ironically developed by the same group (Millennium Partners), the building has been reduced to 43 stories. So, height reduction, developer money towards museum, and off-site affordable housing contribution, and the Mexican Museum has been in a capital campaign for years now. That project is moving forward, with many a setback.

    This project had far fewer setbacks, a city INCREASING the height limit, and yet it’s not able to move forward. Perhaps it’s on the non-profits. They should have raised money. But at the end of the day, not every theater group/non-profit is worth a multi-million dollar venue. No offense, without knowing much about these particular groups, perhaps there isn’t a lot of community value in them.

    It’s a shame…maybe the city tried and the developer tried, for two years, and the non-profits didn’t come through. Either way, it’s all a major disappointment.

  10. I’m only speculating, but it’s possible that the “arts” and “dance” groups all shared a mindset as follows:

    1 – I’m and artist/dancer. I’m special. I deserve having others give me things for free.

    2 – Real estate developers are all rich and greedy. Obviously, because they have more money than me, they would be logical candidates for funding my specialness.

    3 – Apparently these rich and greedy developers are bluffing, and trying to get out of their moral obligation to give me free stuff to encourage and promote my specialness. I’m sure all of the politicians who pander to me and assure me of how special I am will force these greedy developers to pay for the oh-so-special ME.

    4 – Hey! What happened? They not going to build me a nice, new studio???? What, do you expect me to get people to come pay to watch me perform or buy my “art”? How can I possibly dance now, if I don’t have a brand new studio?? How can I create art if no one is setting me up in a shiny new space??? MOM!!!!!!! “

    1. You’re right, you’re only speculating, and you’re speculating incorrectly. The arts organizations people I know work 50 and 60 hour weeks, and are thrilled to jump in and work with anyone who expresses an interest in helping them. But they are non-profits and have limited budgets, and can’t simply write a check (or draw on a credit line) if a developer comes along and says “Give me $1.5 million and I’ll give you a 1/10th share of a performance space”.

      1. You’re closer to the organizations than I am, so I take your word for it. I was basing my speculation on conversations I’ve had with artists and dancers. They definitely have an entitled attitude. I guess the folks who head up the organizations have a more mature and realistic attitude. It must be tough for them to maintain space in a city which is severely “under-spaced”.

        But I DO enjoy taking potshots at the “I am special” mindset I’ve often run across in “artists” here.

        1. Well, I’m certainly willing to acknowledge a difference between “the talent” and the staff, LOL. Yes, the talent can be a bit full of themselves (and clueless). But the staff tend to be incredibly dedicated – they’d have to be, to work the hours they do, for such low pay, and in such an expensive city. And in my mind it’s the staff that really make up the organization; new talent can be hired, but if you unexpectedly lose your executive director, there’s a good chance you’re SOL and the organization will be dead within 2 years.

        2. Don’t forget “talent” have a very short shelf-life. So they are pretty much fighting against time. You have one chance to showcase your talents and if you nitpick too much, you are blowing that chance. Why is their a need for a Tenderloin Performance space? Work with existing theaters in the city and use their space.

        3. “But I DO enjoy taking potshots at the “I am special” mindset…”

          Boy you can really cast a wide net in this city- pretty much everyone here feels entitled!

  11. It plainly just didn’t pencil out – by a mile; no Evil MasterMind motives for christsakes.

    That particular site has very difficult geometry to begin with, and fitting three major programmatic functions on it: theaters, hotel and residential, each with their own lifts, services and security, is a very tall order for any developer, or any architect. Looks like they’re simply returning to a feasible, realistic project.

    As far as comments to the effect of ‘their financial model should have told them they couldn’t afford the project with the arts component’ – i think that is quite true, but it probably came out in the wash a year or more ago, and we’re only now hearing about it

  12. Yes, it looks like the developer tried to make a deal, but the non-profits couldn’t pony up. Makes you wonder, if the developers did pay for it all, would the seats be filled? If so, then there should be another way to finance construction.

  13. I wonder – was maybe the *developer* working on getting a single donor to shell out for the art space? Because if they were, and their prospective angel walked last week, that would explain the sequence of events.

  14. We don’t need more museums in this city! I thought that message had been sent with the George Lucas fiasco. What do these people think we are, a tourist destination of some kind??? Preposterous.

  15. The sheer number of sub scale arts foundations etc tells you how inefficient they are – note the post above with budgets of approx $1m per annum. They all have competing agendas and objectives which basically allows rich board members to claim moral high ground ….”I’m on the board of xyz foundation’ – without making any meaningful impactful change – how about merging some of these? I’m not trolling but they must all compete for funding, all waste money on websites no one looks at etc etc…

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