Trinity Plaza Faces Do or Die Vote at Supes Meeting Today

by Randy Shaw on March 19, 2007

Seven months after being overwhelmingly approved by the San Francisco Planning Commission, the rebuilding of the Trinity Plaza Apartments at 8th and Market will finally get a full and fair hearing at the Monday, March 19 Land Use Committee. The outcome of the hearing will decide whether San Francisco builds its largest rental housing project in over 50 years, and whether hundreds of Trinity Plaza tenants get new, upgraded permanently rent-controlled units at their current, often well below-market rents.

The Supervisors’ inaction has left this project on life-support, despite nearly unanimous support from tenant and landlord organizations, organized labor, builders, neighborhood activists, and the business community. Mayor Newsom frequently criticizes the Board of Supervisors for not addressing the peoples’ business, and while many dispute such comments, the Supervisors’ rejection of Trinity would give the Mayor a lasting public relations victory over his strongest Board critics.

In December 2004, a deal was reached to end a dispute over the rebuilding of Trinity Plaza that involved Mayor Gavin Newsom’s first veto, a ballot initiative wrongly removed from the November 2004 ballot, and a proposed special election in June 2005 to resolve the issue once and for all.

Central to the deal was owner Angelo Sangiacomo’s unprecedented agreement to rebuild all of the current 360 rent-controlled apartments and place the new units under rent control, notwithstanding state law exemption of such units. Subsequent negotiations between Trinity, Supervisor Chris Daly and the tenants resulted in an extraordinarily detailed agreement whereby existing tenants would be moved to far more desirable units in the new building at the same rent, and receive a number of benefits they do not currently enjoy.

The Board of Supervisors unanimously approved a resolution supporting the Trinity Deal in June 2005, and the project moved through the Planning Department and was approved in early August 2006. The assumption was that the Land Use Committee would hear the measure by mid-October, pass it on to the Board, and that construction of the rent-controlled building would commence by spring 2007.

But that’s when a project creating a landmark precedent for preserving rent-controlled housing, and that would revitalize the Mid-Market neighborhood, ran into trouble.

First, some Supervisors publicly expressed anger that Daly’s deal appeared to prevent his colleagues from adding their own bells and whistles. Suddenly a host of unworkable, last-minute deal-killing demands were made that became “preconditions” for building new rental housing.

Consider the parking issue. While the Board quietly allowed a developer to build a five-story parking garage in a market-rate condo project adjacent to Trinity, Trinity was now told that it had too much parking on its site. Parking became an issue even though Trinity was reducing its current spots by 200, while adding 60,000 square feet of commercial space.

Then we heard that the rent-controlled housing was a bad idea in the absence of vacancy control. Vacancy control was not part of the Board resolution unanimously approved by the Supervisors in 2005, and this issue was never raised for almost two years after the Trinity deal was publicized.

Some argue that without vacancy control, the units will not be “permanently” affordable. But the tenants at Trinity who live in rent-controlled units are paying well below market-rate – and also below the rent they would be paying if their rents could rise to the “affordable” limit of 80% of Area Median.

If the anti-rent control advocates of inclusionary housing had their way, the 360 rent-controlled units would instead become 54 “permanently affordable” units. And unlike the average 2% annual rent increases under rent control, rents on these 54 units would jump by 10% or more during good times, as the last decade has seen area median incomes skyrocket in San Francisco.

Creating 360 rent-controlled units is a far more desirable option than inclusionary housing – where 80% of Area Median Income will inevitably increase over time and not be affordable to the vast majority of working-class renters.

Keep in mind that in addition to the 360 rent-controlled units, there will be another 231 affordable units. A project with a combined market-controlled 591 affordable units is unprecedented in San Francisco, and it defies belief that any Supervisors believe the Trinity project is not a good for the city.

Those proposing the parking and vacancy control ideas also ignore the reality that Sangiacamo must obtain financing to build this massive rental project. Imposing financial dealbreakers on this project is not “progressive;” rather, it’s a reactionary strategy to ensure that new rent-controlled housing at Trinity Plaza is never built.

The second problem was the claim that Trinity “changed” the deal by requiring condo mapping of the rent-controlled housing. The irony of this claim was that the deal had already changed materially—Trinity was now required to provide 15% affordable units rather than the 12% imposed in 2005. This added $6 million in costs to the project.

In addition, nobody disputes that interest rates have risen in the last two years, and construction costs have jumped by 40%.

For-profit rental housing is never built in San Francisco because developers cannot get banks to finance such projects. Originally, Sangiacomo thought he could finance the rent-controlled building himself. But that was before Planning urged him to increase the unit count from 1500 to 1900, to add significant new commercial space, and before construction costs skyrocketed.

Banks demand condo-mapping of new buildings so that if the borrower has financial problems they can sell off blocks of units to real estate investment trusts (REITS). The rent-controlled units would be protected by the same deed restrictions that govern the city’s inclusionary housing program, so whether or not the project gets condo-mapped will not affect the affordability of the rental units.

Some have argued that Sangiacomo’s insistence on a condo-map for the rent-controlled housing exposes his true scheme: to convert them to owner-occupied condos. But this idea flies in the face of the entire motive for the project, which is about a lasting legacy for Angelo Sangiacomo, and has nothing to do with maximizing profits.

All of the existing Trinity tenants will have lifetime leases in the new building, and the deed restrictions will require their units to be rent-controlled even after the tenants are long gone. Their deal is unaffected by the mapping issue.

To address the condo-mapping concern, Trinity has agreed to pay an in lieu fee to the Mayor’s Office of Housing for affordable housing if any units in the rent-controlled building are sold in blocks larger than five. To create a disincentive for use of this option, Trinity’s in lieu payment would be double the 15% required under current law.

As much as our current Board of Supervisors touts its support for housing, there are thousands of upscale condos being built and very little if any new rental housing for the working to lower-middle class. Trinity Plaza would bring 1900 rental units to a stretch of Market slated exclusively for condos, and is essential for maintaining the area’s diversity.

The Land Use Committee has been the chief obstacle to Trinity Plaza’s approval, but I am told by one of his colleagues that Supervisor Jake McGoldrick now supports the project. Good for him. Supervisor Sandoval has been a consistent supporter, but Maxwell has remained noncommittal.

One fear is that the Committee, to avoid charges of killing a popular project, will “approve” Trinity with conditions that make it impossible to finance. They can then say that Sangiacomo backed out of the project, absolving them from public backlash.

But the fingerprints of the Supervisors are all over the murder weapon. The Supervisor-hating corporate media will have a field day with the Board’s killing of Trinity Plaza, and Mayor Newsom will use the project’s demise as Case Study No.1 why the Supes cannot be trusted to move the city forward.

As for the current Trinity Plaza tenants, who have been waiting for construction to begin on their new homes, the future without a new building is not promising. The cheaply constructed former Del Webb hotel units will need massive and expensive electrical and plumbing upgrades, resulting in large capital improvement passthroughs. The corner of 8th and Market will continue to be an eyesore.

Five or ten years from now the Sangiacomo family would likely try to erase the bad memories of their patriarch’s failed dream and sell Trinity Plaza. If this project fails, a new more politically connected developer will likely cut a deal without any new rent-controlled housing being constructed, and with the forces who fought the prior demolition efforts either displaced from San Francisco or too bitter over the lost opportunity of 2007 to resist, they will likely succeed.

We talk a lot about the Mayor’s failure to attend Board meetings for Question Time. But if the Supervisors derail Trinity Plaza, they are the ones who will have the explaining to do.

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