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$300 Million housing dream

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  • Derek Dubuque
    By J.K. Dineen San Francisco Business Times John Stewart has always gravitated to what he calls brain-damage projects: the sort of Byzantine, public-private,
    Message 1 of 1 , May 21 4:51 PM
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      By J.K. Dineen
      San Francisco Business Times

      John Stewart has always gravitated to what he calls "brain-damage" projects: the sort of
      Byzantine, public-private, mixed-income housing collaborations that most developers
      wouldn't touch with a 10-footpole.
      But when it comes to brain damage, nothing the John Stewart Co. has taken on compares
      with Hunters View. In a joint venture with partners Devine & Gong and Ridgepoint Non-
      Profit Housing Corp., Stewart and his team are proposing to raise $300 million to
      demolish a 267-unit public housing project on a Hunters Point hillside and replace it with
      a roughly 667-unit mixed-income neighborhood.

      The public housing would be replaced one for one, but the new neighborhood would also
      feature 80 affordable rentals, 50 below-market for-sale units, and 250 to 300 market-rate
      condos, which would be
      priced at about $425a square foot. The project is tough even for the Stewart Co.,which
      manages 20,000 residential units - many in inner city neighborhoods – and employs
      1,000. For the first time in the Bay
      Area, the developers are trying to replace a public housing project with private money. In
      the past, public housing has been replaced using money from HOPEVI, the federal
      program Stewart Co.used to replace the $160million North Beach Place. But that money is
      gone, cut drastically by the Bush administration, leaving company executives to scramble
      for new funding sources.

      "How do you find a substitute for a $25 to $30 million HUD grant - something that has
      been a key part of every other public housing revitalization that has taken place to date?"
      asked Jack Gardner, president
      and CEO of the John Stewart Co.

      The answer, says Stewart, company founder and chairman, will be a combination of
      foundation money and a "cross subsidy" that will pump money from the market-rate
      condo sales into the public housing rebuild. The cost to rebuild the public housing is $80
      million to $100 million. The rest of the $300 million will pay for the low-income and
      market-rate units. In recent months, Stewart has launched an aggressive effort to raise
      money from private foundations. It has been hard going. The developer scored a coup with
      $2.2 million from the Ford Foundation - a combination of loan and grant. The San
      Francisco Foundation, Local Initiative Support Coalition (USC), and the Mayors Office on
      Housing have chipped in $1million. Some $4 million in predevelopment money is still
      needed - the sort of early funding that used to come from HUD. Stewart hopes that
      prominent Bay Area philanthropists will follow the example of the John D. and Catherine T.
      Mac Arthur Foundation, which sank $50 million into rebuilding public housing in its
      hometown of Chicago.

      "We're trying to get foundations to do what they don't want to do - and they have stayed
      away from this like crazy," said Stewart. "The president killed a very fine grant program. So
      the question is, can we get non-government organizations to fill in for the federal
      government? So far they have not all flocked to us."

      The North Beach Model
      North Beach Place has been held up as a model of turning a drug-addled, dangerous
      project into a healthy mixed-income community. There is even a Trader Joe's on the
      ground floor, the only time the grocery
      chain has located below public housing. North Beach Place was built with $28 million in
      federal money and $10 million from the Mayor's Office of Housing. John Stewart Co. put in
      $48 million in equity and took out a $70 million construction loan. A total of 11 funding
      sources were used. But as an urban enclave, Hunters View is a much tougher environment.
      While North Beach Place is surrounded by upscale neighborhoods, Hunters View is nestled
      in a toxic; isolated hillside economically devastated by the departure of the Navy in
      1974and environmentally ravished by both the industrial uses and a nearby power plant.
      "It's nasty up here," said Tessie Ester, president of the Hunters View Tenants Association.
      "Asthma, roaches, rats most
      (people) are sick up here." The history has given Hunters View residents a strong
      skepticism of outsiders and the John Stewart Co. has been no exception. Ester said she
      wonders if current residents would be allowed to stay once the project is reconstructed.
      "We didn't ask for them to come up here. I think they want the hill - this is prime land,"
      she said. Stewart said Hunters View tenants have been bused to North Beach Place and the
      reception has been largely positive. "We take them to North Beach and say if this is
      gentrification, so be it," said Stewart.
      'They see the stacked washer dryers in their units - not outside, not down the hall. They
      don't see dumpsters. They don't see graffiti. When they talk to the women who run the
      households, what they hear is not just the
      architecture, it's the security." Gardner said the three different housing types would be
      built simultaneously
      and the developer would work closely with nonprofits to improve the adjacent Malcom X
      School, an under-enrolled elementary school that the city school district has threatened to
      close.

      An Isolated Maze
      The redevelopment is being designed by Solomon Architecture. Principal Dan Solomon,
      who has been involved in rebuilding dilapidated housing projects across the country, said
      Hunters View stands out even among depressed projects.

      "Hunters View is one of the most problematic, partially because it is even more isolated
      and even more disconnected than many of the other distressed public housing around the
      country," said Solomon.

      The development is a maze of long loop-ing cul-de-sacs, both disorienting and cut off
      from surrounding neighbors. The new physical plan would transform the street labyrinth
      of the old barracks site plan into the grid of a typical city neighborhood. Street corridors
      will capture downtown views; small buildings would step up the hill, as they do in
      Telegraph Hill or Bernal Heights. Dangerous pockets of unsupervised, unowned open
      space will turn into well-defined areas more like Dolores Park or Alamo Square.

      "Quite a lot of open space is shapeless, formless, ownerless and dangerous," said
      Solomon. "It's a textbook case of taking well established principals of San Francisco
      neighborhood planning and doing exactly the opposite. "This is not going to magically fix
      everything wrong with Hunters Point – but without fixing this, there is no hope."

      jkdineen@... (415)288-4971 •
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