August 12, 2019 – The partnership of Forge Development Partners and Bridge Investment Group will break ground on the first newly constructed privately funded workforce housing development in San Francisco – a combination of innovative product design and technology with unique investment financing and management. A Freddie Mac Multifamily unfunded forward commitment, which includes a Preservation of Affordable Rents Covenant (PARC) agreement, will provide permanent financing. The partners will deliver new housing stock affordable to the workforce in the urban core, with a minimum of 51% of units to be rented to those earning a maximum of 80% of the FHFA area median income (AMI).
The project is supported by construction financing from East West Bank and Washington Federal Bank. TL 361, located at 361 Turk Street and 145 Leavenworth Street in the Tenderloin neighborhood, will transform two surface-level parking lots into a vibrant, mixed-use residential community, featuring two standalone buildings housing a total of 240 micro-units above neighborhood-serving retail as well as a dedicated on-site social and community center.
“Forge is excited to launch TL 361 with a partner that shares our vision of bringing transformative solutions to the housing and living issues of the urban core,” said Richard Hannum, founder of Forge. “This first project will demonstrate the applicability of our model to provide high-tech, high-touch and highly-desirable housing solutions in downtown settings that are accessible to the people who work in the urban core. Together, Forge and Bridge will deliver a managed user experience for working people that enhances their quality of life at a lower cost of living.”
Dan Stanger, Vice Chairman of Bridge Investment Group and Co-Chief Investment Officer for the firm’s Workforce & Affordable Housing Strategy, added: “We are very pleased that the double bottom line model we have developed to fund and build affordable workforce housing like TL 361 in the urban environment is both viable and profitable in this era of social responsibility, driving both competitive market returns and social and economic mobility.”
Freddie Mac Vice President, Lauren Garren, said, “Freddie Mac is pleased to provide a forward commitment for this innovative development. Our loan will help keep rents affordable for 240 residents in the highest-cost market in the United States. Workforce housing is in short supply across the country—a problem Bridge Investment Group and Forge Development Partners are taking head on with TL 361.”
These two buildings will be San Francisco’s first privately owned and financed buildings that offer means-tested rent controls for workforce housing, according to Stanger. “The structured financing, which guarantees affordable workforce housing, coupled with innovative construction methodologies from Forge, makes this a particularly attractive model.”
Importantly, Hannum adds, “it is a ‘true solution,’ meaning it is replicable and scalable.”
Scott Bales, Managing Director of Multifamily Housing for Northern California at Jones Lang LaSalle Americas, Inc. (JLL), commented: “Forge Development has the unique capacity to procure alliances within communities and create feasibility for its partners at a time when both of these elements have become increasingly rare and exceedingly valuable. I believe that Hannum and his partners have a successful formula that that is both customizable and replicable and will change the way many think about workforce housing”. JLL represents Forge Development Partners in its acquisition program as well as structuring its partnership agreements.
The landmark $100 million development is a reaction to the elevated construction costs that have made it prohibitively expensive to build new affordable housing without relying on government subsidies, greatly reducing the supply available to the US workforce. This private sector partnership will use patented systems to keep construction costs down, allowing for more affordable rents at a time when over one in two American rental households are cost-burdened by their housing. Innovative solutions to energy systems combine to make the project extremely efficient and sustainable.
As required under the Mayor’s Office of Housing and the inclusionary housing ordinance, 12% of the 240 micro-units will be set aside for renters who earn roughly $32,000 per year. To reach the required 51% of affordable units, Forge and Bridge will privately impose rent restrictions on 39% of the units, making them affordable for renters with income today as low as $75,000 per year. The remaining 49% of units will be offered at market rate, starting at prices affordable for renters making approximately $82,000 per year, still below the area median income.
About TL 361: TL 361 will consist of two, eight-story standalone buildings located at 361 Turk St. and 145 Leavenworth St., containing a total of 240 state-of-the-art micro-unit apartments, designed for maximum space efficiency with minimal comfort sacrifice and common spaces designed to create a managed living and enhanced user experience.
By the Numbers:
- 240 new housing units
- 361 Turk St.: 146 units
- 145 Leavenworth St.: 94 units
- All units feature state-of-the-art private baths and cooking facilities
- Seven stories of residential over ground-floor retail in each building
- Shared rooftop deck and double height common spaces on every floor provide extensive shared space options for residents.
- State-of-the-art green technologies with very low energy usage and high sustainability
- On-site social and community center to enhance resident quality of life and revitalize the community