Resolution approving and authorizing a Loan and Grant Agreement in an amount not to exceed $11,000,000 consisting of a loan in the amount of $8,000,000 for a minimum term of 55 years and a grant in the amount of $3,000,000 with 1035Vets LLC for the purpose of rehabilitating real property located at 1035 Van Ness Avenue (“1035 Van Ness”) into 124 units of permanent supportive housing for veterans exiting homelessness under the Homekey+ Program administered by the California Department of Housing and Community Development (the “Project”); adopting findings that the Project and proposed transactions are consistent with the General Plan, and the eight priority policies of Planning Code, Section 101.1; authorizing the Mayor and the Director of Mayor’s Office of Housing and Community Development (“MOHCD”) to execute the Loan and Grant Agreement, and make certain modifications to such agreements, as defined herein, and take certain actions in furtherance of this Resolution, as defined herein; and authorizing the Director of MOHCD to enter into any additions, amendments, or other modificatio

This resolution approves a Loan and Grant Agreement not exceeding $11,000,000 with 1035Vets LLC for the rehabilitation of 1035 Van Ness Avenue into 124 units of permanent supportive housing (PSH) for veterans experiencing homelessness. The funding consists of an $8,000,000 City loan (55-year term, 0% interest, residual receipts repayment) and a $3,000,000 grant from the California Department of Housing and Community Development (HCD) Homekey+ Program, administered by the City.

The total project development cost is approximately $41,450,482. The overall HCD Homekey+ grant award is $39,044,030, with $29,800,000 allocated for acquisition financing (repaying the San Francisco Housing Accelerator Fund), $3,000,000 for rehabilitation (administered by the City), and $6,244,030 for a Capitalized Operating Subsidy Reserve (COSR) to support initial operating costs for five years. The City's $8,000,000 loan is sourced from $5,912,794 in 2020 Health and Recovery General Obligation Bonds and $2,087,206 from Proposition C (Our City, Our Home) funds. The City subsidy per unit is approximately $64,516, with a total development cost per unit of $334,278.

The project involves rehabilitating a vacant 9-story assisted living facility. This includes restoring 15 previously removed units, adding two new accessory dwelling units, and making minor alterations to create 66 studio units (VASH-supported) and 58 SRO units (LOSP-supported). Construction is anticipated to begin on January 9, 2026, with substantial completion by July 31, 2026, and 95% occupancy by March 31, 2027. The property will be restricted as affordable housing for formerly homeless or low-income veterans for a minimum of 55 years.

All units are targeted for veterans with serious mental illness or substance use disorder, with rents capped at 30% of HCD Median Income (adjustable to 50% if needed). Comprehensive supportive services, including 24/7 front desk staffing, case management, mental health, substance use, and physical health services, will be provided by Swords to Plowshares (the sponsor) and the VA. The project received ministerial approval under AB 2162 and State Density Bonus Law. The City will secure its financial interest and affordability restrictions through a Deed of Trust, Declaration of Restrictions, and a 99-year Purchase Option Agreement.

This project will provide 124 units of permanent supportive housing for veterans experiencing homelessness, offering crucial stability and comprehensive services. Residents of the Stanford Hotel (250 Kearny Street) will be relocated to this new facility, leading to the closure of that site. While addressing a critical housing need, community members have raised concerns about the concentration of supportive housing in the Van Ness area, potential impacts on neighborhood safety and cleanliness, and the suitability of the building for its intended use. The City maintains that the project aligns with revitalization goals and includes robust onsite support.

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