Infrastructure work has begun on the $6 billion Treasure Island and Yerba Buena Island redevelopment, one of the largest mixed-use projects in the Bay Area with 8,000 residential units planned.
A development partnership of Lennar Urban (NYSE: LEN), Kenwood Investments, Stockbridge Capital Group and Wilson Meany started work last week, which will include demolition of 40 existing structures, new roads, utilities and parks. The first phase will include around 2,100 residential units, up to 500 hotel rooms and 90 acres of parks, built on around 45 acres on Treasure Island’s western shoreline and the 80-acre Yerba Buena Island.
“It’s taken almost two decades to get to this point and we’re eager to transform this former naval base into a vibrant community with more housing, jobs and economic opportunities for our residents,” San Francisco Mayor Ed Lee said in a statement.
Infrastructure work for the first phase will cost around $155 million and take around two-and-a-half years, said Kheay Loke, senior development manager at Wilson Meany. A $155 million construction loan has been secured for the project through the EB-5 foreign investment program, which allowed foreigners, mostly Chinese citizens, to obtain green cards by investing a minimum of $500,000 in U.S. projects.
Vertical construction of new housing could begin by next year, starting with around 250 townhomes on Yuerba Buena Island, followed by 400 to 500 units in midrise buildings of four to five stories on Treasure Island, said Loke. The entire 8,000 residential units are expected to be built out over the next 10 to 15 years, depending on market demand, said Loke. Under the development agreement, 25 percent or 2,000 units will be affordable, which the developers will fund with land grants and a $17,500 fee for each market-rate unit that is built, said Loke. The city will eventually select affordable developers for the below-market-rate units, and the percentage of affordable housing could also be boosted to 30 percent if the city obtains additional funding, said Loke.
Silverado Contractors is performing the first phase’s demolition work. A general contractor hasn’t been hired yet. Skidmore, Owings & Merrill and Perkins + Will are the architects, while CMG, Andrea Cochran, Sheryl Barton, Walter Hood and AECOM are the landscape architects.
The project will also include 140,000 square feet of retail and commercial space and 100,000 square feet of office space. “We have enough critical mass to create a sense of place and enough density to create services like retail to make it successful,” said Loke.
The U.S. Navy, which operated a naval station on the islands until it closed in 1997, is in the process of cleaning up the land, and transferring it to the city. Remediation includes potentially radioactive material on the site, which the navy has said is safe. Infrastructure work will also include protections against earthquakes and sea level rise. A ferry terminal connecting the project to San Francisco will also be built.
“This project began with a commitment to have a new level of public participation,” said Chris Meany, managing partner at Wilson Meany. “It’s really reflective of what the public wanted.
He noted that there were hundreds of community meetings held and the 90 acres of planned parks and open spaces would be the largest new addition of parkland since Golden Gate Park.
The city approved the project in 2011, but work was delayed by a lawsuit led by a group led by then-former Supervisor Aaron Peskin. Legal action was resolved in 2014 after the state’s Supreme Court declined to take a case alleging that the project failed to complete adequate environmental reviews.
Wilson Meany and Stockbridge are also building the large Bay Meadows mixed-use project in San Mateo. Lennar is also working another major redevelopment at Candlestick Point and the Shipyard. It is also seeking the rights to redevelop the former Concord naval base in a selection process that has raised controversy.
“A transformative development like this only happens because of the strong partnership with the city and the community. Together, we are committed to creating another unique San Francisco neighborhood.,” said Kofi Bonner, president of Lennar Urban, in a statement.
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