S.F. Supervisor accuses Mayor Breed of withholding affordable housing funds for blighted lot

The battle over the future of the blighted former Touchless car wash property on San Francisco’s Divisadero Street escalated Tuesday with Supervisor Dean Preston accusing Mayor London Breed’s administration of jeopardizing affordable housing on the site by refusing to commit city money to purchase it.

Preston said that the city has been dragging its feet on acquiring the property for seven months, despite promises by the Mayor’s Office of Housing and Community Development that a “notice of funds availability,” or NOFA, would be issued. He said that the nonprofit builder Tenderloin Neighborhood Development Corporation was in contract to buy the property from the current owner, but the agreement expired because there was no guarantee that the money would be available.

“This kind of obstruction of affordable housing is ridiculous,” said Preston. “We came to an agreement last year, but because the mayor has decided to stand in the way of getting the funds out the door, we’re missing golden opportunities for more affordable housing development.”

In June, Preston worked with Supervisor Hillary Ronen and Breed’s office on an agreement to allocate $112 million in the budget to boost affordable housing development, including $40 million for site acquisition and $12 million for teacher housing.

Preston said the language in the agreement was written specifically with the car wash lot at 400 Divisadero in mind. The property was approved for 186 apartments in 2019 but the developer walked away in 2021 after determining that the project no longer worked economically. Since then, Preston, who was opposed to the original market rate development there, has been pushing the city to snap up the site for affordable housing, he said.

Jeff Cretan, a spokesperson for Mayor Breed, said that the city’s bidding rules don’t allow the city to fund a specific property acquisition for a developer without a competitive process.

“We have to be transparent, we can’t predetermine that any particular nonprofit or any particular lot will be selected,” Cretan said. “We do not want to corrupt the process by showing any favorites. There are numerous entitled projects across the city that could be eligible for this funding.”

The fight comes at a time when the Board of Supervisors is expected, next week, to pass its housing element, a state-mandated plan to produce 82,000 units over the next eight years, 46,000 of which must be affordable to low- and moderate-income households.

Under the city’s housing element plan, units in “high-resource” neighborhoods are prioritized. The Touchless site — on public transportation and close to retail, schools and jobs — makes it one of the better locations for affordable housing, Preston said.

Preston also pointed to a proposed 63-unit teacher housing project at 2205 Mission St., for which developer Mission Economic Development Corporation is seeking $12 million.

Eric Shaw, who heads up the Mayor’s Office of Housing and Community Development, said the “notice of funds availability” that Preston has been waiting for would be issued in the next three weeks. He said the site at 400 Divisadero would be evaluated against other qualified properties.

“We have to go through a process where a number of nonprofits are able to apply,” said Shaw. “We can’t tell a nonprofit ahead of time that they are guaranteed to get that money. That would be a violation of our laws. It would show favoritism and we don’t want to do that.”

He said the city is focused on picking projects that are most likely to win affordable housing tax credit through the state’s competitive process.

In recent years, San Francisco has lost out on state money to projects in parts of California with lower land and construction costs.

“We are trying to get that state money — that is the biggest thing for us,” Shaw said. “We understand that certain groups want to advocate for certain sites. What if there is project X that provides more units or would be more competitive in the state funding process?”

But Preston said the city should have released funds months ago. Or the city could have purchased the 400 Divisadero site outright, without a competitive process, and then issued a request for proposals to develop it. That is something the city did with sites like 1515 South Van Ness, 730 Stanyan, 490 South Van Ness and other properties.

“We are losing affordable housing deals because they are inexplicably refusing to issue this NOFA,” said Preston. “Or they could simply buy the damn site.”

J.K. Dineen is a San Francisco Chronicle staff writer. Email: jdineen@sfchronicle.com Twitter: @sfjkdineen