San Francisco Breaks Ground on 11-Story Affordable Housing Project After Over 5 Years

San Francisco officials are touting an affordable housing project that is finally breaking ground in Potrero Hill after being in development for five years.

Construction is underway at 300 De Haro St., which was one of the first privately funded mixed-income housing projects in San Francisco to make use of Senate Bill 35 in streamlining its approval process.

Through this measure, which was introduced by Sen. Scott Wiener and signed into law in 2017, developments that allocate 10% of units to households making at or below 50% of the area’s average median income are guaranteed streamlined approval. Projects that qualify under the law are exempt from certain steps, like conducting a full environmental review under the California Environmental Quality Act.

The De Haro site was originally marked five years ago for a mixed-income development, projected to be an 11-story building with over 400 furnished and unfurnished units.

Although the project was originally proposed to be a mixed-income building, financial constraints emerged amid a rocky housing market, said Mark MacDonald, the CEO of DM Development, a San Francisco-based firm specializing in mixed-use development and one of the community partners spearheading the project.

“We ended up pivoting the project from a mixed-income project to a 100% affordable housing project,” MacDonald said. “Using low-income housing tax credit financing as a way to kind of get around the challenges that the market rate developments have had.”

Residents who qualify to live in the building, according to MacDonald, have annual income wages between 30% and 70% of the area’s median income, “which would range from about $50,000 to $100,000.”

Although the project leveraged SB 35 for a streamlined process, its groundbreaking has been years in the making.

MacDonald pointed to the capital markets in San Francisco slowing down post-pandemic, as well as skyrocketing interest rates and decreased investor interest, which is “why you don’t really see any cranes in the sky in San Francisco now.”

Compounded with extended dialogue among the neighborhood and community, the permitting phase and entitlement process were lengthy, he said. But without SB 35, it would have taken even longer to get to groundbreaking.

MacDonald acknowledged that 300 De Haro became a point of contention among Potrero Hill residents upon its proposal, especially because a few small businesses like Cafe Da Fonk and Torraku Ramen, both situated at the development’s address, were given notice to vacate before groundbreaking began.

He said the building will have 6,000 square feet of space for retailers, but he did not specify which would operate there.

“We even invited some of our existing [retail] tenants at 300 De Haro back into the building should they choose to come,” he said. “We would welcome them with open arms if they do that.”

The Housing Action Coalition’s Executive Director Corey Smith said the community partners, which include his group, incorporated neighbors’ concerns and feedback into the process, but it’s difficult “to convince everybody that building housing is a good idea.”

“When this project first got introduced, there were a number of neighbors who were very upset with it,” Smith said. But, he said, it’s important to emphasize that the project entails “more residents in the neighborhood, that’s good for small businesses.”

According to MacDonald and the development’s website, the building will have a fitness center, a rooftop lounge, a coworking space, and a 7,000-square-foot yard for “green space.”

He said construction is projected to be complete by the summer of 2027, and that the development is already accepting names for its interest list on the website.

Smith said he hopes this project will inspire more builders and development firms to invest in San Francisco and its long-term economic sustainability.

“This project won’t solve all the problems,” he said. “But if we have a lot more projects like it, we will get closer to a solution.”