The San Francisco developer who once planned a sweeping transit-oriented retail and housing complex in Railroad Square has abandoned a scaled-back version of the project, citing political opposition by the City Council.
John Stewart, the managing partner of Santa Rosa Canners, LLC, sent a letter Wednesday to Mayor Scott Bartley explaining his decision to cease all work on the project.
"Financing and construction of this project is difficult enough as it is, let alone without broad-based, top-down support from the city," Stewart wrote.
The City Council voted 4-3 last week not to support Stewart's latest plan to build 93 units of affordable housing for seniors on his 2.1-acre property on Third Street.
The majority of council members questioned the appropriateness of the site for low-income seniors and didn't feel the benefits to the city justified the public subsidies.
Supporters thought the project could jump-start development in the area, and called it unwise to turn away $10 million of redevelopment and grant funding that would have funded key infrastructure upgrades in the area.
Early plans for the 11-acre site called for a 40,000-square-foot food-and wine center similar to the Ferry Building in San Francisco, 40,000 square feet of office space, 279 units of market rate and affordable housing, a 263-space parking garage and several restaurants.
Stewart noted that the 2008 plan "encountered the worst market collapse since the Great Depression" followed by the demise of the state's 425 redevelopment agencies.
While he acknowledged the chance of another vote on the issue next week, something Councilwoman Julie Combs said she was considering, Stewart said that with both the mayor and vice mayor against the project, "it appears to us and our advisers that the city's body politic is and will remain deeply divided."
Stewart said Vice Mayor Erin Carlstrom's characterization of the proposed project as a "bailout" was a "particularly offensive but instructive harbinger" of the project's fate.
He noted that his company has spent $7.4 million trying to develop its two Railroad Square properties to date, and would have recouped "about a fifth" of the $3.6 million expended on the cannery site.
"This doesn't feel like a bailout. It feels like private sector investment in a challenging site that would have generated significant public benefits," Stewart wrote.
Carlstrom previously said that she considered the project a bailout of a private developer because it proposed using millions in public dollars originally set side for the development of the entire site, not just Stewart's property.
She said that 85 percent of the $27.3 million project was being funded with public subsidies. She arrived at that figure by including $13.2 million in low-income housing tax credits, she said.
But that's misleading, Stewart said, because the $13.2 million would all be private equity. Investors in such projects get tax breaks, but that doesn't make it a government subsidy, he said.
"She's flat-out wrong on the 85 percent," Stewart said after last week's vote. "Where did she come up with that?"
Stewart said he was surprised when Carlstrom made the statement about a bailout because it seemed anyone familiar with the development of affordable housing knows some public support is required.
"That one really took us all aback because it suddenly personalized this whole thing," Stewart said.
Carlstrom said the project had changed so much since it was first proposed that many of the public benefits that would have flowed from the larger project were not in the scaled-back version.