South City approves financing gap for senior housing

Fully affordable housing developments typically take longer than market-rate projects to secure financing, as the former often requires a complicated mix of public funds from various local, regional and state entities.

Cities, including South San Francisco, often rely heavily on developer impact fees to help fund affordable housing projects, or commercial linkage fees. It also collects other impact fees to help fund other services and infrastructure needs, ranging from child care to sewer and park systems.

“I think it just goes to show how expensive it is to build affordable housing. It’s extremely expensive,” Vice Mayor Mark Nagales said during a City Council meeting Jan. 14. “The development that you’ve seen, in terms of [research and development] or other things, is helping pay for the affordable housing that’s coming to South San Francisco.”

The senior housing development will be built first and faced a financing gap of about $6.7 million. During a City Council meeting Jan. 14, it approved funds from its commercial linkage fund and also a $1.2 million reduction in its child care impact fee that the developer, Rotary Gardens, would otherwise have to pay. The city had previously approved almost $3 million toward the first phase of the project in 2023 and mid-2025.

Late last year, the county awarded $16.8 million to the senior housing development, though the funds are contingent upon South City’s contribution.

“I am in favor. I am supportive,” Councilmember Eddie Flores said. “I think it’s incumbent upon us to be able to deliver for the $16 million that the county is also moving forward with as well.”

The City Council unanimously approved the $6.7 million contribution. Construction is anticipated to begin toward the end of 2026 and take about a year and a half to complete.